UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Name of Registrant, State of Incorporation, Address of Principal Executive Offices, Telephone Number, Commission File Number, IRS Employer Identification Number
ALLIANT ENERGY CORPORATION
(a Wisconsin Corporation)
4902 N. Biltmore Lane
Madison, Wisconsin 53718
Telephone (608) 458-3311
Commission File Number - 1-9894
IRS Employer Identification Number - 39-1380265
INTERSTATE POWER & LIGHT COMPANY
(an Iowa corporation)
Alliant Energy Tower
Cedar Rapids, Iowa 52401
Telephone (319) 786-4411
Commission File Number - 1-4117
IRS Employer Identification Number - 42-0331370
WISCONSIN POWER & LIGHT COMPANY
(a Wisconsin corporation)
4902 N. Biltmore Lane
Madison, Wisconsin 53718
Telephone (608) 458-3311
Commission File Number - 0-337
IRS Employer Identification Number - 39-0714890
This combined Form 10-K is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-K relating to Interstate Power and Light Company and Wisconsin Power and Light Company is filed by each such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself.
Securities registered pursuant to Section 12(b) of the Act:
Alliant Energy Corporation, Common Stock, $0.01 Par Value, Trading Symbol LNT, Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Alliant Energy Corporation - Yes ☒ No ☐
Interstate Power and Light Company - Yes ☒ No ☐
Wisconsin Power and Light Company - Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Alliant Energy Corporation - Yes ☐ No ☒
Interstate Power and Light Company - Yes ☐ No ☒
Wisconsin Power and Light Company - Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
Alliant Energy Corporation - Yes ☒ No ☐
Interstate Power and Light Company - Yes ☒ No ☐
Wisconsin Power and Light Company - Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Alliant Energy Corporation - Yes ☒ No ☐
Interstate Power and Light Company - Yes ☒ No ☐
Wisconsin Power and Light Company - Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, accelerated filer, non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Alliant Energy Corporation - Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐
Interstate Power and Light Company - Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐
Wisconsin Power and Light Company - Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Alliant Energy Corporation ☐
Interstate Power and Light Company ☐
Wisconsin Power and Light Company ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (§ 15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.
Alliant Energy Corporation ☒
Interstate Power and Light Company ☐
Wisconsin Power and Light Company ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Alliant Energy Corporation - Yes ☐ No ☒
Interstate Power and Light Company - Yes ☐ No ☒
Wisconsin Power and Light Company - Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by nonaffiliates as of June 30, 2021:
Alliant Energy Corporation - $13.9 billion
Interstate Power and Light Company - $0
Wisconsin Power and Light Company - $0
Number of shares outstanding of each class of common stock as of January 31, 2022:
Alliant Energy Corporation, Common Stock, $0.01 par value, 250,478,681 shares outstanding
Interstate Power and Light Company, Common Stock, $2.50 par value, 13,370,788 shares outstanding (all outstanding shares are owned beneficially and of record by Alliant Energy Corporation)
Wisconsin Power and Light Company, Common Stock, $5 par value, 13,236,601 shares outstanding (all outstanding shares are owned beneficially and of record by Alliant Energy Corporation)
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement relating to Alliant Energy Corporation’s 2022 Annual Meeting of Shareowners are, or will be upon filing with the Securities and Exchange Commission, incorporated by reference into Part III hereof.
TABLE OF CONTENTS
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DEFINITIONS
The following abbreviations or acronyms used in this report are defined below:
| Abbreviation or Acronym | Definition | Abbreviation or Acronym | Definition | ||||||||
| 2022 Alliant Energy Proxy Statement | Alliant Energy’s Proxy Statement for the 2022 Annual Meeting of Shareowners | Fuel-related | Electric production fuel and purchased power | ||||||||
| AEF | Alliant Energy Finance, LLC | GAAP | U.S. generally accepted accounting principles | ||||||||
| AFUDC | Allowance for funds used during construction | GHG | Greenhouse gases | ||||||||
| Alliant Energy | Alliant Energy Corporation | IPL | Interstate Power and Light Company | ||||||||
| ARO | Asset retirement obligation | IRS | Internal Revenue Service | ||||||||
| ATC | American Transmission Company LLC | ITC | ITC Midwest LLC | ||||||||
| ATC Holdings | Interest in American Transmission Company LLC and ATC Holdco LLC | IUB | Iowa Utilities Board | ||||||||
| ATI | AE Transco Investments, LLC | KWh | Kilowatt-hour | ||||||||
| CA | Certificate of authority | Marshalltown | Marshalltown Generating Station | ||||||||
| CAA | Clean Air Act | MDA | Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||||||
| CCR | Coal combustion residuals | MGP | Manufactured gas plant | ||||||||
| CO2 | Carbon dioxide | MISO | Midcontinent Independent System Operator, Inc. | ||||||||
| Corporate Services | Alliant Energy Corporate Services, Inc. | MW | Megawatt | ||||||||
| COVID-19 | Novel coronavirus | MWh | Megawatt-hour | ||||||||
| CPCN | Certificate of Public Convenience and Necessity | N/A | Not applicable | ||||||||
| CWIP | Construction work in progress | Note(s) | Combined Notes to Consolidated Financial Statements | ||||||||
| DAEC | Duane Arnold Energy Center | OIP | Alliant Energy Omnibus Incentive Plan | ||||||||
| DCP | Alliant Energy Deferred Compensation Plan | OPEB | Other postretirement benefits | ||||||||
| DLIP | Alliant Energy Director Long Term Incentive Plan | PPA | Purchased power agreement | ||||||||
| Dth | Dekatherm | PSCW | Public Service Commission of Wisconsin | ||||||||
| EEP | Energy efficiency plan | Receivables Agreement | Receivables Purchase and Sale Agreement | ||||||||
| EGU | Electric generating unit | Riverside | Riverside Energy Center | ||||||||
| EPA | U.S. Environmental Protection Agency | SEC | Securities and Exchange Commission | ||||||||
| EPS | Earnings per weighted average common share | U.S. | United States of America | ||||||||
| Federal Tax Reform | Tax Cuts and Jobs Act | VEBA | Voluntary Employees’ Beneficiary Association | ||||||||
| FERC | Federal Energy Regulatory Commission | VIE | Variable interest entity | ||||||||
| Financial Statements | Consolidated Financial Statements | Whiting Petroleum | Whiting Petroleum Corporation | ||||||||
| FTR | Financial transmission right | WPL | Wisconsin Power and Light Company | ||||||||
FORWARD-LOOKING STATEMENTS
Statements contained in this report that are not of historical fact are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified as such because the statements include words such as “may,” “believe,” “expect,” “anticipate,” “plan,” “project,” “will,” “projections,” “estimate,” or other words of similar import. Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all, of the risks and uncertainties of Alliant Energy, IPL and WPL that could materially affect actual results include:
•the impact of penalties or third-party claims related to, or in connection with, a failure to maintain the security of personally identifiable information, including associated costs to notify affected persons and to mitigate their information security concerns;
•the direct or indirect effects resulting from terrorist incidents, including physical attacks and cyber attacks, or responses to such incidents;
•the impact of customer- and third party-owned generation, including alternative electric suppliers, in IPL’s and WPL’s service territories on system reliability, operating expenses and customers’ demand for electricity;
•the impact of energy efficiency, franchise retention and customer disconnects on sales volumes and margins;
•the impact that price changes may have on IPL’s and WPL’s customers’ demand for electric, gas and steam services and their ability to pay their bills;
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•IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of and/or the return on costs, including fuel costs, operating costs, transmission costs, deferred expenditures, deferred tax assets, tax expense, capital expenditures, and remaining costs related to EGUs that may be permanently closed and certain other retired assets, decreases in sales volumes, earning their authorized rates of return, and the payments to their parent of expected levels of dividends;
•federal and state regulatory or governmental actions, including the impact of legislation, and regulatory agency orders;
•the ability to utilize tax credits and net operating losses generated to date, and those that may be generated in the future, before they expire;
•the impacts of changes in the tax code, including tax rates, minimum tax rates, and adjustments made to deferred tax assets and liabilities;
•the ability to complete construction of renewable generation and storage projects within the cost targets set by regulators due to cost increases of materials, equipment and commodities including due to tariffs, labor issues or supply shortages, the ability to successfully resolve warranty issues or contract disputes, the ability to achieve the expected level of tax benefits based on tax guidelines and project costs, and the ability to efficiently utilize the renewable generation and storage project tax benefits for the benefit of customers;
•employee workforce factors, including changes in key executives, ability to hire and retain employees with specialized skills, ability to create desired corporate culture, collective bargaining agreements and negotiations, work stoppages or restructurings;
•any material post-closing payments related to any past asset divestitures, including the sale of Whiting Petroleum, which could result from, among other things, indemnification agreements, warranties, guarantees or litigation;
•weather effects on results of utility operations;
•the direct or indirect effects resulting from the ongoing COVID-19 pandemic and the spread of variant strains, including any vaccine mandates and testing requirements, on sales volumes, margins, operations, employees, labor markets, contractors, vendors, the ability to complete construction projects, supply chains, customers’ inability to pay bills, suspension of disconnects, the market value of the assets that fund pension plans and the potential for additional funding requirements, the ability of counterparties to meet their obligations, compliance with regulatory requirements, the ability to implement regulatory plans, economic conditions and access to capital markets;
•issues associated with environmental remediation and environmental compliance, including compliance with all environmental and emissions permits, the CCR rule, future changes in environmental laws and regulations, including federal, state or local regulations for CO2 emissions reductions from new and existing fossil-fueled EGUs, and litigation associated with environmental requirements;
•increased pressure from customers, investors and other stakeholders to more rapidly reduce CO2 emissions;
•the ability to defend against environmental claims brought by state and federal agencies, such as the EPA, state natural resources agencies or third parties, such as the Sierra Club, and the impact on operating expenses of defending and resolving such claims;
•continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;
•inflation and interest rates;
•disruptions to the supply of materials, equipment and commodities needed to construct solar generation and storage projects, including due to shortages, labor issues or transportation issues, which may impact the ability to meet capacity requirements and result in increased capacity expense;
•possible changes to MISO’s methodology establishing capacity planning reserve margin and capacity accreditation requirements that may impact how and when new generating facilities such as IPL’s and WPL’s additional solar generation may be accredited with energy capacity and may require IPL and WPL to adjust their current resource plans, the need to add resources to comply with MISO’s proposal, or procure capacity in the market whereby such costs might not be recovered in rates;
•changes in the price of delivered natural gas, transmission, purchased electricity and coal due to shifts in supply and demand caused by market conditions and regulations;
•disruptions in the supply and delivery of natural gas, purchased electricity and coal;
•the direct or indirect effects resulting from breakdown or failure of equipment in the operation of electric and gas distribution systems, such as mechanical problems and explosions or fires, and compliance with electric and gas transmission and distribution safety regulations, including regulations promulgated by the Pipeline and Hazardous Materials Safety Administration;
•issues related to the availability and operations of EGUs, including start-up risks, breakdown or failure of equipment, availability of warranty coverage for equipment breakdowns or failures; performance below expected or contracted levels of output or efficiency, operator error, employee safety, transmission constraints, compliance with mandatory reliability standards and risks related to recovery of resulting incremental costs through rates;
•impacts that excessive heat, excessive cold, storms or natural disasters may have on Alliant Energy’s, IPL’s and WPL’s operations and recovery of costs associated with restoration activities or on the operations of Alliant Energy’s investments;
•Alliant Energy’s ability to sustain its dividend payout ratio goal;
•changes to costs of providing benefits and related funding requirements of pension and OPEB plans due to the market value of the assets that fund the plans, economic conditions, financial market performance, interest rates, timing and form of benefits payments, life expectancies and demographics;
•material changes in employee-related benefit and compensation costs;
•risks associated with operation and ownership of non-utility holdings;
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•changes in technology that alter the channels through which customers buy or utilize Alliant Energy’s, IPL’s or WPL’s products and services;
•impacts on equity income from unconsolidated investments from valuations and potential changes to ATC’s authorized return on equity;
•impacts of IPL’s future tax benefits from Iowa rate-making practices, including deductions for repairs expenditures, allocation of mixed service costs and state depreciation, and recoverability of the associated regulatory assets from customers, when the differences reverse in future periods;
•changes to the creditworthiness of counterparties with which Alliant Energy, IPL and WPL have contractual arrangements, including participants in the energy markets and fuel suppliers and transporters;
•current or future litigation, regulatory investigations, proceedings or inquiries;
•reputational damage from negative publicity, protests, fines, penalties and other negative consequences resulting in regulatory and/or legal actions;
•the effect of accounting standards issued periodically by standard-setting bodies;
•the ability to successfully complete tax audits and changes in tax accounting methods with no material impact on earnings and cash flows; and
Alliant Energy, IPL and WPL each assume no obligation, and disclaim any duty, to update the forward-looking statements in this report, except as required by law.
WEBSITE ACCESS TO REPORTS
Alliant Energy, IPL and WPL make their periodic and current reports, and amendments to those reports, available, free of charge, on Alliant Energy’s website at www.alliantenergy.com/investors on the same day as such material is electronically filed with, or furnished to, the SEC. Alliant Energy, IPL and WPL are not including the information contained on Alliant Energy’s website as a part of, or incorporating it by reference into, this report.
PART I
This report includes information relating to Alliant Energy, IPL and WPL (as well as AEF and Corporate Services). Where appropriate, information relating to a specific entity has been segregated and labeled as such. Unless otherwise noted, the information herein excludes discontinued operations for all periods presented. The terms “we,” “our” and “us” used in this report refer collectively to Alliant Energy, IPL and WPL.
ITEM 1. BUSINESS
A. GENERAL
Alliant Energy maintains its principal executive offices in Madison, Wisconsin. Alliant Energy operates as a regulated investor-owned public utility holding company, and its purpose-driven strategy is to serve its customers and build strong communities. Alliant Energy’s primary focus is to provide regulated electric and natural gas service to approximately 985,000 electric and approximately 425,000 natural gas customers in the Midwest through its two public utility subsidiaries, IPL and WPL. The primary first tier wholly-owned subsidiaries of Alliant Energy are as follows:
1) IPL - is a public utility engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Iowa. IPL provides utility services to incorporated communities as directed by the IUB and utilizes non-exclusive franchises, which cover the use of public right-of-ways for utility facilities in incorporated communities for a maximum term of 25 years. At December 31, 2021, IPL supplied electric and natural gas service to approximately 500,000 and 225,000 retail customers, respectively, in Iowa. IPL also sells electricity to wholesale customers in Minnesota, Illinois and Iowa. IPL is also engaged in the generation and distribution of steam for two customers in Cedar Rapids, Iowa.
2) WPL - is a public utility engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Wisconsin. WPL operates in municipalities pursuant to permits of indefinite duration and state statutes authorizing utility operation in areas annexed by a municipality. At December 31, 2021, WPL supplied electric and natural gas service to approximately 485,000 and 200,000 retail customers, respectively. WPL also sells electricity to wholesale customers in Wisconsin.
3) CORPORATE SERVICES - provides administrative services to Alliant Energy, IPL, WPL and AEF.
4) AEF - Alliant Energy’s non-utility holdings are organized under AEF, which manages a portfolio of wholly-owned subsidiaries and additional holdings, including the following distinct platforms:
ATI - currently holds all of Alliant Energy’s interest in ATC Holdings. ATC Holdings is comprised of a 16% ownership interest in ATC and a 20% ownership interest in ATC Holdco LLC. ATC is an independent, for-profit, transmission-only company. ATC Holdco LLC holds Duke-American Transmission Company, LLC, a joint venture between Duke Energy Corporation and ATC, that owns electric transmission infrastructure in North America.
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Corporate Venture Investments - includes various minority ownership interests in regional and national venture funds, including a coalition with different energy companies across the U.S., working together to help identify and research innovative products, technologies and business models within the emerging energy economy.
Non-utility Wind Farm - includes a 50% cash equity ownership interest in a 225 MW non-utility wind farm located in Oklahoma.
Sheboygan Falls Energy Facility - is a 347 MW, simple-cycle, natural gas-fired EGU near Sheboygan Falls, Wisconsin, which is leased to WPL for an initial period of 20 years ending in 2025.
Travero - is a diversified supply chain solutions company, including a short-line rail freight service in Iowa; a Mississippi River barge, rail and truck freight terminal in Illinois; freight brokerage services; and a rail-served warehouse in Iowa, which began operations in 2021.
B. INFORMATION RELATING TO ALLIANT ENERGY ON A CONSOLIDATED BASIS
1) HUMAN CAPITAL MANAGEMENT - Alliant Energy’s core purpose is to serve customers and build strong communities. We constantly strive to attract, retain and develop a diverse and qualified workforce of high-performing employees, and create and foster an environment of inclusion and belonging for all employees.
Employees - At December 31, 2021, Alliant Energy, IPL and WPL had the following full- and part-time employees:
| Total | Number of | Percentage of Employees | |||||||||||||||
| Number of | Bargaining Unit | Covered by Collective | |||||||||||||||
| Employees | Employees | Bargaining Agreements | |||||||||||||||
| Alliant Energy | 3,313 | 1,788 | 54% | ||||||||||||||
| IPL | 1,185 | 822 | 69% | ||||||||||||||
| WPL | 1,033 | 854 | 83% | ||||||||||||||
The majority of IPL’s bargaining unit employees are covered by the International Brotherhood of Electrical Workers Local 204 (Cedar Rapids) collective bargaining agreement, which expires on August 31, 2024. All of WPL’s bargaining unit employees are covered by the International Brotherhood of Electrical Workers Local 965 collective bargaining agreement, which expires on May 31, 2022.
Safety - Safety is integral to our company’s culture. It is one of our Values – “Live safety. Everyone. Always. Our first priority is that nobody gets hurt.” Alliant Energy is committed to providing a safe environment for our employees, visitors, customers, contractors, vendors and the communities in which we live and work.
We focus on the proactive management of our safety performance. Our comprehensive behavioral safety-based program consists of leading indicators, lagging indicators and targeted focus programs. We utilize a formal safety management system to capture and track best practices, near misses, job site briefings, safety observations, safety conversations and any unsafe conditions. This system provides the insights needed to help drive a positive safety culture and help ensure compliance with safety rules, processes and procedures. We also use this system to broadly share lessons learned in support of shaping the mindsets and behaviors needed to help prevent similar events from occurring elsewhere. Collectively, this information is used to evaluate the safety performance of the executive and management teams related to their goals, and safety metrics are factored into short-term incentive awards.
We maintain executive and local safety leadership teams to establish our safety vision, strategy and priorities, and ensure education and recognition of employee actions that improve our safety culture. This leadership provides strong support for sustained growth of both employee and public safety programs and initiatives.
Public safety is equally important as we interact with our customers to provide energy to their homes and businesses. We offer awareness campaigns, natural gas and electric public safety presentations, and free online resources and training programs and guidance to assist local emergency responders.
Refer to “Overview – COVID-19” in MDA for discussion of certain employee safety protocols related to COVID-19.
Total Rewards - Our market-competitive Total Rewards programs are designed to meet the varied and evolving needs of our employees. Through a variety of health, welfare and compensation programs, we offer employees choice and control, while supporting their financial, physical, and mental well-being. Tools and resources are provided to employees to help maintain and improve their health. Short- and long-term incentive plans are designed with a mix of operational and financial metrics that align employees with strategic corporate and social goals.
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In addition to competitive salaries and wages, our Total Rewards programs include:
•competitive short- and long-term incentive compensation;
•a 401(k) savings plan with an employer match;
•healthcare and insurance benefits, including medical, vision, dental, life, short-term disability, and long-term disability insurance;
•health savings and flexible spending accounts;
•paid time off to use for vacation, personal time, sick time, holidays, bereavement, jury duty, military leave, parental leave, maternity leave, and adoption leave;
•adoption assistance;
•legal planning assistance;
•Employee Assistance program;
•tuition reimbursement;
•Vacation Donation program; and
•Volunteer Grants & Matching Gifts program.
Diversity, Equity and Inclusion (DE&I) - A diverse, equitable and inclusive workplace is crucial for the success and retention of our employees, to attract future talent and to execute our purpose-driven strategy to serve our customers and build strong communities. It is one of our Values – “Care for others: Together we create a workplace where people feel like they belong and can use their unique backgrounds, talents and perspectives to their fullest potential.” Alliant Energy is driven by DE&I and believes the achievement of its strategic objectives can only be achieved with a focused and engaged workforce. Alliant Energy’s corporate officers group currently has approximately 40% gender diversity and 27% ethnic diversity.
Our efforts to create a diverse and inclusive workforce include:
•learning opportunities for employees, such as inviting employees to participate in area diversity summits and supporting company-wide listening sessions, speakers and programs;
•Employee Resource Groups that foster a diverse and inclusive workplace that supports employee well-being while promoting professional development and enhancing community relationships; and
•a DE&I Leadership Team that partners with the Human Resources recruiting department and hiring managers to attract more diverse applicants that represent the diversity of the communities we serve.
Our DE&I initiatives also include a focus on building a diverse Board of Directors. We believe it is in our shareowners’ best interest to have a diverse Board representing a wide breadth of experiences and perspectives. Our Board currently has approximately 40% gender diversity and 20% ethnic diversity.
Our 2021 DE&I accomplishments include:
•received a perfect score on the Corporate Equality Index administered by the Human Rights Campaign Foundation to benchmark LGBTQ+ rights, policies and practices;
•selected for the 2021 Bloomberg Gender-Equality Index; and
•held a Day of Understanding where executives met with employees and held conversations around creating a culture of belonging where employees can do the best work of their lives.
Alliant Energy’s short- and long-term incentive compensation plans include diversity metrics to drive leadership accountability for efforts to advance a diverse and inclusive culture.
Talent Development and Workforce Readiness - We support employees in the growth of their careers through several training opportunities and development programs. These include tuition reimbursement, online, instructor-led and on-the-job learning formats, as well as leadership development and succession planning.
In addition, we have an apprenticeship program that combines supervised, structured on-the-job training with related instruction to produce highly skilled trade and technical workers. Our program builds lifetime skills and comprehensive knowledge in the high-demand technical trades necessary for our success. The program gives us the flexibility to tailor training to match our needs – training employees in our facilities, on our equipment, and consistent with our safety standards and employee expectations. We instill company Values, methods and procedures from day one.
2) REGULATION - Alliant Energy, IPL and WPL are subject to regulation by various federal, state and local agencies. The following includes the primary regulations impacting Alliant Energy’s, IPL’s and WPL’s businesses.
FERC -
Public Utility Holding Company Act of 2005 - Alliant Energy is registered with FERC as a public utility holding company, pursuant to the Public Utility Holding Company Act of 2005, and is required to maintain certain records and to report certain transactions involving its public utilities, service company and other entities regulated by FERC. Corporate Services, IPL and WPL are subject to regulation by FERC under the Public Utility Holding Company Act of 2005 for various matters including, but not limited to, affiliate transactions, public utility mergers, acquisitions and dispositions, and books, records and accounting requirements.
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Energy Policy Act of 2005 - The Energy Policy Act of 2005 requires creation of an Electric Reliability Organization to provide oversight by FERC. FERC designated North American Electric Reliability Corporation as the overarching Electric Reliability Organization. Midwest Reliability Organization, which is a regional member of North American Electric Reliability Corporation, has direct responsibility for mandatory electric reliability standards for IPL and WPL.
Federal Power Act of 1935 - FERC also has jurisdiction, under the Federal Power Act of 1935, over certain electric utility facilities and operations, electric wholesale sales, interstate electric transmission rates, dividend payments, issuance of IPL’s securities, and accounting practices of Corporate Services, IPL and WPL.
Electric Wholesale Rates - FERC has authority over IPL's and WPL's wholesale electric market-based rates. Market-based rate authorization allows for wholesale sales of electricity within FERC’s wholesale markets, including the MISO market, and in transactions directly with third parties, based on the market value of the transactions. IPL and WPL also have FERC-approved cost of service formula-based rates related to the provision of firm full- and partial-requirement wholesale electric sales, which allow for true-ups to actual costs, including fuel costs.
Electric Transmission Rates - FERC regulates the rates charged for electric transmission facilities used in interstate commerce. IPL and WPL do not own or operate FERC-regulated electric transmission facilities; however, both IPL and WPL pay for the use of the interstate electric transmission system based upon FERC-regulated rates. IPL and WPL rely primarily on the use of the ITC and ATC transmission systems, respectively.
Natural Gas Act - FERC regulates the transportation and sale for resale of natural gas in interstate commerce under the Natural Gas Act. Under the Natural Gas Act, FERC has authority over certain natural gas facilities and operations of IPL and WPL.
IUB - IPL is subject to regulation by the IUB for various matters including, but not limited to, retail utility rates and standards of service, accounting requirements, sales of assets with values that exceed 3% of IPL’s revenues, and approval of the location and construction of EGUs.
Retail Utility Base Rates - IPL files periodic requests with the IUB for retail rate changes and may base those requests on either historical or forward-looking test periods. The IUB must decide on requests for retail rate changes within 10 months of the date of the application for which changes are filed. The historical test periods may be adjusted for certain known and measurable changes to capital investments, cost of capital and operating and maintenance expenses consistent with IUB rules and regulations. In June 2021, the IUB adopted new rules that establish minimum filing requirements for rate reviews using a forward-looking test period, and a related subsequent proceeding review after the close of the forward-looking test period. The rules provide that in the subsequent proceeding review, a utility’s actual costs and revenues will be presumed to be reasonably consistent with the forward-looking test period if the utility’s actual return on common equity falls within a standard of reasonableness of 50 basis points above to 50 basis points below the authorized return on common equity. If the utility’s actual return on common equity is outside of this range, future rates could be adjusted.
Energy Efficiency - In accordance with Iowa law, IPL is required to file an EEP every five years with the IUB. An EEP provides a utility’s plan and related budget to achieve specified levels of electric and gas energy savings. IUB approval demonstrates that IPL’s EEP is reasonably expected to achieve cost-effective delivery of the energy efficiency programs. Refer to Note 1(g) for discussion of the recovery of these costs from IPL’s retail electric and gas customers.
Electric Generating Units - IPL must obtain a certificate of public convenience, use and necessity (GCU Certificate) from the IUB in order to construct a new, or significantly alter (including fuel switching) an existing, EGU located in Iowa with 25 MW or more of capacity. IPL’s ownership and operation of EGUs (including those located outside the state of Iowa) to serve Iowa customers is subject to retail utility rate regulation by the IUB.
Gas Pipeline Projects - IPL must obtain a pipeline permit from the IUB related to the siting of utility gas pipelines in Iowa that will be operated at a pressure over 150 pounds per square inch and will transport gas to a distribution system or single, large volume customer.
Advance Rate-making Principles - Iowa law provides Iowa utilities with rate-making principles prior to making certain generation investments in Iowa. As a result, IPL may file for, and the IUB must render a decision on, rate-making principles for certain new EGUs located in Iowa, including any alternative energy production facility (such as a wind or solar facility), combined-cycle natural gas-fired EGU, and certain base-load EGUs with a nameplate generating capacity of 300 MW or more (such as nuclear-fired generation). Advance rate-making principles are also available for the repowering of an alternative energy production facility or certain significant alterations of an existing EGU. Upon approval of rate-making principles by the IUB, IPL must either build the EGU or repower the alternative energy production facility under the approved rate-making principles, or not at all.
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Electric Generating Unit Environmental Controls Projects - IPL is required to submit an updated emissions plan and budget biennially to the IUB setting out a multi-year plan and budget for managing regulated emissions from its coal-fired EGUs in a cost-effective manner. IPL must simultaneously submit this plan and budget to the Iowa Department of Natural Resources for a determination of whether the plan and budget meet state environmental requirements for regulated emissions. The reasonable and prudent costs associated with implementing the approved plan are expected to be included in IPL’s future retail electric rates.
PSCW - WPL is subject to regulation by the PSCW related to its operations in Wisconsin for various matters including, but not limited to, retail utility rates and standards of service, accounting requirements, issuance and use of proceeds of securities, affiliate transactions, approval of the location and construction of EGUs and certain other additions and extensions to facilities. In addition, Alliant Energy is subject to regulation by the PSCW for the type and amount of Alliant Energy’s holdings in non-utility businesses and other affiliated interest activities, among other matters.
Retail Utility Base Rates - WPL files periodic requests with the PSCW for retail rate changes. These filings are required to be based on forward-looking test periods. There is no statutory time limit for the PSCW to decide on retail base rate requests. However, the PSCW attempts to process retail base rate reviews in approximately 10 months and has the ability to approve interim retail rate relief, subject to refund, if necessary. Currently, WPL is required to defer a portion of its earnings if its annual regulatory return on common equity exceeds certain levels. Through 2023, any such deferral is required to be offset against the remaining net book value of Edgewater Unit 5, which is currently expected to be retired by early 2023.
Public Benefits - WPL contributes 1.2% of its annual retail utility revenues to help fund Focus on Energy, Wisconsin’s state-wide energy efficiency and renewable energy resource program. In addition, WPL contributes to a program that provides assistance to income-eligible residents in Wisconsin. These contributions are recovered from customers through a monthly bill surcharge of the lesser of 3% of customers’ utilities bills or $750. Refer to Note 1(g) for discussion of the recovery of these costs from WPL’s retail electric and gas customers.
New Electric Generating Units - A CA application is required to be filed with the PSCW for construction approval of any new EGU with a capacity of less than 100 MW and a project cost of $11.9 million or more. WPL must obtain a CPCN from the PSCW in order to construct a new EGU in Wisconsin with a capacity of 100 MW or more. In addition, WPL’s ownership and operation of EGUs (including those located outside the state of Wisconsin) to serve Wisconsin customers are subject to retail utility rate regulation by the PSCW.
Electric Generating Unit Upgrades and Electric Distribution Projects - A CA application is required to be filed with the PSCW for construction approval of any additions to EGUs, including environmental controls projects, as well as electric distribution projects, with estimated project costs of $11.9 million or more.
Gas Distribution Projects - A CA application is required to be filed with the PSCW for construction approval of gas projects with an estimated project cost of $5 million or more and at any time that WPL requests to extend gas service to a new portion of its service territory.
Advance Rate-making Principles - Wisconsin law provides Wisconsin utilities with the opportunity to request rate-making principles prior to the purchase or construction of any EGU utilized to serve Wisconsin customers. WPL is not obligated to file for or accept authorized rate-making principles under Wisconsin law. WPL can proceed with an approved project under traditional rate-making terms or accept authorized rate-making principles under Wisconsin law.
Environmental - Alliant Energy, IPL and WPL are subject to regulation of environmental matters by federal, state and local authorities as a result of their current and past operations. Alliant Energy, IPL and WPL monitor these environmental matters and address them by installing controls that reduce emissions and by implementing operational modifications or other measures to address compliance obligations. There is currently significant regulatory uncertainty with respect to environmental rules and regulations discussed below. Given the evolving nature of environmental regulations and other related regulatory requirements, Alliant Energy, IPL and WPL develop and periodically update their compliance plans to address these environmental obligations. Prudent expenditures incurred by IPL and WPL to comply with environmental requirements are eligible to be recovered in rates from their customers. The following are major environmental matters that could potentially have a significant impact on financial condition and results of operations.
Climate Change and Greenhouse Gas Regulations - In 2007, the Supreme Court provided direction on the EPA’s authority to regulate GHG and ruled that these emissions are covered by the CAA. In 2009, the EPA issued a ruling that found GHG emissions contribute to climate change, and therefore, threaten public health and welfare, which was the prerequisite for implementing CO2 reduction standards under the CAA. While the EPA’s rules to regulate GHG issued under the authority of the CAA remain subject to further review, growing emphasis on climate change and evolving energy technologies are driving efforts to decarbonize the environment through voluntary emissions reductions. The primary GHG directly emitted from Alliant Energy’s utility operations is CO2 from the combustion of fossil fuels at their larger EGUs.
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Clean Air Act Section 111(d) - In 2015, the EPA issued the Clean Power Plan under Section 111(d) of the CAA to reduce CO2 emissions from existing fossil-fueled EGUs through broad electricity system-wide measures. This was replaced by the Affordable Clean Energy rule in 2019, to reduce CO2 emissions from existing coal-fueled EGUs through heat rate improvements. In 2021, the U.S. Court of Appeals for the District of Columbia Circuit vacated and remanded the Affordable Clean Energy rule to the EPA for reconsideration. The EPA is working on a new set of Section 111(d) emission guidelines for states to implement Best System of Emission Reduction standards for GHG emissions from existing fossil-fueled EGUs, and has stated that it intends to issue a proposed rule in 2022 and a final rule in 2023, although such a timeline cannot be predicted with certainty. In addition, the Supreme Court granted review of appeals regarding the extent of the EPA’s authority under Section 111(d) to regulate GHG emissions, with a decision anticipated by June 2022. Alliant Energy, IPL and WPL are currently unable to predict with certainty the future outcome or impact of these matters.
Clean Air Act Section 111(b) - In 2015, the EPA published final standards under Section 111(b) of the CAA, which establish CO2 emissions limits for certain new fossil-fueled EGUs. Marshalltown and West Riverside are subject to the EPA’s Section 111(b) regulation and have been designed to achieve compliance with these standards. The EPA is reviewing the Section 111(b) standards, and has stated it intends to issue a proposed rule in 2022 and a final rule in 2023, although a timeline cannot be predicted with certainty. Litigation related to Section 111(b) is suspended while the EPA revises its Section 111(b) regulations, and Alliant Energy, IPL and WPL are currently unable to predict with certainty the impact of these standards.
Water Quality -
Effluent Limitation Guidelines - In 2015, the EPA published final effluent limitation guidelines, which required changes to discharge limits for wastewater from certain IPL and WPL steam EGUs. In 2020, revised effluent limitation guidelines (2020 Reconsideration Rule) became effective, which incorporated flexibility to the 2015 rule, including a new subcategory for coal-fired EGUs that will be retired or converted to no longer burn coal before 2028. Compliance for existing steam-electric generating facilities is determined by each facility’s wastewater discharge permit and will generally be required by December 31, 2025. Projects required for compliance are facility-specific. Estimated capital expenditures to comply with the 2020 Reconsideration Rule for 2022 through 2025 are included in the “Other Generation” line in the construction and acquisition expenditures table in “Liquidity and Capital Resources” in MDA. In January 2021, the current Presidential Administration issued an Executive Order requiring the review and possible revision of environmental regulations issued during the prior Administration. As a result, the EPA will undertake a supplemental rule-making to revise the 2020 Reconsideration Rule, and has stated that it intends to issue a proposed rule in 2022. As part of the rule-making process, the EPA is expected to determine whether more stringent limitations and standards are appropriate. The 2020 Reconsideration Rule will remain in effect while the EPA undertakes this new rule-making. Alliant Energy, IPL and WPL are currently unable to predict with certainty the future outcome or impact of the anticipated supplemental rule-making.
Land and Solid Waste -
Coal Combustion Residuals Rule - The CCR Rule, which became effective in 2015, regulates CCR as a non-hazardous waste. IPL and WPL have coal-fired EGUs with coal ash ponds and active CCR landfills that are impacted by this rule. Compliance obligations associated with the CCR Rule may be subject to change due to future EPA CCR Rule updates, on-going litigation related to the CCR Rule, and any actions taken to-date that may be challenged. Alliant Energy, IPL and WPL are currently unable to predict with certainty the impact of these updates.
Renewable Energy Standards - Iowa and Wisconsin have renewable energy standards, which establish the minimum amount of energy IPL and WPL must supply from renewable resources. IPL primarily relies upon renewable energy generated from the wind resources it owns and renewable energy acquired under PPAs to meet these requirements. WPL utilizes its current renewable portfolio, which primarily consists of wind and hydro energy, both owned and acquired under PPAs, to meet these requirements. IPL and WPL currently exceed their respective renewable energy standards requirements.
3) STRATEGY - Refer to “Overview” in MDA for discussion of Alliant Energy’s strategy, which supports its mission to deliver energy solutions and exceptional service that its customers and communities count on - safely, efficiently, reliably and responsibly.
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C. INFORMATION RELATING TO UTILITY OPERATIONS
Alliant Energy’s utility business (IPL and WPL) has three segments: a) electric operations; b) gas operations; and c) other, which includes IPL’s steam operations and the unallocated portions of the utility business. IPL’s and WPL’s electric, gas and other revenues as a percentage of total revenues were as follows:
| IPL | WPL | |||||||
1) ELECTRIC UTILITY OPERATIONS
General - Electric utility operations represent the largest operating segment for Alliant Energy, IPL and WPL. Alliant Energy’s electric utility operations are located in the Midwest with IPL providing retail electric service in Iowa and WPL providing retail and wholesale electric service in Wisconsin. IPL also sells electricity to wholesale customers in Minnesota, Illinois and Iowa. Refer to the “Electric Operating Information” tables for additional details regarding electric utility operations.
Customers - IPL and WPL provide electric utility service to a diversified base of retail customers in several industries, with the largest concentrations in the farming, agriculture, industrial manufacturing, chemical (including ethanol), packaging and food industries. IPL and WPL also sell electricity to wholesale customers, which primarily consist of municipalities and rural electric cooperatives.
Seasonality - Electric sales are seasonal to some extent with the annual peak normally occurring in the summer months due to air conditioning requirements. Electric sales are also impacted to a certain extent in the winter months due to heating requirements.
Competition - Retail electric customers in Iowa and Wisconsin currently do not have the ability to choose their electric supplier, and IPL and WPL have obligations to serve all their retail electric customers. Although electric service in Iowa and Wisconsin is regulated, IPL and WPL still face competition from self-generation by large industrial customers, customer- and third party-owned generation (e.g. solar panels), alternative energy sources, and petitions to municipalize (Iowa) as well as service territory expansions by municipal utilities through annexations (Wisconsin). In addition, the wholesale power market is competitive and IPL and WPL compete against independent power producers, other utilities and MISO market purchases to serve wholesale customers for their electric energy and capacity needs. Alliant Energy’s strategy includes actions to retain current customers and attract new customers into IPL’s and WPL’s service territories in an effort to keep energy rates low for all of their customers. Refer to “Overview” in MDA for discussion of the strategy element focusing on growing customer demand.
Electric Supply - Alliant Energy, IPL and WPL have met, and expect to continue meeting, customer demand of electricity through a mix of electric supply, including owned EGUs, PPAs and additional purchases from wholesale energy markets. Alliant Energy expects its mix of electric supply to change in the next several years with its planned transition away from coal-fired EGUs by incorporating renewable energy such as solar generation, distributed energy resources including community solar and energy storage systems, as well as the actual and potential sale of partial interests in West Riverside to neighboring utilities. Long-term generation plans are intended to meet customer demand, reduce air emissions and water impacts, reduce reliance on wholesale market purchases and mitigate the impacts of future EGU retirements while maintaining compliance with long-term electric demand planning reserve margins, renewable energy standards established by regulators and other various requirements.
Electric Demand Planning Reserve Margin - IPL and WPL are required to maintain a planning reserve margin above their load at the time of the MISO-wide peak to ensure reliability of electric service to their customers. The required installed capacity reserve margin is 17.9% and the required unforced capacity reserve margin is 8.7% for the June 1, 2022 through May 31, 2023 MISO planning year. IPL and WPL utilize accredited capacity from EGUs they own, and have rights to through PPAs, to meet a substantial portion of their current MISO planning reserve margin requirements and periodically rely on short-term market capacity purchases to supplement the accredited capacity from such EGUs.
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Generation Fuel Supply - IPL and WPL own a portfolio of EGUs located in Iowa, Wisconsin and Minnesota with a diversified fuel mix that includes natural gas, renewable resources and coal. Refer to “Properties” in Item 2 for details of IPL’s and WPL’s EGUs. The average cost of delivered fuel per million British Thermal Units used for electric generation was as follows:
| IPL | WPL | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | ||||||||||||||||||||||||||||||
| All fuels | $2.10 | $2.22 | $2.17 | $2.62 | $2.36 | $2.55 | |||||||||||||||||||||||||||||
| Natural gas (a) | 2.54 | 2.54 | 2.52 | 3.31 | 2.51 | 2.76 | |||||||||||||||||||||||||||||
| Coal | 1.81 | 1.84 | 1.81 | 2.07 | 2.19 | 2.35 | |||||||||||||||||||||||||||||
(a)The average cost of natural gas includes commodity and transportation costs, as well as realized gains and losses from swap and option contracts used to hedge the price of natural gas volumes expected to be used by IPL’s and WPL’s natural gas-fired EGUs.
Natural Gas - Alliant Energy, IPL and WPL own several natural gas-fired EGUs, and WPL also has exclusive rights to the output of AEF’s Sheboygan Falls Energy Facility under an affiliated lease agreement. These facilities help meet customer demand for electricity when natural gas prices are low enough to make natural gas-fired generation economical compared to other fuel sources. Alliant Energy manages the gas supply to these gas-fired EGUs and helps ensure an adequate supply is available at known prices through a combination of gas commodity, pipeline transportation and storage agreements held by IPL and WPL for numerous years. Alliant Energy, IPL and WPL believe they are reasonably insulated against gas price volatility for these EGUs given their use of forward contracts and hedging practices, as well as their regulatory cost-recovery mechanisms.
Coal - Coal is one of the fuel sources for owned EGUs. Coal contracts entered into with different entities help ensure that a specified supply of coal is available, and delivered, at known prices for IPL’s and WPL’s coal-fired EGUs. Alliant Energy, IPL and WPL believe their coal supply portfolio represents a reasonable balance between the risks of insufficient supplies and those associated with being unable to respond to future coal market changes. Remaining coal requirements are expected to be met from either future term contracts or purchases in the spot market. Currently, all of the coal utilized by IPL and WPL is from the Wyoming Powder River Basin.
Alliant Energy, IPL and WPL believe they are reasonably insulated against coal price volatility given their current coal procurement process, the specific coal market in their primary purchase region and regulatory cost-recovery mechanisms. The coal procurement process supports periodic purchases, staggering of contract terms, stair-stepped levels of supply going forward and supplier diversity. Similarly, given the term lengths of their transportation agreements and strategic alignment of agreement expirations for negotiation purposes, Alliant Energy, IPL and WPL believe they are reasonably insulated against future higher coal transportation rates from the major railroads.
Purchased Power - IPL and WPL periodically enter into PPAs and purchase electricity from wholesale energy markets to meet a portion of their customer demand for electricity.
Electric Transmission - IPL and WPL do not own electric transmission service assets and currently receive transmission services from ITC and ATC, respectively. ITC and ATC are independent, for-profit, transmission-only companies and are transmission-owning members of the MISO Regional Transmission Organization, Midwest Reliability Organization and Reliability First Corporation Regional Entities. The annual transmission service rates that ITC or ATC charges their customers are calculated each calendar year using a FERC-approved cost of service formula rate. As a result, ITC and ATC can implement new rates each calendar year without filing a request with FERC. However, new rates are subject to challenge by either FERC or customers. If the rates proposed by ITC or ATC are determined by FERC to be unjust or unreasonable, or another mechanism is determined by FERC to be just and reasonable, ITC’s or ATC’s rates would change accordingly. Refer to Note 1(g) for discussion of a transmission cost rider utilized by IPL for recovery of its electric transmission service expense, and discussion of WPL’s electric transmission service expense, which is recovered from its retail electric customers through changes in base rates determined during periodic rate proceedings.
MISO Markets - IPL and WPL are members of MISO, a FERC-approved Regional Transmission Organization, which is responsible for monitoring and ensuring equal access to the transmission system in their footprint. IPL and WPL participate in the wholesale energy and ancillary services markets operated by MISO, which are discussed in more detail below. As agent for IPL and WPL, Corporate Services enters into energy, capacity, ancillary services, and transmission sale and purchase transactions within MISO. Corporate Services assigns such sales and purchases between IPL and WPL based on statements received from MISO.
Wholesale Energy Market - IPL and WPL sell and purchase power in the day-ahead and real-time wholesale energy markets operated by MISO. MISO’s bid/offer-based markets compare the cost of IPL and WPL generation against other generators, which affects IPL and WPL generation operations, energy purchases and energy sales. MISO generally dispatches the lowest cost generators, while recognizing current system constraints, to reduce costs for purchasers in the wholesale energy market. In addition, MISO may dispatch generators that support reliability needs, but that would not have operated based on economic needs. In these cases, MISO’s settlement assures that these generators are made whole financially for their variable costs.
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Ancillary Services Market - IPL and WPL also participate in MISO’s ancillary services market, which integrates the procurement and use of regulation and contingency reserves with the existing wholesale energy market to ensure reliability of electricity supply. MISO’s ancillary services market has had the overall impact of lowering ancillary services costs in the MISO footprint.
Financial Transmission Rights and Auction Revenue Rights - In areas of constrained transmission capacity, energy costs could be higher due to congestion and its impact on locational marginal prices. FTRs provide a hedge for certain congestion costs that occur in the MISO energy market. MISO allocates auction revenue rights to IPL and WPL annually based on a fiscal year from June 1 through May 31 and historical use of the transmission system. The allocated auction revenue rights are used by IPL and WPL to acquire FTRs through the FTR auctions operated by MISO.
Resource Adequacy - MISO has resource adequacy requirements to help ensure adequate resources to meet forecasted peak load obligations plus a reserve margin. Only accredited capacity assigned to EGUs is available to meet these requirements. In order for an EGU to receive accredited capacity, it must meet MISO capacity accreditation requirements, which can include satisfying transmission requirements identified in its interconnection agreement prior to the MISO planning year.
In November 2021, MISO issued proposals to change its methodology for procuring capacity in the energy market effective with the 2023/2024 MISO Planning Year, as a result of changes in the overall generation resource mix due to the shift to renewable generation and the retirement of certain fossil-fueled generation. MISO proposes to change the capacity construct from the current Summer-based annual construct to four distinct seasons to help ensure the continued reliability of the electric transmission grid. MISO’s proposal includes establishing planning reserve margin requirements for all market participants on a seasonal basis and determining a seasonal accredited capacity value for certain classes of generating resources. These changes, if implemented, may require IPL and WPL to adjust their current resource plans, and may result in limited accredited capacity for solar generation during the Winter season and higher accredited capacity for wind generation during the non-Summer seasons. IPL and WPL may need to develop and/or acquire additional resources in order to comply with the new methodology, as well as procure capacity in the market until the new resources are placed in service and accredited by MISO. Alliant Energy, IPL and WPL are currently unable to predict with certainty the future outcome or impact of these matters.
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| Electric Operating Information - Alliant Energy | 2021 | 2020 | 2019 | ||||||||||||||
| Revenues (in millions): | |||||||||||||||||
| Residential | $1,115 | $1,093 | $1,092 | ||||||||||||||
| Commercial | 763 | 718 | 770 | ||||||||||||||
| Industrial | 893 | 841 | 889 | ||||||||||||||
| Retail subtotal | 2,771 | 2,652 | 2,751 | ||||||||||||||
| Sales for resale | 243 | 204 | 250 | ||||||||||||||
| Other | 67 | 64 | 63 | ||||||||||||||
| Total | $3,081 | $2,920 | $3,064 | ||||||||||||||
| Sales (000s MWh): | |||||||||||||||||
| Residential | 7,353 | 7,294 | 7,207 | ||||||||||||||
| Commercial | 6,383 | 6,107 | 6,466 | ||||||||||||||
| Industrial | 11,696 | 11,134 | 11,448 | ||||||||||||||
| Retail subtotal | 25,432 | 24,535 | 25,121 | ||||||||||||||
| Sales for resale | 5,805 | 6,046 | 6,594 | ||||||||||||||
| Other | 71 | 71 | 79 | ||||||||||||||
| Total | 31,308 | 30,652 | 31,794 | ||||||||||||||
| Customers (End of Period): | |||||||||||||||||
| Retail | 981,570 | 974,144 | 968,485 | ||||||||||||||
| Other | 2,878 | 2,841 | 2,816 | ||||||||||||||
| Total | 984,448 | 976,985 | 971,301 | ||||||||||||||
| Other Selected Electric Data: | |||||||||||||||||
| Maximum summer peak hour demand (MW) | 5,486 | 5,496 | 5,626 | ||||||||||||||
| Maximum winter peak hour demand (MW) | 4,413 | 4,158 | 4,395 | ||||||||||||||
| Cooling degree days (a): | |||||||||||||||||
| Cedar Rapids, Iowa (IPL) (normal - 802) | 974 | 800 | 805 | ||||||||||||||
| Madison, Wisconsin (WPL) (normal - 687) | 845 | 736 | 657 | ||||||||||||||
| Sources of electric energy (000s MWh): | |||||||||||||||||
| Gas | 10,055 | 10,440 | 11,060 | ||||||||||||||
| Purchased power: | |||||||||||||||||
| Wind (b) | 3,529 | 3,683 | 2,383 | ||||||||||||||
| Nuclear | — | 2,347 | 3,748 | ||||||||||||||
| Other (b) | 2,642 | 2,521 | 3,264 | ||||||||||||||
| Wind (b) | 5,231 | 4,872 | 2,896 | ||||||||||||||
| Coal | 10,218 | 7,021 | 8,643 | ||||||||||||||
| Other (b) | 226 | 254 | 239 | ||||||||||||||
| Total | 31,901 | 31,138 | 32,233 | ||||||||||||||
| Revenue per KWh sold to retail customers (cents) | 10.90 | 10.81 | 10.95 | ||||||||||||||
(a)Cooling degree days are calculated using a simple average of the high and low temperatures each day compared to a 65 degree base. Normal degree days are calculated using a rolling 20-year average of historical cooling degree days. Refer to “Gas Operating Information” below for details of heating degree days.
(b)All or some of the renewable energy attributes associated with generation from these sources may be used in future years to comply with renewable energy standards or other regulatory requirements.
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| Electric Operating Information | IPL | WPL | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | ||||||||||||||||||||||||||||||
| Revenues (in millions): | |||||||||||||||||||||||||||||||||||
| Residential | $620 | $602 | $601 | $495 | $491 | $491 | |||||||||||||||||||||||||||||
| Commercial | 508 | 474 | 510 | 255 | 244 | 260 | |||||||||||||||||||||||||||||
| Industrial | 505 | 488 | 504 | 388 | 353 | 385 | |||||||||||||||||||||||||||||
| Retail subtotal | 1,633 | 1,564 | 1,615 | 1,138 | 1,088 | 1,136 | |||||||||||||||||||||||||||||
| Sales for resale | 74 | 88 | 128 | 169 | 116 | 122 | |||||||||||||||||||||||||||||
| Other | 45 | 43 | 38 | 22 | 21 | 25 | |||||||||||||||||||||||||||||
| Total | $1,752 | $1,695 | $1,781 | $1,329 | $1,225 | $1,283 | |||||||||||||||||||||||||||||
| Sales (000s MWh): | |||||||||||||||||||||||||||||||||||
| Residential | 3,680 | 3,623 | 3,613 | 3,673 | 3,671 | 3,594 | |||||||||||||||||||||||||||||
| Commercial | 4,022 | 3,835 | 4,109 | 2,361 | 2,272 | 2,357 | |||||||||||||||||||||||||||||
| Industrial | 6,581 | 6,372 | 6,420 | 5,115 | 4,762 | 5,028 | |||||||||||||||||||||||||||||
| Retail subtotal | 14,283 | 13,830 | 14,142 | 11,149 | 10,705 | 10,979 | |||||||||||||||||||||||||||||
| Sales for resale | 1,807 | 3,485 | 4,479 | 3,998 | 2,561 | 2,115 | |||||||||||||||||||||||||||||
| Other | 35 | 34 | 36 | 36 | 37 | 43 | |||||||||||||||||||||||||||||
| Total | 16,125 | 17,349 | 18,657 | 15,183 | 13,303 | 13,137 | |||||||||||||||||||||||||||||
| Customers (End of Period): | |||||||||||||||||||||||||||||||||||
| Retail | 496,435 | 494,258 | 492,830 | 485,135 | 479,886 | 475,655 | |||||||||||||||||||||||||||||
| Other | 858 | 856 | 855 | 2,020 | 1,985 | 1,961 | |||||||||||||||||||||||||||||
| Total | 497,293 | 495,114 | 493,685 | 487,155 | 481,871 | 477,616 | |||||||||||||||||||||||||||||
| Other Selected Electric Data: | |||||||||||||||||||||||||||||||||||
| Maximum summer peak hour demand (MW) | 2,892 | 2,951 | 2,944 | 2,680 | 2,609 | 2,682 | |||||||||||||||||||||||||||||
| Maximum winter peak hour demand (MW) | 2,433 | 2,311 | 2,377 | 2,028 | 1,873 | 2,031 | |||||||||||||||||||||||||||||
| Cooling degree days (a): | |||||||||||||||||||||||||||||||||||
| Cedar Rapids, Iowa (IPL) (normal - 802) | 974 | 800 | 805 | N/A | N/A | N/A | |||||||||||||||||||||||||||||
| Madison, Wisconsin (WPL) (normal - 687) | N/A | N/A | N/A | 845 | 736 | 657 | |||||||||||||||||||||||||||||
| Sources of electric energy (000s MWh): | |||||||||||||||||||||||||||||||||||
| Gas | 4,011 | 5,296 | 6,362 | 6,044 | 5,144 | 4,698 | |||||||||||||||||||||||||||||
| Purchased power: | |||||||||||||||||||||||||||||||||||
| Wind (b) | 2,285 | 2,359 | 1,788 | 1,244 | 1,324 | 595 | |||||||||||||||||||||||||||||
| Nuclear | — | 2,347 | 3,748 | N/A | N/A | N/A | |||||||||||||||||||||||||||||
| Other (b) | 1,166 | 391 | 326 | 1,476 | 2,130 | 2,938 | |||||||||||||||||||||||||||||
| Wind (b) | 4,088 | 3,843 | 2,067 | 1,143 | 1,029 | 829 | |||||||||||||||||||||||||||||
| Coal | 4,756 | 3,185 | 4,470 | 5,462 | 3,836 | 4,173 | |||||||||||||||||||||||||||||
| Other (b) | 12 | 12 | 11 | 214 | 242 | 228 | |||||||||||||||||||||||||||||
| Total | 16,318 | 17,433 | 18,772 | 15,583 | 13,705 | 13,461 | |||||||||||||||||||||||||||||
| Revenue per KWh sold to retail customers (cents) | 11.43 | 11.31 | 11.42 | 10.21 | 10.16 | 10.35 | |||||||||||||||||||||||||||||
(a)Cooling degree days are calculated using a simple average of the high and low temperatures each day compared to a 65 degree base. Normal degree days are calculated using a rolling 20-year average of historical cooling degree days. Refer to “Gas Operating Information” below for details of heating degree days.
(b)All or some of the renewable energy attributes associated with generation from these sources may be used in future years to comply with renewable energy standards or other regulatory requirements.
2) GAS UTILITY OPERATIONS
General - Gas utility operations represent the second largest operating segment for Alliant Energy, IPL and WPL. Alliant Energy’s gas utility operations are located in the Midwest with IPL providing gas service in Iowa and WPL providing gas service in Wisconsin. Refer to the “Gas Operating Information” tables for additional details regarding gas utility operations. Refer to Note 1(g) for information relating to utility natural gas cost recovery mechanisms and Note 17(b) for discussion of natural gas commitments.
Customers - IPL and WPL provide gas utility service to a diversified base of retail customers and industries, including research, education, hospitality, manufacturing and chemicals (including ethanol). In addition, IPL and WPL provide transportation service to commercial and industrial customers by moving customer-owned gas through Alliant Energy’s distribution systems to the customers’ meters.
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Seasonality - Gas sales follow a seasonal pattern with an annual base-load of gas and a large heating peak occurring during the winter season. Natural gas obtained from producers, marketers and brokers, as well as gas in storage, is utilized to meet the peak heating season requirements. Storage contracts generally allow IPL and WPL to purchase gas in the summer and inject it into underground storage fields, and remove it from storage fields in the winter to deliver to customers.
Competition - Gas customers in Iowa and Wisconsin currently do not have the ability to choose their gas distributor, and IPL and WPL have obligations to serve all their gas customers. While the gas utility distribution function is expected to remain a regulated function, sales of the natural gas commodity and related services are subject to competition from third-parties who provide alternative fuel sources (e.g. propane). However, when natural gas service is available for a given area, customers in such area have generally selected natural gas over propane as a more cost competitive solution for their fuel needs. Refer to “Customer Investments” in MDA for discussion of plans to expand gas distribution systems.
Gas Supply - IPL and WPL maintain purchase agreements with numerous suppliers of natural gas from various gas producing regions of the U.S. and Canada. In providing gas commodity service to retail customers, Corporate Services administers a diversified portfolio of transportation and storage contracts on behalf of IPL and WPL. The tariffs for IPL’s and WPL’s retail gas customers provide for subsequent adjustments to their rates for the cost of gas sold to these customers. As a result, natural gas prices do not have a material impact on IPL’s or WPL’s gas margins.
Gas Demand Planning Reserve Margin - IPL and WPL are required to maintain adequate pipeline capacity to ensure they meet their customers’ maximum daily system demand requirements. IPL and WPL currently have planning reserve margins of 1% and 7%, respectively, above their forecasted maximum daily system demand requirements from November 2021 through March 2022.
| Gas Operating Information - Alliant Energy | 2021 | 2020 | 2019 | ||||||||||||||
| Revenues (in millions): | |||||||||||||||||
| Residential | $257 | $214 | $259 | ||||||||||||||
| Commercial | 139 | 107 | 133 | ||||||||||||||
| Industrial | 17 | 12 | 16 | ||||||||||||||
| Retail subtotal | 413 | 333 | 408 | ||||||||||||||
| Transportation/other | 43 | 40 | 47 | ||||||||||||||
| Total | $456 | $373 | $455 | ||||||||||||||
| Sales (000s Dths): | |||||||||||||||||
| Residential | 26,795 | 27,809 | 30,791 | ||||||||||||||
| Commercial | 18,516 | 17,996 | 21,611 | ||||||||||||||
| Industrial | 2,868 | 3,003 | 3,448 | ||||||||||||||
| Retail subtotal | 48,179 | 48,808 | 55,850 | ||||||||||||||
| Transportation/other | 99,179 | 102,790 | 97,135 | ||||||||||||||
| Total | 147,358 | 151,598 | 152,985 | ||||||||||||||
| Retail Customers (End of Period) | 422,864 | 419,994 | 417,322 | ||||||||||||||
| Other Selected Gas Data: | |||||||||||||||||
| Heating degree days (a): | |||||||||||||||||
| Cedar Rapids, Iowa (IPL) (normal - 6,705) | 6,539 | 6,625 | 7,262 | ||||||||||||||
| Madison, Wisconsin (WPL) (normal - 6,992) | 6,620 | 6,789 | 7,397 | ||||||||||||||
| Revenue per Dth sold to retail customers | $8.57 | $6.82 | $7.31 | ||||||||||||||
| Purchased gas costs per Dth sold to retail customers | $5.29 | $3.67 | $3.89 | ||||||||||||||
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| Gas Operating Information | IPL | WPL | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2019 | 2021 | 2020 | 2019 | ||||||||||||||||||||||||||||||
| Revenues (in millions): | |||||||||||||||||||||||||||||||||||
| Residential | $146 | $116 | $149 | $111 | $98 | $110 | |||||||||||||||||||||||||||||
| Commercial | 79 | 59 | 75 | 60 | 48 | 58 | |||||||||||||||||||||||||||||
| Industrial | 12 | 8 | 12 | 5 | 4 | 4 | |||||||||||||||||||||||||||||
| Retail subtotal | 237 | 183 | 236 | 176 | 150 | 172 | |||||||||||||||||||||||||||||
| Transportation/other | 28 | 25 | 28 | 15 | 15 | 19 | |||||||||||||||||||||||||||||
| Total | $265 | $208 | $264 | $191 | $165 | $191 | |||||||||||||||||||||||||||||
| Sales (000s Dths): | |||||||||||||||||||||||||||||||||||
| Residential | 13,873 | 14,521 | 16,078 | 12,922 | 13,288 | 14,713 | |||||||||||||||||||||||||||||
| Commercial | 9,065 | 8,925 | 10,906 | 9,451 | 9,071 | 10,705 | |||||||||||||||||||||||||||||
| Industrial | 1,943 | 2,062 | 2,514 | 925 | 941 | 934 | |||||||||||||||||||||||||||||
| Retail subtotal | 24,881 | 25,508 | 29,498 | 23,298 | 23,300 | 26,352 | |||||||||||||||||||||||||||||
| Transportation/other | 40,738 | 39,543 | 38,323 | 58,441 | 63,247 | 58,812 | |||||||||||||||||||||||||||||
| Total | 65,619 | 65,051 | 67,821 | 81,739 | 86,547 | 85,164 | |||||||||||||||||||||||||||||
| Retail Customers (End of Period) | 225,517 | 224,927 | 224,613 | 197,347 | 195,067 | 192,709 | |||||||||||||||||||||||||||||
| Other Selected Gas Data: | |||||||||||||||||||||||||||||||||||
| Maximum daily winter peak demand (Dth) | 269,335 | 253,439 | 303,508 | 221,256 | 189,439 | 229,022 | |||||||||||||||||||||||||||||
| Heating degree days (a): | |||||||||||||||||||||||||||||||||||
| Cedar Rapids, Iowa (IPL) (normal - 6,705) | 6,539 | 6,625 | 7,262 | N/A | N/A | N/A | |||||||||||||||||||||||||||||
| Madison, Wisconsin (WPL) (normal - 6,992) | N/A | N/A | N/A | 6,620 | 6,789 | 7,397 | |||||||||||||||||||||||||||||
| Revenue per Dth sold to retail customers | $9.53 | $7.17 | $8.00 | $7.55 | $6.44 | $6.53 | |||||||||||||||||||||||||||||
| Purchased gas cost per Dth sold to retail customers | $5.96 | $3.87 | $4.06 | $4.58 | $3.45 | $3.70 | |||||||||||||||||||||||||||||
(a)Heating degree days are calculated using a simple average of the high and low temperatures each day compared to a 65 degree base. Normal degree days are calculated using a rolling 20-year average of historical heating degree days.
3) OTHER UTILITY OPERATIONS - STEAM - IPL’s Prairie Creek facility is the primary source of steam for IPL’s two high-pressure steam customers in Iowa. These customers are each under contract through 2025 for taking minimum quantities of annual steam usage, with certain conditions.
ITEM 1A. RISK FACTORS
You should carefully consider each of the risks described below relating to Alliant Energy, IPL and WPL, together with all of the other information contained in this combined report, before making an investment decision with respect to our securities. If any of the following risks develop into actual events, our business, financial condition or results of operations could be materially and adversely affected, and you may lose all or part of your investment.
Risks Related to Business Operations
A cyber attack may disrupt our operations or lead to a loss or misuse of confidential and proprietary information or potential liability - We operate in an industry that requires the continuous use and operation of sophisticated information technology systems and network infrastructure. We face threats from use of malicious code (such as malware, viruses and ransomware), employee theft or misuse, advanced persistent threats, vulnerabilities such as the log4j vulnerability, fraud attempts, and phishing attacks. More of our workforce is working remotely due to the novel coronavirus (COVID-19) pandemic, which has increased the number of devices connected to the internet that impact our operations and therefore increase our cyber security risk. Incidents of ransomware attacks have been increasing in frequency and magnitude, including the ransomware attack that resulted in the operator of the Colonial Pipeline paying millions of dollars in ransom to hackers as a result of a cyber attack disabling the pipeline for several days in May 2021. Cyber attacks targeting electronic control systems used at our generating facilities and for electric and gas distribution systems could result in a full or partial disruption of our electric and/or gas operations. We have relied on a global supply chain for certain components of our operating and technology systems, which may increase our exposure to cyber attacks. Any disruption of these operations could result in a loss of service to customers and a significant decrease in revenues, as well as significant expense to repair system damage and remedy security breaches. Due to the evolving nature of cyber attacks and cyber security, our current safeguards to protect our operating systems and information technology assets may not always be effective. We rely on third parties for software to protect against cyber attacks and we are at risk if such third parties are targets of cyber attacks. If the technology systems were to fail or be breached by a cyber attack or a computer virus, and not be recovered in a timely fashion, we may be unable to fulfill critical business functions and confidential data could be compromised, adversely impacting our financial condition and results of operation.
In addition, we may collect and retain sensitive information, including personal information about our customers, shareowners and employees. In some cases, we outsource administration of certain functions to vendors that could be targets of cyber attacks. For example, we outsource administration of our employee health insurance to Anthem, which was the target of a
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cyber attack in 2014. Any theft, loss and/or fraudulent use of customer, shareowner, employee or proprietary data as a result of a cyber attack could subject us to significant litigation, liability and costs, as well as adversely impact our reputation with customers and regulators, among others.
Demand for energy may decrease - Our results of operations are affected by the demand for energy in our service territories. Energy demand may decrease due to many things, including proliferation of customer and third party-owned generation, technological advances that reduce the costs of renewable energy and storage solutions for our customers, loss of service territory or franchises, energy efficiency measures, technological advances that improve energy efficiency, third-party disrupters, loss of wholesale customers, the adverse impact of tariffs on our customers, and economic conditions. The loss of sales due to lower demand for energy may increase our rates for remaining customers, as our rates must cover our fixed costs. Increased customer rates may cause decreased demand for energy as customers move to customer and third party-owned generation and implement energy efficiency measures to reduce costs. The loss of customers, the inability to replace those customers with new customers, and the decrease in demand for energy could negatively impact our financial condition and results of operations.
Our strategy includes large construction projects, which are subject to risks - Our strategy includes constructing renewable generating facilities and large-scale additions and upgrades to our electric and gas distribution systems. These construction projects are subject to various risks. These risks include: the inability to obtain necessary regulatory approvals and permits in a timely manner; adverse interpretation or enforcement of permit conditions; changes in applicable laws or regulations; changes in costs of materials, equipment, commodities, fuel or labor including due to tariffs, labor issues, or supply shortages; delays caused by construction accidents or injuries; shortages in materials, equipment, inflation and qualified labor; changes to the scope or timing of the projects; general contractors, subcontractors, or equipment not performing as required under their contracts; the inability to agree to contract terms or disputes in contract terms; the inability to successfully resolve warranty claims; poor initial cost estimates; work stoppages; adverse weather conditions; government actions; legal action; unforeseen engineering or technology issues; limited access to capital or other proposed financing arrangements such as tax equity financing; and other adverse economic conditions. We may not be able to recover all costs for the projects in rates and face increased risk of potential impairment of our project investment if a construction project is not completed or is delayed, or final costs exceed expectations or the costs approved by our regulators. Inability to recover costs, or inability to complete projects in a timely manner, could adversely impact our financial condition and results of operations.
Our utility business is seasonal and may be adversely affected by the impacts of weather - Electric and gas utility businesses are seasonal businesses. Demand for electricity is greater in the summer months associated with higher air conditioning needs and winter months associated with higher heating needs. Demand for natural gas depends significantly upon temperature patterns in winter months due to heavy use in residential and commercial heating. As a result, our overall operating results in the future may fluctuate substantially on a seasonal basis. In addition, we have historically generated less revenues and income when temperatures are warmer in the winter and/or cooler in the summer. Thus, mild winters and/or summers could have an adverse impact on our financial condition and results of operations.
We face risks associated with operating electric and natural gas infrastructure - The operation of electric generation and distribution infrastructure involves many risks, including start-up risks, breakdown or failure of equipment, fires developing from our power lines, transformers or substations, dam failure at one of our hydroelectric facilities, the dependence on a specific fuel source, including the supply and transportation of fuel, the risk of performance below expected or contracted levels of output or efficiency, public and employee safety, operator error and ruptured oil and chemical tanks. The operation of our natural gas transmission and distribution infrastructure also involves many risks, such as leaks, explosions, mechanical problems, members of the public and contractors coming into contact with our infrastructure, and employee and public safety. In addition, the North American electric transmission grid is highly interconnected and, in extraordinary circumstances, disruptions at particular points within the grid could cause an extensive power outage in our service territories. Increased utilization of customer- and third party-owned generation technologies could also disrupt the reliability and balance of the electricity grid. Further, the electric transmission system in our utilities’ service territories can experience constraints, limiting the ability to transmit electricity within our service territories. The transmission constraints could result in an inability to deliver electricity from generating facilities, particularly wind generating facilities, to the national grid, or to access lower cost sources of electricity.
These risks could cause significant harm to employees, customers and the public including loss of human life, significant damage to property, adverse impacts on the environment and impairment of our operations, all of which could result in substantial financial losses to us. We are also responsible for compliance with new and changing regulatory standards involving safety, reliability and environmental compliance, including regulations under the Pipeline and Hazardous Materials Safety Administration, the Occupational Health and Safety Administration, the North American Electric Reliability Corporation and Transportation Security Authority. Failure to meet these regulatory standards could result in substantial fines. Lastly, we have obligations to provide electric and natural gas service to customers under regulatory requirements and contractual commitments. Failure to meet our service obligations could adversely impact our financial condition and results of operations.
Storms or other natural disasters may impact our operations in unpredictable ways - Storms and other natural disasters, including events such as floods, tornadoes, windstorms like the 2020 derecho in Iowa, blizzards, ice storms, extreme hot temperatures, extreme cold temperatures, fires, solar flares or pandemics may adversely impact our ability to generate,
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purchase or distribute electric energy and gas or obtain fuel or other critical supplies. In addition, we could incur large costs to repair damage to our generating facilities and electric and gas infrastructure, or costs related to environmental remediation, due to storms or other natural disasters. The restoration costs may not be fully covered by insurance policies and may not be fully recovered in rates, or recovery in rates may be delayed. Storms and natural disasters may impact our customers and the resulting reduced demand for energy could cause lower sales and revenues, which may not be replaced or recovered in rates, or rate recovery may be delayed. Any of these items could adversely impact our financial condition and results of operations.
The COVID-19 pandemic and the spread of variant strains could adversely affect our business functions, financial condition, results of operations and cash flows - The ongoing COVID-19 pandemic and the spread of variant strains has resulted in widespread impacts on the economy, including disruptions to supply chains, and reduced labor availability and productivity. The COVID-19 pandemic has impacted, and may continue to impact, the economic conditions in our service territories, which may adversely impact our sales and our customers’ abilities to pay their bills. Travel and transportation restrictions and closures of commercial spaces and industrial facilities have been imposed in and across the U.S., including in the service territories in which we operate. Governmental and regulatory responses to COVID-19 have included suspending service disconnects, which may increase customer account arrears, possibly increasing our allowance for expected credit losses and decreasing our cash flows.
Closures of commercial spaces and industrial facilities, stay-at-home trends, work-from-home trends, and business disruptions have impacted sales volumes. These trends may result in a reduction in demand for electricity and natural gas from retail customers. Negative impacts on the economy resulting from the continued pandemic could adversely impact the market value of the assets that fund our pension plans, which could necessitate accelerated funding of the plans to meet minimum federal government requirements. The negative impacts on the economy, labor markets, and supply chains could also adversely impact the ability of counterparties to meet contractual payment obligations, including guarantees, or deliver contracted commodities and other goods or services at the contracted price, which could increase company expenses. Our access to the capital markets could be adversely affected by COVID-19, which could cause us to need alternative sources of funding for our operations and for working capital, any of which could increase our cost of capital.
Travel bans and restrictions, quarantines, and vaccine mandates have caused, and may continue to cause, disruptions in supply chains or access to labor that may adversely impact our planned construction projects, our ability to satisfy compliance requirements, or our operations, including our ability to maintain reliable electric and gas service. This may cause us to miss milestones on construction projects and experience operational delays, which, in the case of renewable energy projects, could delay our completion of such projects past the in-service dates required to qualify for the maximum general renewable tax credits for investments in such renewable energy projects. We have modified certain business practices to be consistent with government restrictions and best practices encouraged by government and regulatory authorities and developed risk mitigation plans for critical items and services required to continue our operations. The effects of these government restrictions could adversely impact implementation of our regulatory plans and our operations. If our workforce contracts COVID-19, it could negatively impact our operations, including our ability to maintain reliable electric and gas service.
The degree to which COVID-19 and the spread of the variant strains may impact our business operations, financial condition and results of operations is unknown at this time and will depend on future developments, including the continued spread of COVID-19 and its variants, the severity of the disease, the duration of the pandemic, possible resurgence of the disease at a later date, emergence of variants, speed, efficacy and adoption rates of vaccines, and further actions that may be taken by governmental and regulatory authorities.
Threats of terrorism and catastrophic events that could result from terrorism may impact our operations in unpredictable ways - We are subject to direct and indirect effects of terrorist threats and activities. Generation, transmission and distribution facilities, in general, have been identified as potential targets of physical or cyber attacks. Physical attacks on transmission and distribution facilities that appeared to be terrorist-style attacks have occurred. Our gas distribution system could also be the target of terrorist threats and activities. The risks posed by such attacks could include, among other things, the inability to generate, purchase or distribute electric energy or obtain fuel sources, the increased cost of security and insurance, the disruption of, volatility in, or other effects on capital markets, and a decline in the economy and/or energy usage within our service territories, all of which could adversely impact our financial condition and results of operations. In addition, the cost of repairing damage to our facilities and infrastructure caused by acts of terrorism, and the loss of revenue if such events prevent us from providing utility service to our customers, could adversely impact our financial condition and results of operations.
We may not be able to fully recover costs related to commodity prices - We have natural gas and coal supply and transportation contracts in place for some of the natural gas and coal we require to generate electricity. We also have transportation and supply agreements in place to facilitate delivery of natural gas to our customers. Our counterparties to these contracts may not fulfill their obligations to provide natural gas or coal to us due to financial or operational problems caused by natural disasters, severe weather, economic conditions, pandemics, physical attacks or cyber attacks. If we were unable to obtain enough natural gas or coal for our electric generating facilities under our existing contracts, or to obtain electricity under existing or future purchased power agreements, we could be required to purchase natural gas or coal at higher prices or forced to purchase electricity from higher-cost generating resources in the Midcontinent Independent System Operator, Inc. (MISO) energy market. We may be obligated to pay for coal deliveries under our contracts even if our coal-fired
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generating facilities do not operate enough to fully utilize the amounts of coal covered by the contracts. If, for natural gas delivery to our customers, we were unable to obtain our natural gas supply requirements under existing or future natural gas supply and transportation contracts, we could be required to purchase natural gas at higher prices from other sources. Natural gas market prices have been volatile in the past and could be volatile in the future due to additional future regulations, increased demand including due to increased liquified natural gas demand from foreign countries, periods of extremely cold temperatures or disruption in supply caused by major storms or pipeline explosions. We may not be able to pass on all of the changes in costs to our customers, especially at WPL where we do not have an automatic retail electric fuel cost adjustment clause to timely recover such costs and where electric fuel cost recovery may be limited if WPL earns in excess of its authorized return on common equity. Increases in prices and costs due to disruptions that are not recovered in rates fully, in a timely manner, may adversely impact our financial condition and results of operations.
Energy industry changes could have a negative effect on our businesses - We operate in a highly regulated business environment. The advent of new and unregulated markets has the potential to significantly impact our financial condition and results of operations. Further, competitors may not be subject to the same operating, regulatory and financial requirements that we are, potentially causing a substantial competitive disadvantage for us. Changes in public policy that could be the result of a new Presidential Administration, such as new tax incentives that we cannot take advantage of or efforts to deregulate the utility industry, could provide an advantage to competitors. Changes in technology could also alter the channels through which electric customers buy or utilize power, which could reduce the revenues or increase the expenses of our utility companies. Increased competition in our primary retail electric service territories may have an adverse impact on our financial condition and results of operations.
We face risks related to non-utility operations - We rely on our non-utility operations for a portion of our earnings. If our non-utility holdings do not perform at expected levels, we could experience an adverse impact on our financial condition and results of operations.
Risks Related to Laws and Regulations
Our utility business is significantly impacted by government legislation, regulation and oversight - Our utility financial condition is influenced by how regulatory authorities, including the IUB, the PSCW and FERC, establish the rates we can charge our customers, our authorized rates of return and common equity levels, and the costs that may be recovered from customers. Our ability to timely obtain rate adjustments to earn authorized rates of return depends upon timely regulatory action under applicable statutes and regulations, and cannot be guaranteed. In future rate reviews, IPL and WPL may not receive an adequate amount of rate relief to recover all costs and earn their authorized rates of return, rates may be reduced, rate refunds may be required, rate adjustments may not be approved on a timely basis, costs may not be otherwise recovered through rates, future rates may be temporarily frozen, certain rate base items may not receive a full weighted average cost of capital, and authorized rates of return on capital may be reduced. As a result, we may experience adverse impacts on our financial condition and results of operations.
In addition, our operations are subject to extensive regulation primarily by the IUB, the PSCW and FERC. We are also subject to oversight and monitoring by organizations such as the North American Electric Reliability Corporation, the Midwest Reliability Organization, the Pipeline and Hazardous Materials Safety Administration, MISO and the Transportation Security Administration. The impacts on our operations include: our ability to site and construct new generating facilities, such as renewable energy projects, and recover associated costs, including our ability to continue to use a renewable energy rider in Iowa; our ability to decommission generating facilities and recover related costs and the remaining carrying value of these facilities and related assets; possible changes to MISO’s methodology establishing capacity planning reserve margin requirements that may impact how and when new generating facilities such as IPL’s and WPL’s additional solar and wind generation may be accredited with energy capacity and may require IPL and WPL to adjust their current resource plans, the need to add additional resources to comply with MISO’s proposal, or procure capacity in the market whereby such costs might not be recovered in rates; the impact of the lack of availability of existing and new generating facilities has on our accredited capacity for such facilities pursuant to MISO’s methodology for establishing capacity planning reserve margin requirements; the rates paid to transmission operators and how those costs are recovered from customers, including our ability to continue to use a transmission rider in Iowa; our ability to site, construct and recover costs for new natural gas pipelines; our ability to recover costs to upgrade our electric and gas distribution systems; the amount of certain sources of energy we must use, such as renewable sources; our ability to purchase generating facilities and recover the costs associated therewith; our ability to sell utility assets and any conditions placed upon the sale of such assets; our ability to enter into purchased power agreements and recover the costs associated therewith; the allocation of expenditures by transmission companies on transmission network upgrades and our ability to recover costs associated therewith; reliability; safety; the issuance of securities and ability to use other financing arrangements, such as tax equity financing to finance renewable energy projects; accounting matters; and transactions between affiliates. These regulatory authorities and organizations are also empowered to impose financial penalties and other sanctions, including requirements to implement new compliance programs. Failure to obtain approvals for any of these matters in a timely manner, or receipt of approvals with uneconomical conditions, may cause us not to pursue the construction of such projects or to record an impairment of our assets and may have a material adverse impact on our financial condition and results of operations. Changes to these regulations could materially increase our costs or cause us to reconsider our strategy, which could have a material adverse impact on our financial condition and results of operations.
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Provisions of the Wisconsin Utility Holding Company Act may limit our ability to invest in or grow our non-utility activities and may deter potential purchasers who might be willing to pay a premium for our stock.
Changes to certain tax elections, tax regulations and future taxable income could negatively impact our financial condition and results of operations - We have significantly reduced our federal and state income tax obligations through tax planning strategies and the utilization of bonus depreciation deductions for certain expenditures for property. These tax planning strategies and bonus depreciation deductions have generated large taxable losses and tax credits that have resulted in significant federal and state net operating losses and tax credit carryforwards. We plan to utilize substantially all of these net operating losses and tax credit carryforwards in the future to reduce our income tax obligations. If we cannot generate enough taxable income in the future to utilize all of the net operating losses and tax credit carryforwards before they expire due to lower than expected financial performance or changes to tax regulations, we may incur material charges to earnings. In addition, our tax liability is determined by our taxable income multiplied by the current tax rates in effect. If the tax rates are increased or a minimum corporate income tax is implemented, as has been proposed by the current Presidential Administration, we may experience adverse impacts to our financial condition and results of operations.
Our utility business currently operates wind generating facilities, which generate production tax credits for us to use to reduce our federal tax obligations. The amount of production tax credits we earn is dependent on the date the qualifying generating facilities are placed in service, the level of electricity output generated by our qualifying generating facilities and the applicable tax credit rate. If there is a disagreement on the in-service date, the amount of production tax credits that we can generate may be significantly reduced. A variety of operating and economic parameters, including transmission constraints, the imbalance of supply and demand of wind energy resulting in unfavorable pricing for wind energy, adverse weather conditions and breakdown or failure of equipment, could significantly reduce the production tax credits generated by our wind farms resulting in a material adverse impact on our financial condition and results of operations. Our strategic plan includes developing solar generating facilities, which are expected to generate investment tax credits. Investment tax credits are dependent on the date the qualifying generating facilities begin and end construction and the costs of the qualifying generating facilities. If there is a disagreement on the dates construction began and ended or the qualifying costs, the amount of investment tax credits awarded may be significantly reduced, possibly adversely impacting our financial condition and results of operations.
Our utility businesses are subject to numerous environmental laws and regulations - Our utilities are subject to numerous federal, regional, state and local environmental laws, regulations, court orders, and international treaties. These laws, regulations and court orders generally concern emissions into the air, discharges into water, use of water, wetlands preservation, remediation of contamination, waste disposal and containment, disposal of coal combustion residuals, hazardous waste disposal, threatened and endangered species, and noise regulation, among others. Failure to comply with such laws, regulations and court orders, or to obtain or comply with any necessary environmental permits pursuant to such laws and regulations, could result in injunctions, fines or other sanctions. Environmental laws and regulations affecting power generation and electric and gas distribution are complex and subject to continued uncertainty and could be changed by the current Presidential Administration. These laws and regulations have imposed, and proposed laws and regulations could impose in the future, additional costs on our utility operations. We have incurred, and will continue to incur, capital and other expenditures to comply with these and other environmental laws and regulations. Changes in or new development of environmental restrictions may force us to incur significant expenses or expenses that may exceed our estimates. There can be no assurance that we would be able to recover all or any increased environmental costs from our customers. Failure to comply with the laws, regulations and court orders, changes in the laws and regulations and failure to recover costs of compliance may adversely impact our financial condition and results of operations.
Actions related to global climate change and reducing greenhouse gas (GHG) emissions could negatively impact us - Regulators, customers and investors continue to raise concerns about climate change and GHG emissions. National regulatory action and international regulatory actions continue to evolve. We are focused on executing a long-term strategy to deliver reliable and affordable energy with lower carbon dioxide (CO2) emissions independent of changing policies and political landscape. However, it is unclear how these climate change concerns will ultimately impact us. We could incur costs or other obligations to comply with future GHG regulations, and could become the target of legal claims or challenges, because generating electricity using fossil fuels emits CO2 and other GHGs. Further, investors may determine that we are too reliant on fossil fuels, reducing demand for our stock, which may cause our stock price to decrease, or not buy our debt securities, which may cause our cost of capital to increase. We could face additional pressures from customers, investors or other stakeholders to more rapidly reduce CO2 emissions on a voluntary-basis, including faster adoption of lower CO2 emitting technologies and management of excess renewable energy credits. The timing and pace to fully achieve decarbonization is also contingent on the future development of technologies to reliably store and manage electricity, as well as electrification of other economic sectors. The EPA’s approach and timing for implementing rules to regulate CO2 emissions at fossil-fuel fired electric generating units remains undecided and subject to litigation and could change in the current Presidential Administration. Various legislative and regulatory proposals to address climate change at the national, state and local levels continue to be introduced. Potential future requirements to reduce CO2, methane and other GHGs from the energy and manufacturing sectors could affect our operations in various ways. Regulation or legislation mandating CO2 emissions reductions or other clean energy standards affecting utility companies could materially increase costs, causing some electric generating units to be uneconomical to operate or maintain. We are vulnerable to potential risks associated with transition to a lower-carbon economy that may extend to our supply chain and natural gas operations. Regulation of oil and gas production
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could affect our upstream supply of natural gas for electricity generation and to provide directly to our residential and business customers from our local distribution company. This could result in rapid increased demand for alternative non-fossil energy sources and economy-wide electrification. Changes to regional and local climate trends such as the frequency, seasonality, and severity of weather conditions could directly and indirectly impact our company. Acute and chronic physical risks could disrupt our operations or affect our property. Furthermore, it could affect the timing of peak demand and overall energy consumption of our customers. We cannot provide any assurance regarding the potential impacts of climate change or related policies and regulations to reduce GHG emissions on our operations and these could have a material adverse impact on our financial condition and results of operations.
Risks Related to Economic, Financial and Labor Market Conditions
We are subject to employee workforce factors that could affect our businesses - We operate in an industry that requires specialized technical skills. Further, we must build a workforce that is innovative, customer-focused and competitive to thrive in the future in order to successfully implement our strategy. It may be difficult to hire and retain such a skilled workforce due to labor market conditions, such as low unemployment rates in our service territories, the length of time employees need to acquire the skills, and general competition for talent. We are also subject to collective bargaining agreements covering approximately 1,800 employees. Any work stoppage experienced in connection with negotiations of collective bargaining agreements could adversely affect our financial condition and results of operations as well as our ability to implement our strategy.
We are subject to limitations on our ability to pay dividends - Alliant Energy is a holding company with no significant operations of its own. The primary sources of funds for Alliant Energy to pay dividends to its shareowners are dividends and distributions from its subsidiaries, primarily its utility subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts to Alliant Energy, whether by dividends, distributions, loans or other payments. The ability of our subsidiaries to pay dividends or make distributions to Alliant Energy and, accordingly, our ability to pay dividends on Alliant Energy common stock will depend on regulatory limitations, earnings, cash flows, capital requirements and general financial condition of our subsidiaries. Our utilities have dividend payment restrictions based on the terms of regulatory limitations applicable to them. If we do not receive adequate dividends and distributions from our subsidiaries, then we may not be able to make, or may have to reduce, dividend payments on Alliant Energy common stock.
We may incur material post-closing adjustments related to past asset and business divestitures - We have sold certain non-utility subsidiaries such as Whiting Petroleum Corporation (Whiting Petroleum). We may continue to incur liabilities relating to our previous ownership of, or the transactions pursuant to which we disposed of, these subsidiaries and assets. Any potential liability depends on a number of factors outside of our control, including the financial condition of Whiting Petroleum, certain of its partners, and/or their assignees. Any required payments on retained liabilities, guarantees or indemnification obligations with respect to Whiting Petroleum or other past and future asset or business divestitures could adversely impact our financial condition and results of operations.
We are dependent on the capital markets and could be negatively impacted by disruptions in the capital markets - Successful implementation of our strategy is dependent upon our ability to access the capital markets. We have forecasted capital expenditures of approximately $7 billion over the next four years. Disruption, uncertainty or volatility in the capital markets could increase our cost of capital or limit our ability to raise funds needed to operate our businesses. Disruptions could be caused by Federal Reserve policies and actions, currency concerns, inflation, economic downturn or uncertainty, monetary policies, a negative view of the utility industry or our company, failures of financial institutions, U.S. debt management concerns, U.S. debt limit and budget debates, including government shutdowns, European and worldwide sovereign debt concerns, other global or geopolitical events, or other factors. Increases in interest rates may cause the price of our equity securities to decline. Any disruptions in capital markets could adversely impact our ability to implement our strategy.
We rely on our strong credit ratings to access the credit markets. If our credit ratings are downgraded for any reason, such as worsening credit metric impacts, negative changes to our regulatory environment, or general negative outlook for the utility industry, we could pay higher interest rates in future financings, the pool of potential lenders could be reduced, borrowing costs under existing credit facilities could increase, our access to the commercial paper market could be limited, or we could be required to provide additional credit assurance, including cash collateral, to contract counterparties. If our access to capital were to become significantly constrained or costs of capital increased significantly due to lowered credit ratings, prevailing industry conditions, regulatory constraints, volatility of the capital markets, inflation or other factors, our financial condition and results of operations could be adversely affected.
Our pension and other postretirement benefits plans are subject to investment and interest rate risk that could negatively impact our financial condition - We have pension and other postretirement benefits plans that provide benefits to many of our employees and retirees. Costs of providing benefits and related funding requirements of these plans are subject to changes in the liabilities of the plans and market value of the assets that fund the plans. The funded status of the plans and the related costs reflected in our financial statements are affected by various factors, which are subject to an inherent degree of uncertainty, including economic conditions, financial market performance, interest rates, life expectancies and demographics. Recessions and volatility in the domestic and international financial markets have negatively affected the asset values of our pension plans at various times in the past. Poor investment returns or lower interest rates may necessitate
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accelerated funding of the plans to meet minimum federal government requirements, which could have an adverse impact on our financial condition and results of operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
Alliant Energy - As a holding company, Alliant Energy doesn’t directly own any significant properties other than the stock of its subsidiaries. The principal properties of those subsidiaries are as follows:
IPL and WPL
Electric - At December 31, 2021, IPL’s and WPL’s facilities by primary fuel type were as follows:
| IPL | Nameplate | Generating | ||||||||||||||||||
| In-service | Capacity | Capacity | ||||||||||||||||||
| Name of Facility and Location | Dates | in MW | in MW (a) | |||||||||||||||||
| Marshalltown Generating Station (Units 1-3); Marshalltown, IA | 2017 | 706 | 625 | |||||||||||||||||
| Emery Generating Station (Units 1-3); Mason City, IA | 2004 | 603 | 532 | |||||||||||||||||
| Burlington Generating Station (Unit 1); Burlington, IA | 1968 | 212 | 167 | |||||||||||||||||
| Marshalltown Combustion Turbines (Units 1-3); Marshalltown, IA | 1978 | 189 | 144 | |||||||||||||||||
| Prairie Creek Generating Station (Unit 4); Cedar Rapids, IA | 1967 | 149 | 113 | |||||||||||||||||
| Burlington Combustion Turbines (Units 1-4); Burlington, IA | 1994-1996 | 79 | 35 | |||||||||||||||||
| Total Gas | 1,938 | 1,616 | ||||||||||||||||||
| Upland Prairie (121 Units); Clay and Dickinson Cos., IA | 2019 | 299 | 89 | |||||||||||||||||
| Whispering Willow - North (81 Units); Franklin Co., IA | 2020 | 201 | 36 | |||||||||||||||||
| Whispering Willow - East (121 Units); Franklin Co., IA | 2009 | 200 | 28 | |||||||||||||||||
| Golden Plains (82 Units); Winnebago and Kossuth Cos., IA | 2020 | 200 | 33 | |||||||||||||||||
| English Farms (69 Units); Poweshiek Co., IA | 2019 | 172 | 27 | |||||||||||||||||
| Richland (53 Units); Sac Co., IA | 2020 | 131 | 21 | |||||||||||||||||
| Franklin County (60 Units); Franklin Co., IA | 2012 | 99 | 14 | |||||||||||||||||
| Total Wind | 1,302 | 248 | ||||||||||||||||||
| Ottumwa Generating Station (Unit 1); Ottumwa, IA (b) | 1981 | 348 | 315 | |||||||||||||||||
| Lansing Generating Station (Unit 4); Lansing, IA | 1977 | 275 | 206 | |||||||||||||||||
| George Neal Generating Station (Unit 4); Sioux City, IA (c) | 1979 | 179 | 157 | |||||||||||||||||
| George Neal Generating Station (Unit 3); Sioux City, IA (d) | 1975 | 164 | 140 | |||||||||||||||||
| Prairie Creek Generating Station (Units 1 and 3); Cedar Rapids, IA | 1958-1997 | 65 | 29 | |||||||||||||||||
| Louisa Generating Station (Unit 1); Louisa, IA (e) | 1983 | 32 | 28 | |||||||||||||||||
| Total Coal | 1,063 | 875 | ||||||||||||||||||
| Lime Creek Combustion Turbines (Units 1-2); Mason City, IA | 1991 | 90 | 66 | |||||||||||||||||
| Total Oil | 90 | 66 | ||||||||||||||||||
| Dubuque Solar Garden; Dubuque, IA | 2017 | 5 | 2 | |||||||||||||||||
| Marshalltown Solar Garden; Marshalltown, IA | 2020 | 3 | 1 | |||||||||||||||||
| Total Solar | 8 | 3 | ||||||||||||||||||
| Battery Storage; Decorah, Wellman and Marshalltown, IA | 2019-2021 | 4 | — | |||||||||||||||||
| Total Battery Storage | 4 | — | ||||||||||||||||||
| Total capacity | 4,405 | 2,808 | ||||||||||||||||||
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| WPL | Nameplate | Generating | ||||||||||||||||||
| In-service | Capacity | Capacity | ||||||||||||||||||
| Name of Facility and Location | Dates | in MW | in MW (a) | |||||||||||||||||
| Riverside Energy Center (Units 1-3); Beloit, WI | 2004 | 675 | 503 | |||||||||||||||||
| West Riverside Energy Center (Units 1-3); Beloit, WI (f) | 2020 | 658 | 595 | |||||||||||||||||
| Neenah Energy Facility (Units 1-2); Neenah, WI | 2000 | 371 | 294 | |||||||||||||||||
| South Fond du Lac Combustion Turbines (2 Units); Fond du Lac, WI (g) | 1994 | 191 | 161 | |||||||||||||||||
| Total Gas | 1,895 | 1,553 | ||||||||||||||||||
| Bent Tree (122 Units); Freeborn Co., MN | 2010-2011 | 201 | 26 | |||||||||||||||||
| Kossuth (56 Units); Kossuth Co., IA | 2020 | 152 | 25 | |||||||||||||||||
| Cedar Ridge (41 Units); Fond du Lac Co., WI | 2008 | 68 | 8 | |||||||||||||||||
| Forward Wind Energy Center (37 Units); Dodge and Fond du Lac Cos., WI (h) | 2008 | 59 | 7 | |||||||||||||||||
| Total Wind | 480 | 66 | ||||||||||||||||||
| Columbia Energy Center (Units 1-2); Portage, WI (i) | 1975-1978 | 595 | 585 | |||||||||||||||||
| Edgewater Generating Station (Unit 5); Sheboygan, WI | 1985 | 414 | 397 | |||||||||||||||||
| Total Coal | 1,009 | 982 | ||||||||||||||||||
| Prairie du Sac Hydro Plant (8 Units); Prairie due Sac, WI | 1914-1940 | 33 | 12 | |||||||||||||||||
| Kilbourn Hydro Plant (4 Units); Wisconsin Dells, WI | 1926-1939 | 10 | 6 | |||||||||||||||||
| Total Hydro | 43 | 18 | ||||||||||||||||||
| West Riverside Solar Garden, Beloit, WI (j) | 2021 | 4 | — | |||||||||||||||||
| Total Solar | 4 | — | ||||||||||||||||||
| Total capacity | 3,431 | 2,619 | ||||||||||||||||||
(a)Based on the accredited generating capacity of the EGUs as of December 31, 2021 included in MISO’s resource adequacy process for the planning period from June 2021 through May 2022. IPL’s Battery Storage did not receive any accredited generating capacity for the planning period from June 2021 through May 2022. Electricity generated from the West Riverside Solar Garden is used to offset electricity usage at the West Riverside Energy Center and does not receive any accredited generating capacity.
(b)Represents IPL’s 48% ownership interest in this 726 MW (nameplate capacity) / 656 MW (generating capacity) EGU, which is operated by IPL.
(c)Represents IPL’s 25.695% ownership interest in this 696 MW (nameplate capacity) / 610 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(d)Represents IPL’s 28% ownership interest in this 584 MW (nameplate capacity) / 501 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(e)Represents IPL’s 4% ownership interest in this 812 MW (nameplate capacity) / 708 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(f)Represents WPL’s 91% ownership interest in this 723 MW (nameplate capacity) / 654 MW (generating capacity) EGU, which is operated by WPL.
(g)Represents Units 2 and 3, which WPL owns. WPL also operates, but does not own, South Fond du Lac Combustion Turbines Units 1 and 4.
(h)Represents WPL’s 42.64% ownership interest in this 138 MW (nameplate capacity) / 17 MW (generating capacity) EGU, which is operated by Invenergy Services, LLC.
(i)Represents WPL’s 53.5% ownership interest in this 1,112 MW (nameplate capacity) / 1,093 MW (generating capacity) EGU, which is operated by WPL.
(j)Represents WPL’s 91% ownership interest in this 4 MW (nameplate capacity) EGU, which is operated by WPL.
IPL and WPL own overhead electric distribution line, underground electric distribution cable and substation distribution transformers, substantially all of which are located in Iowa for IPL and Wisconsin for WPL.
Gas - IPL’s and WPL’s gas properties consist primarily of mains and services, meters, regulating and gate stations and other related transmission and distribution equipment. IPL’s and WPL’s gas distribution facilities include gas mains located in Iowa and Wisconsin, respectively.
Other - IPL’s other property includes steam service assets. Refer to Note 10 for information regarding WPL’s lease of the Sheboygan Falls Energy Facility from AEF’s Non-utility Generation business.
Corporate Services - Corporate Services’ property included in “Property, plant and equipment, net” on Alliant Energy’s balance sheet at December 31, 2021 consisted primarily of a customer billing and information system for IPL and WPL and other computer software, and the corporate headquarters building located in Madison, Wisconsin.
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AEF - AEF’s principal properties included in “Property, plant and equipment, net” on Alliant Energy’s balance sheet at December 31, 2021 were as follows:
Non-utility Generation - Includes the Sheboygan Falls Energy Facility, a 347 MW, simple-cycle, natural gas-fired facility near Sheboygan Falls, Wisconsin that was placed in service in 2005 and is leased to WPL. The Sheboygan Falls Energy Facility was accredited with 295 MW of generating capacity for MISO’s resource adequacy process for the planning period from June 2021 through May 2022.
Travero - Includes a short-line rail freight service in Iowa; a Mississippi River barge, rail and truck freight terminal in Illinois; freight brokerage services; and a rail-served warehouse in Iowa, which began operations in 2021.
ITEM 3. LEGAL PROCEEDINGS
None. SEC regulations require Alliant Energy, IPL and WPL to disclose information about certain proceedings arising under federal, state or local environmental provisions when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that Alliant Energy, IPL and WPL reasonably believe will exceed a specified threshold. Pursuant to the SEC regulations, Alliant Energy, IPL and WPL use a threshold of $1 million for purposes of determining whether disclosure of any such proceedings is required. Applying this threshold, there are no environmental matters to disclose for this period. Refer to Note 17(c) for discussion of legal and administrative proceedings before various courts and agencies with respect to matters arising in the ordinary course of business.
ITEM 4. MINE SAFETY DISCLOSURES
None.
INFORMATION ABOUT EXECUTIVE OFFICERS
The executive officers of Alliant Energy, IPL and WPL for which information must be included are the same; however, different positions may be held at the various registrants. None of the executive officers for Alliant Energy, IPL or WPL listed below are related to any member of the Board of Directors or nominee for director or any other executive officer. All of the executive officers have no definite terms of office and serve at the pleasure of the Board of Directors. The executive officers of Alliant Energy, IPL and WPL as of the date of this filing are as follows:
| Name | Age as of Filing Date | Registrant | Positions | |||||||||||||||||
| John O. Larsen | 58 | Alliant Energy | Mr. Larsen has served as a director since February 2019, and as Chairman of the Board, President and Chief Executive Officer (CEO) since July 2019. He previously served as President and Chief Operating Officer since January 2019, as President from January 2018 to January 2019, and as Senior Vice President (VP) from February 2014 to January 2018. | |||||||||||||||||
| IPL | Mr. Larsen has served as CEO since January 2019, as a director since February 2019, and as Chairman of the Board since July 2019. He previously served as Senior VP since February 2014. | |||||||||||||||||||
| WPL | Mr. Larsen has served as CEO since January 2019, as a director since February 2019, and as Chairman of the Board since July 2019. He previously served as President since December 2010. | |||||||||||||||||||
| Robert J. Durian | 51 | Alliant Energy, IPL and WPL | Mr. Durian has served as Executive VP and Chief Financial Officer (CFO) since February 2020. He previously served as Senior VP and CFO since February 2019; as Senior VP, CFO and Treasurer from January 2018 to February 2019; and as VP, CFO and Treasurer from December 2016 to January 2018. | |||||||||||||||||
| James H. Gallegos | 61 | Alliant Energy, IPL and WPL | Mr. Gallegos has served as Executive VP, General Counsel and Corporate Secretary since February 2020. He previously served as Senior VP, General Counsel and Corporate Secretary since February 2015. | |||||||||||||||||
| David A. de Leon | 59 | Alliant Energy and IPL | Mr. de Leon has served as Senior VP since January 2019. He previously served as VP since April 2017 and as Director-Generation Construction from February 2014 to April 2017. | |||||||||||||||||
| WPL | Mr. de Leon has served as President since January 2019. He previously served as VP since April 2017 and as Director-Generation Construction from February 2014 to April 2017. | |||||||||||||||||||
| Terry L. Kouba | 63 | Alliant Energy and WPL | Mr. Kouba has served as Senior VP since January 2019. He previously served as VP since February 2014. | |||||||||||||||||
| IPL | Mr. Kouba has served as President since January 2019. He previously served as VP since February 2014. | |||||||||||||||||||
| Benjamin M. Bilitz | 46 | Alliant Energy, IPL and WPL | Mr. Bilitz has served as Chief Accounting Officer and Controller since December 2016. | |||||||||||||||||
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PART II
ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Common Stock Data - Alliant Energy’s common stock trades on the Nasdaq Global Select Market under the symbol “LNT,” and the closing sales price at December 31, 2021 was $61.47.
Shareowners - At December 31, 2021, there were 22,334 holders of record of Alliant Energy’s common stock, including holders through Alliant Energy’s Shareowner Direct Plan. Alliant Energy is the sole common shareowner of all 13,370,788 and 13,236,601 shares of IPL and WPL common stock, respectively, currently outstanding. As a result, there is no established public trading market for the common stock of either IPL or WPL.
Dividends - In November 2021, Alliant Energy announced an increase in its targeted 2022 annual common stock dividend to $1.71 per share, which is equivalent to a quarterly rate of $0.4275 per share, beginning with the February 2022 dividend payment. The timing and amount of future dividends is subject to an approved dividend declaration from Alliant Energy’s Board of Directors, and is dependent upon earnings expectations, capital requirements, and general financial business conditions, among other factors.
Common Stock Repurchases - A summary of Alliant Energy common stock repurchases for the quarter ended December 31, 2021 was as follows:
| Total Number | Average Price | Total Number of Shares | Maximum Number (or Approximate | |||||||||||||||||||||||
| of Shares | Paid Per | Purchased as Part of | Dollar Value) of Shares That May | |||||||||||||||||||||||
| Period | Purchased (a) | Share | Publicly Announced Plan | Yet Be Purchased Under the Plan (a) | ||||||||||||||||||||||
| October 1 to October 31 | 3,833 | $55.96 | — | N/A | ||||||||||||||||||||||
| November 1 to November 30 | 2,800 | 56.28 | — | N/A | ||||||||||||||||||||||
| December 1 to December 31 | 72 | 59.22 | — | N/A | ||||||||||||||||||||||
| 6,705 | 56.13 | — | ||||||||||||||||||||||||
(a)All shares were purchased on the open market and held in a rabbi trust under the DCP. There is no limit on the number of shares of Alliant Energy common stock that may be held under the DCP, which currently does not have an expiration date.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This MDA includes information relating to Alliant Energy, IPL and WPL, as well as AEF and Corporate Services. Where appropriate, information relating to a specific entity has been segregated and labeled as such. The following discussion and analysis should be read in conjunction with the Financial Statements and Notes included in this report. Unless otherwise noted, all “per share” references in MDA refer to earnings per diluted share. In addition, this MDA includes certain financial information for 2021 compared to 2020. Refer to MDA in the combined 2020 Form 10-K for details on certain financial information for 2020 compared to 2019.
OVERVIEW
Strategy and Mission
Alliant Energy’s mission is to deliver affordable energy solutions and exceptional service that its customers and communities count on - safely, efficiently, reliably and responsibly. The mission is supported by a strategy focused on meeting the evolving expectations of customers while providing an attractive return for investors, as well as serving its customers and building strong communities. This strategy includes the following key elements:
Providing affordable energy solutions to customers - Alliant Energy’s strategy focuses on affordable energy solutions that support retention and growth of its existing customers and attract new customers to its service territories.
Key Highlights -
•Alliant Energy’s Clean Energy Blueprints, also known as its cleaner energy strategy, is expected to result in cost savings for its utility customers through the planned transition away from coal-fired EGUs and incorporation of additional renewable energy, renewable tax credits for investments in renewable energy projects, and utilization of renewable project tax equity financing under the current tax regulations.
•WPL maintaining flat base rates in 2021 by utilizing Federal Tax Reform benefits and expected lower fuel costs to offset higher revenue requirements from rate base additions.
•IPL’s renewable energy rider became effective February 26, 2020, which allows for annual adjustments to electric rates charged to IPL’s retail electric customers for actual renewable energy costs incurred to fund IPL’s 1,000 MW of wind EGUs placed in service in 2019 and 2020, and related tax benefits, including production tax credits.
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•Providing $35 million of billing credits to IPL’s retail electric customers beginning in the third quarter of 2020 through June 2021, largely driven by Federal Tax Reform benefits for customers.
•Significant fuel cost reductions achieved in 2021 as a result of expansion of renewable generation and shortening the term of IPL’s DAEC PPA by 5 years.
•Issuance of new long-term debt in 2021 at historically low interest rates for IPL ($300 million of 3.1% senior debentures due 2051) and WPL ($300 million of 1.95% green bonds due 2031).
•Redemption of IPL’s 5.1% cumulative preferred stock in 2021.
•Levelized cost recovery mechanism for the remaining net book value of Edgewater Unit 5, which helps reduce customer costs in 2022 and 2023.
Making customer-focused investments - Alliant Energy’s strategic priorities include making significant customer-focused investments toward cleaner energy and sustainable customer solutions. Alliant Energy’s strategy drives a capital allocation process focused on: 1) transitioning its generation portfolio to meet the growing interest of customers for cleaner sources of energy, 2) upgrading its electric and gas distribution systems to strengthen safety and resiliency, as well as enable distributed energy solutions in its service territories, and 3) enhancing its customers’ experience with evolving technology and greater flexibility.
•Planned development and acquisition of additional renewable energy, including approximately 1,100 MW of solar generation at WPL with in-service dates in 2022 and 2023, approximately 400 MW of solar generation at IPL with in-service dates in 2023 and 2024 and approximately 75 MW of battery storage in 2024 at IPL. In addition, IPL and WPL continue to evaluate additional opportunities to add more renewable generation, including repowering of existing wind farms and additional solar generation and distributed energy resources, including community solar and energy storage systems.
•IPL’s December 2021 completion of the fuel switch of the Burlington Generating Station (212 MW) from coal to natural gas.
Growing customer demand - Alliant Energy’s strategy supports expanding electric and gas usage in its service territories by promoting electrification initiatives and economic development in the communities it serves.
Key Highlights -
•WPL entered into a new wholesale power supply agreement, which was effective January 1, 2021 and brought approximately 55 MW of load to WPL’s electric system in 2021.
•Alliant Energy has various development-ready sites throughout Iowa and Wisconsin, including the 1,300-acre Big Cedar Industrial Center Mega-site in Cedar Rapids, Iowa, and the 730-acre Prairie View Industrial Center Super Park in Ames, Iowa, which are rail-served ready-to-build manufacturing and industrial sites in close proximity to the regional airport and interstate freeways and access IPL’s electric services. The Big Cedar Industrial Center Mega-site also accesses Travero’s rail-served warehouse in Iowa. In addition, the Beaver Dam Commerce Park is a 520-acre ready-to-build manufacturing and industrial site in Beaver Dam, Wisconsin, with access to commercial and freight airports, interstate freeways and WPL’s electric services.
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; however, the degree to which the COVID-19 pandemic may impact such items in the future is currently unknown and will depend on future developments of the pandemic as well as possible additional actions by government and regulatory authorities. Alliant Energy has mitigated the impact of any sales declines from COVID-19 by accelerating planned cost transformation activities. Actual and potential impacts from COVID-19 include, but are not limited to, the following:
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. Alliant Energy’s construction projects are currently progressing as planned with added safety protocols, and while it continues to monitor its supply chain, Alliant Energy has experienced supply constraints and commodity inflation in the solar market. Alliant Energy’s wind farms under construction during the pandemic were placed in service in 2020 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.
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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 and supply chain impacts but 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, especially early on in the pandemic. While the total expected impact of COVID-19 on future sales is currently unknown, Alliant Energy experienced higher electric residential sales and lower electric commercial and industrial sales in 2020, and lower electric residential sales and higher electric commercial and industrial sales in 2021. In addition, Alliant Energy has not experienced a material increase in customer bankruptcies in 2020 or 2021.
Liquidity and Capital Resources Impacts - Alliant Energy maintains a single credit facility, which allows borrowing capacity to shift among Alliant Energy (at the parent company level), IPL and WPL, as needed. In addition, IPL maintains a sales of accounts receivable program as an alternative financing source; however, if customer arrears were to exceed certain levels, IPL’s access to the program may be restricted. 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 has not experienced any material negative impacts related to customer arrears and bad debts as a result of the pandemic; however, if government funds are no longer available for customers to help pay their utility bills, it may negatively impact Alliant Energy’s customers’ willingness and ability to pay, which could negatively impact Alliant Energy’s cash flows from operations. Currently, Alliant Energy does not anticipate any material credit risk related to its commodity transactions.
Legislative Impacts - Refer to “Legislative Matters” for discussion of legislation that was enacted in 2020 related to impacts from COVID-19.
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.
Additionally, the table below includes EPS for Utilities and Corporate Services, ATC Holdings, and Non-utility and Parent, which are non-GAAP financial measures. Alliant Energy believes these non-GAAP financial measures are useful to investors because they facilitate an understanding of segment performance and trends, and provide additional information about Alliant Energy’s operations on a basis consistent with the measures that management uses to manage its operations and evaluate its performance.
Financial Results Overview - Alliant Energy’s net income and EPS attributable to Alliant Energy common shareowners were as follows (dollars in millions, except per share amounts):
| 2021 | 2020 | ||||||||||||||||||||||
| Income (Loss) | EPS | Income (Loss) | EPS | ||||||||||||||||||||
| Utilities and Corporate Services | $632 | $2.52 | $586 | $2.36 | |||||||||||||||||||
| ATC Holdings | 31 | 0.12 | 34 | 0.14 | |||||||||||||||||||
| Non-utility and Parent | (4) | (0.01) | (6) | (0.03) | |||||||||||||||||||
| Alliant Energy Consolidated | $659 | $2.63 | $614 | $2.47 | |||||||||||||||||||
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Alliant Energy’s Utilities and Corporate Services income increased $46 million in 2021 compared to 2020. The increase was primarily due to higher earnings resulting from IPL’s and WPL’s increasing rate base, as well as higher sales due in part to the derecho windstorm in Iowa and COVID-19 sales impacts in 2020. These items were partially offset by higher depreciation expense and lower AFUDC.
Operating income and a reconciliation of utility electric and gas margins to the most directly comparable GAAP measure, operating income, was as follows (in millions):
| Alliant Energy | IPL | WPL | |||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||
| Operating income | $795 | $740 | $460 | $410 | $308 | $306 | |||||||||||||||||||||||||||||
| Electric utility revenues | $3,081 | $2,920 | $1,752 | $1,695 | $1,329 | $1,225 | |||||||||||||||||||||||||||||
| Electric production fuel and purchased power expenses | (642) | (652) | (295) | (352) | (347) | (300) | |||||||||||||||||||||||||||||
| Electric transmission service expense | (537) | (449) | (367) | (298) | (170) | (151) | |||||||||||||||||||||||||||||
| Utility Electric Margin (non-GAAP) | 1,902 | 1,819 | 1,090 | 1,045 | 812 | 774 | |||||||||||||||||||||||||||||
| Gas utility revenues | 456 | 373 | 265 | 208 | 191 | 165 | |||||||||||||||||||||||||||||
| Cost of gas sold | (258) | (182) | (149) | (99) | (109) | (83) | |||||||||||||||||||||||||||||
| Utility Gas Margin (non-GAAP) | 198 | 191 | 116 | 109 | 82 | 82 | |||||||||||||||||||||||||||||
| Other utility revenues | 49 | 49 | 46 | 44 | 3 | 5 | |||||||||||||||||||||||||||||
| Non-utility revenues | 83 | 74 | — | — | — | — | |||||||||||||||||||||||||||||
| Other operation and maintenance expenses | (676) | (670) | (362) | (375) | (268) | (254) | |||||||||||||||||||||||||||||
| Depreciation and amortization expenses | (657) | (615) | (375) | (356) | (276) | (254) | |||||||||||||||||||||||||||||
| Taxes other than income tax expense | (104) | (108) | (55) | (57) | (45) | (47) | |||||||||||||||||||||||||||||
| Operating income | $795 | $740 | $460 | $410 | $308 | $306 | |||||||||||||||||||||||||||||
Operating Income Variances - Variances between periods in operating income for 2021 compared to 2020 were as follows (in millions):
Electric and Gas Revenues and Sales Summary - Electric and gas revenues (in millions), and MWh and Dth sales (in thousands), were as follows:
| Electric | Gas | ||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | MWhs Sold | Revenues | Dths Sold | ||||||||||||||||||||||||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||||||||||||||||||||||
| Alliant Energy | |||||||||||||||||||||||||||||||||||||||||||||||
| Retail | $2,771 | $2,652 | 25,432 | 24,535 | $413 | $333 | 48,179 | 48,808 | |||||||||||||||||||||||||||||||||||||||
| Sales for resale | 243 | 204 | 5,805 | 6,046 | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| Transportation/Other | 67 | 64 | 71 | 71 | 43 | 40 | 99,179 | 102,790 | |||||||||||||||||||||||||||||||||||||||
| $3,081 | $2,920 | 31,308 | 30,652 | $456 | $373 | 147,358 | 151,598 | ||||||||||||||||||||||||||||||||||||||||
| IPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Retail | $1,633 | $1,564 | 14,283 | 13,830 | $237 | $183 | 24,881 | 25,508 | |||||||||||||||||||||||||||||||||||||||
| Sales for resale | 74 | 88 | 1,807 | 3,485 | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| Transportation/Other | 45 | 43 | 35 | 34 | 28 | 25 | 40,738 | 39,543 | |||||||||||||||||||||||||||||||||||||||
| $1,752 | $1,695 | 16,125 | 17,349 | $265 | $208 | 65,619 | 65,051 | ||||||||||||||||||||||||||||||||||||||||
| WPL | |||||||||||||||||||||||||||||||||||||||||||||||
| Retail | $1,138 | $1,088 | 11,149 | 10,705 | $176 | $150 | 23,298 | 23,300 | |||||||||||||||||||||||||||||||||||||||
| Sales for resale | 169 | 116 | 3,998 | 2,561 | N/A | N/A | N/A | N/A | |||||||||||||||||||||||||||||||||||||||
| Transportation/Other | 22 | 21 | 36 | 37 | 15 | 15 | 58,441 | 63,247 | |||||||||||||||||||||||||||||||||||||||
| $1,329 | $1,225 | 15,183 | 13,303 | $191 | $165 | 81,739 | 86,547 | ||||||||||||||||||||||||||||||||||||||||
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Sales Trends and Temperatures - Alliant Energy’s retail electric sales volumes increased 4% in 2021 compared to 2020, primarily due to changes in temperatures, COVID-19 impacts in Alliant Energy’s service territories and impacts from the derecho windstorm in IPL’s service territory in August 2020, partially offset by the impact on sales of the additional day due to leap year in 2020. Alliant Energy’s retail gas sales volumes decreased 1% in 2021 compared to 2020, primarily due to changes in temperatures and the impact on sales of the additional day due to leap year in 2020, partially offset by COVID-19 impacts in Alliant Energy’s service territories. In 2021, changes in COVID-19 impacts resulted in decreases for retail electric residential sales volumes and increases for retail electric commercial and industrial sales.
Estimated increases (decreases) to electric and gas margins from the impacts of temperatures were as follows (in millions):
| Electric Margins | Gas Margins | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| IPL | $12 | $1 | ($1) | $— | |||||||||||||||||||
| WPL | 7 | 3 | (2) | (1) | |||||||||||||||||||
| Total Alliant Energy | $19 | $4 | ($3) | ($1) | |||||||||||||||||||
Electric Sales for Resale - Electric sales for resale volume changes were largely due to changes in sales in the wholesale energy markets operated by MISO. These changes are impacted by several factors, including the availability and dispatch of Alliant Energy’s EGUs and electricity demand within these wholesale energy markets. Changes in sales for resale revenues were largely offset by changes in fuel-related costs, and therefore, did not have a significant impact on electric margins.
Gas Transportation/Other - Gas transportation/other sales volume changes were largely due to changes in the gas volumes supplied to Alliant Energy’s natural gas-fired EGUs caused by the availability and dispatch of such EGUs. Changes in these transportation/other revenues did not have a significant impact on gas margins.
Utility Electric Margin Variances - The following items contributed to increased (decreased) utility electric margins for 2021 compared to 2020 (in millions):
| Alliant Energy | IPL | WPL | |||||||||||||||
| Higher revenue requirements due to increasing rate base (a) (b) | $43 | $29 | $14 | ||||||||||||||
| Estimated changes in sales volumes caused by temperatures | 15 | 11 | 4 | ||||||||||||||
| Higher wholesale margins at WPL partially due to a new wholesale customer in 2021 | 8 | — | 8 | ||||||||||||||
| Lower revenues at IPL related to changes in recovery amounts for energy efficiency costs through the energy efficiency rider (mostly offset by changes in energy efficiency expense) | (14) | (14) | — | ||||||||||||||
| Other (includes higher temperature-normalized sales primarily due to the derecho windstorm in 2020 and COVID-19 impacts) | 31 | 19 | 12 | ||||||||||||||
| $83 | $45 | $38 | |||||||||||||||
(a)IPL’s final retail electric base rate increase was effective February 26, 2020. Effective with final rates, the recovery of, and return on, IPL’s new wind generation placed in service in 2019 and 2020 is provided through the renewable energy rider. The final rate increase includes a reduction for anticipated production tax credits for IPL’s new wind generation. This reduction is expected to be offset by a reduction in income tax expense resulting from production tax credits recognized from this new wind generation. In September 2020, IPL made a buyout payment of $110 million in exchange for shortening the terms of its DAEC PPA by 5 years. The higher revenue requirements from the buyout payment, including a return on such costs, is being recovered from IPL’s retail customers from 2021 through the end of 2025. Refer to Note 2 for further discussion.
(b)In December 2020, the PSCW issued an order authorizing WPL to maintain its current retail electric base rates through the end of 2021. WPL utilized anticipated fuel-related cost savings and excess deferred income tax benefits in 2021 to offset the revenue requirement impacts of increasing electric rate base, including the Kossuth wind farm, which was placed in service in October 2020. The lower fuel expense benefits are recognized in electric margin and the additional amount of excess deferred income tax benefits is recognized as a reduction in income tax expense.
Utility Gas Margin Variances - The following items contributed to increased (decreased) utility gas margins for 2021 compared to 2020 (in millions):
| Alliant Energy | IPL | WPL | |||||||||||||||
| Higher revenues at IPL related to changes in recovery amounts for energy efficiency costs through the energy efficiency rider (mostly offset by changes in energy efficiency expense) | $7 | $7 | $— | ||||||||||||||
| Estimated changes in sales volumes caused by temperatures | (2) | (1) | (1) | ||||||||||||||
| Other | 2 | 1 | 1 | ||||||||||||||
| $7 | $7 | $— | |||||||||||||||
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Other Operation and Maintenance Expenses Variances - The following items contributed to (increased) decreased other operation and maintenance expenses for 2021 compared to 2020 (in millions):
| Alliant Energy | IPL | WPL | |||||||||||||||
| Higher generation operation and maintenance expenses | ($17) | ($12) | ($5) | ||||||||||||||
Credit loss adjustments in 2020 related to guarantees for an affiliate of Whiting Petroleum (Refer to Note 17(d)) | (7) | — | — | ||||||||||||||
| Lower bad debt expense at IPL | 13 | 13 | — | ||||||||||||||
| Lower energy efficiency expense at IPL (primarily offset by changes in electric and gas revenues) | 7 | 7 | — | ||||||||||||||
| Other | (2) | 5 | (9) | ||||||||||||||
| ($6) | $13 | ($14) | |||||||||||||||
Other Income and Deductions Variances - The following items contributed to (increased) decreased other income and deductions for 2021 compared to 2020 (in millions):
| Alliant Energy | IPL | WPL | |||||||||||||||
| Lower AFUDC primarily due to changes in CWIP balances related to IPL’s new wind generation, and WPL’s West Riverside Energy Center and Kossuth wind farm, placed in service in 2020 | ($30) | ($15) | ($15) | ||||||||||||||
| Other | 8 | 7 | — | ||||||||||||||
| ($22) | ($8) | ($15) | |||||||||||||||
Preferred Dividend Requirements of IPL - Refer to Note 8 for details of the redemption of IPL’s 5.1% cumulative preferred stock in December 2021, including a $5 million non-cash charge recorded in 2021 related to this transaction.
Other Future Considerations - In addition to items discussed in this report, the following key items could impact Alliant Energy’s, IPL’s and WPL’s future financial condition or results of operations:
•Financing Plans - WPL and AEF currently expect to issue up to $600 million and $800 million of long-term debt, respectively, in 2022. WPL, AEF and Corporate Services have $250 million, $300 million and $75 million of long-term debt maturing in 2022, respectively. Alliant Energy currently expects to issue approximately $25 million of common stock in 2022 through its Shareowner Direct Plan.
•Common Stock Dividends - Alliant Energy announced a 6% increase in its targeted 2022 annual common stock dividend to $1.71 per share, which is equivalent to a quarterly rate of $0.4275 per share, beginning with the February 2022 dividend payment. The timing and amount of future dividends is subject to an approved dividend declaration from Alliant Energy’s Board of Directors, and is dependent upon earnings expectations, capital requirements, and general financial business conditions, among other factors.
•Higher Earnings on Increasing Rate Base - Alliant Energy and WPL currently expect an increase in earnings in 2022 compared to 2021 due to impacts from increasing revenue requirements related to investments in the utility business, including WPL’s solar investments. WPL’s increased revenue requirements are expected to be offset by higher income tax expense as a result of lower tax benefits.
•Depreciation and Amortization Expenses - Alliant Energy, IPL and WPL currently expect an increase in depreciation and amortization expenses in 2022 compared to 2021 due to property additions, including WPL’s expansion of solar generation.
•Interest Expense - Alliant Energy, IPL and WPL currently expect an increase in interest expense in 2022 compared to 2021 due to financings completed in 2021 and planned in 2022 as discussed above.
•Allowance for Funds Used During Construction - Alliant Energy and WPL currently expect AFUDC to increase in 2022 compared to 2021 primarily due to increased CWIP balances related to WPL’s solar generation.
•Preferred Dividend Requirements of IPL - Alliant Energy and IPL currently expect a decrease in preferred dividend requirements in 2022 compared to 2021 due to the redemption of IPL’s 5.1% cumulative preferred stock in December 2021.
CUSTOMER INVESTMENTS
Alliant Energy’s, IPL’s and WPL’s strategic priorities include making significant customer-focused investments toward cleaner energy and sustainable customer solutions. These priorities include:
Environmental Stewardship
Alliant Energy’s environmental stewardship is focused on meeting its customers’ energy needs in an economical, efficient, reliable and sustainable manner. Alliant Energy proactively considers future environmental compliance requirements and proposed regulations in its planning, decision-making, construction and ongoing operations activities. Alliant Energy is focused on executing a long-term strategy to deliver reliable and affordable energy with lower emissions independent of changing policies and political landscape. To achieve these long-term goals, Alliant Energy will transition away from coal-fired EGUs by
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incorporating renewable energy, distributed energy resources, energy efficiency, demand response, highly-efficient natural gas-fired EGUs and other emerging technologies such as energy storage. Alliant Energy’s voluntary environmental-related goals and achievements include the following:
•Exceeded its 2020 targets by reducing air emissions for sulfur dioxide by over 90%, nitrogen oxide by over 80% and mercury by over 90% from 2005 levels.
•By 2030, reduce CO2 emissions by 50% from its owned fossil-fueled EGUs and reduce electric utility water supply by 75% from 2005 levels, and transition 100% of its owned light-duty fleet vehicles to be electric, as well as partner to plant more than 1 million trees by the end of 2030.
•By 2040, eliminate all coal-fired EGUs from its generating fleet.
•By 2050, achieve an aspirational goal of net-zero CO2 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.
Renewable Generation
Alliant Energy has developed Clean Energy Blueprints, or its cleaner energy strategy, as a guide to meet customer demand for affordable, reliable and cleaner energy in Iowa and Wisconsin. This strategy includes the planned development and acquisition of additional renewable energy, including approximately 1,100 MW of solar generation at WPL with in-service dates in 2022 and 2023, approximately 400 MW of solar generation at IPL with in-service dates in 2023 and 2024 and approximately 75 MW of battery storage in 2024 at IPL. In addition, WPL’s plans include up to 300 MW of additional capacity. Alliant Energy, IPL and WPL continue to evaluate additional opportunities to add more renewable generation, repowering of existing wind farms, and distributed energy resources, including community solar and energy storage systems. Estimated capital expenditures for these planned projects for 2022 through 2025 are included in the “Renewable projects” line in the construction and acquisition table in “Liquidity and Capital Resources.” These estimates include current expectations for higher costs for various projects, as supply constraints and commodity inflation continue to be prevalent in the solar market. IPL and WPL currently assume 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 Financing” in “Liquidity and Capital Resources.” In addition, Alliant Energy completed the construction and acquisition of approximately 1,200 MW of wind generation in aggregate (approximately 1,000 MW at IPL and approximately 200 MW at WPL) from 2018 through 2020.
WPL’s Solar Generation and Distributed Energy Resources - In June 2021, WPL received an order from the PSCW for its first CA authorizing WPL to acquire, own, and operate 675 MW of new solar generation in the following Wisconsin counties: Grant (200 MW), Sheboygan (150 MW), Wood (150 MW), Jefferson (75 MW), Richland (50 MW) and Rock (50 MW). In July 2021, WPL notified the PSCW that it currently expects estimated construction costs and related rate base additions associated with its 675 MW of new solar generation will exceed amounts approved by the PSCW in June 2021 by approximately 7-10%. In September 2021 and January 2022, WPL filed revised estimated construction costs and related rate base additions for its second CA with the PSCW for approval to acquire, construct, own, and operate up to 414 MW of new solar generation in the following Wisconsin counties: Dodge (150 MW), Waushara (99 MW), Rock (65 MW), Grant (50 MW) and Green (50 MW). These projects in the first and second CAs are expected to be placed in service in 2022 and 2023. The 1,089 MW of new solar generation would replace energy and capacity being eliminated with the planned retirement of the coal-fired Edgewater Generating Station (414 MW) by early 2023, and Columbia Unit 1 by the end of 2023 and Columbia Unit 2 by the end of 2024 (595 MW in aggregate), which are the last coal-fired EGUs at WPL. The retirement of these coal-fired EGUs supports Alliant Energy’s strategy, which is focused on meeting its customers’ energy needs in an economical, efficient, reliable and sustainable manner. As a result of WPL’s neighboring utilities’ anticipated purchase of a partial ownership interest in West Riverside and any requirements resulting from MISO’s resource adequacy proposal that was issued in 2021, WPL anticipates additional capacity needs by 2024, which is expected to result in additional renewable energy resources and energy storage systems. WPL currently expects to request approval from the PSCW in 2022 for up to 300 MW of additional capacity.
IPL’s Solar Generation and Distributed Energy Resources - In November 2021, IPL filed for advance rate-making principles with the IUB for up to 400 MW of solar generation with in-service dates in 2023 and 2024 and approximately 75 MW of battery storage in 2024. The advance rate-making principles filing included requests for a fixed cost cap of $1,575/kilowatt, including AFUDC and transmission upgrade costs among other costs, and a return on common equity of 11.40%, and proposes that a portion of the construction be financed by tax equity partners. In addition, the filing included a request that any costs incurred in excess of the cost cap be incorporated into rates if determined to be reasonable and prudent. The 400 MW of new solar generation and 75 MW of battery storage would help replace a portion of the energy and capacity expected to be eliminated with the planned retirement of the coal-fired Lansing Generating Station (275 MW) by the end of 2022 and the expected reduction of energy and capacity resulting from the December 2021 fuel switch of the Burlington Generating Station (212 MW) from coal to natural gas. In addition, IPL’s plans include additional renewables and distributed energy resources, including community solar and energy storage systems, to add energy and capacity.
Complementary Generation Investments
WPL’s West Riverside Natural Gas-fired Generating Station - In 2020, WPL completed the construction of West Riverside, a 723 MW natural gas-fired combined-cycle EGU in Beloit, Wisconsin. WPL entered into agreements with neighboring utilities and electric cooperatives that provide each of them options to purchase a partial ownership interest in West Riverside. The
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purchase price for such options is based on the ownership interest acquired and the net book value of West Riverside on the date of the purchase. The exercise of the WPSC and MGE options is subject to PSCW approval, which is currently expected by early 2023, and the timing and ownership amounts of the options are as follows:
| Counterparty | Option Amount and Timing | |||||||
| Wisconsin Public Service Corporation (WPSC) | 100 MW were exercised January 2022; additionally, up to 100 MW may be exercised between May 15, 2022 and May 15, 2024 (a) | |||||||
| Madison Gas and Electric Company (MGE) | 25 MW were exercised January 2022; additionally, up to 25 MW may be exercised between May 15, 2022 and May 15, 2025 | |||||||
| Electric cooperatives | Approximately 60 MW were acquired January 2018 | |||||||
(a)Upon WPSC’s exercise of its options, WPL may exercise reciprocal options, subject to approval by the PSCW, to purchase up to 200 MW of any natural-gas combined-cycle EGU that either WPSC or its affiliated utility, Wisconsin Electric Power Company, places in service prior to May 2030.
Plant Retirements and Fuel Switching - The current strategy includes the retirement, or fuel switch from coal to natural gas, of various EGUs in the next several years. In December 2021, completed the fuel switch of the Burlington Generating Station (212 MW) from coal to natural gas. IPL currently expects to retire the coal-fired Lansing Generating Station (275 MW) by the end of 2022. WPL currently expects to retire the coal-fired Edgewater Generating Station (414 MW) by early 2023, Columbia Unit 1 by the end of 2023 and Columbia Unit 2 by the end of 2024. Alliant Energy, IPL and WPL are working with MISO, state regulatory commissions and other regulatory agencies, as required, to determine the timing of these actions, which are subject to change depending on operational, regulatory, market and other factors. Refer to Note 3 for additional details on these EGUs.
Other Customer-focused Investments
Electric and Gas Distribution Systems - Customer-focused investments include replacing, modernizing and upgrading infrastructure in the electric and gas distribution systems. Electric system investments will focus on areas such as improving reliability and resiliency with more underground electric distribution and enabling distributed energy solutions with higher capacity lines. Gas system investments will focus on pipeline replacement to ensure safety and pipeline expansion to support reliability and economic development. Estimated capital expenditures for expected and current electric and gas distribution infrastructure projects for 2022 through 2025 are included in the “Electric and gas distribution systems” lines in the construction and acquisition expenditures table in “Liquidity and Capital Resources.”
Fiber Optic Telecommunication Network - Alliant Energy is currently installing fiber optic routes between its facilities to enhance its communications network to improve resiliency and reliability of, and enable and strengthen, the integrated grid network to help serve its customers.
Gas Pipeline Expansion - IPL and WPL currently expect to make investments to extend various gas distribution systems to provide natural gas to unserved or underserved areas in their service territories.
Gas Pipeline Safety - In 2019, the Pipeline and Hazardous Materials Safety Administration published a final rule that updates safety requirements for gas transmission pipelines, and various updated procedures were implemented in 2020. Plans to address certain requirements for specific pipelines were developed and implemented, and remediation efforts must be completed by July 2035. In anticipation of these rule changes, Alliant Energy, IPL and WPL have been proactively replacing certain of IPL’s transmission pipelines and making modifications to certain of WPL’s transmission pipelines. Alliant Energy, IPL, and WPL also continue to evaluate the impact of this final rule and resulting remediation plans on their financial condition and results of operations.
Technology - Alliant Energy, IPL and WPL currently plan to make investments in technology to enhance productivity and efficiency through automation, customer self-service and telework. Estimated capital expenditures for expected and current technology projects for 2022 through 2025 are included in the “Other” line in the construction and acquisition expenditures table in “Liquidity and Capital Resources.”
Non-utility business - Alliant Energy continues to explore growth of its Travero businesses and other limited scope opportunities outside of, but complimentary to, Alliant Energy’s core utility business. This non-utility strategy continues to evolve through exploration of modest strategic opportunities that are accretive to earnings and cash flows.
RATE MATTERS
Rate Reviews
Retail Base Rate Filings - Base rate changes reflect both returns on additions to infrastructure and recovery of changes in costs incurred or expected to be incurred. Given that a portion of the rate changes will offset changes in costs, revenues from rate changes should not be expected to result in an equal change in net income for either IPL or WPL.
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WPL’s Retail Electric and Gas Rate Reviews (2022/2023 Forward-looking Test Period) - In December 2021, the PSCW issued an order authorizing annual base rate increases of $114 million and $15 million for WPL’s retail electric and gas customers, respectively, covering the 2022/2023 forward-looking Test Period, which was based on a stipulated agreement between WPL and certain intervenor groups. The key drivers for the annual base rate increases include higher retail fuel-related costs in 2022, lower excess deferred income tax benefits in 2022 and 2023 and revenue requirement impacts of increasing electric and gas rate base, including investments in solar generation. In addition, the PSCW authorized WPL to receive a recovery of and a return on the remaining net book value of Edgewater Unit 5 through 2023. Retail electric rate changes were effective on January 1, 2022 and extend through the end of 2023. Retail gas rate changes were effective on January 1, 2022 and extend through the end of 2022. WPL expects to file a limited reopener by August 2022 to adjust retail gas rates for the 2023 forward-looking Test Period, which will be limited to changes in weighted average cost of capital, updated depreciation rates and modifications to certain regulatory asset and regulatory liability amortizations. WPL’s settlement extends, with certain modifications, an earnings sharing mechanism through 2023. Under the earnings sharing mechanism, WPL will defer a portion of its earnings if its annual regulatory return on common equity exceeds 10.25% during the 2022/2023 Test Period. WPL must defer 50% of its excess earnings between 10.25% and 10.75%, and 100% of any excess earnings above 10.75%. Through 2023, any such deferral is required to be offset against the remaining net book value of Edgewater Unit 5, which is currently expected to be retired by early 2023.
IPL’s Retail Electric and Gas Rate Reviews (2020 Forward-looking Test Period) - In 2019, IPL filed retail electric and gas rate review requests with the IUB covering the 2020 forward-looking Test Period. In January 2020, IPL received an order from the IUB approving IPL’s proposed settlement for its retail electric rate review. Final retail electric rates were effective February 26, 2020. In December 2019, IPL received an order from the IUB approving IPL’s proposed settlement for its retail gas rate review. Final retail gas rates were effective January 10, 2020. In 2021, the IUB issued orders for IPL’s 2020 forward-looking Test Period electric and gas subsequent proceedings, which compared actual revenues and costs to those initially forecasted by IPL, and authorized IPL to main its current retail electric and gas rates. Refer to Note 2 for details.
Rate Review Details - Details related to IPL’s and WPL’s key jurisdictions were as follows:
| Average | Authorized Return | Common Equity | |||||||||||||||||||||||||||
| Regulatory | Rate Base | on Common | Component of Regulatory | ||||||||||||||||||||||||||