Powering Beyond. EEI Finance Conference November 11 13, 2018

Transcription

1 Powering Beyond EEI Finance Conference November 11 13, 2018

2 Safe harbor This presentation contains statements that may be considered forward looking statements, such as management s expectations of financial objectives and projections, capital expenditures, earnings growth, plant retirements, rate base, and new generation plans. These statements speak of the Company s plans, goals, beliefs, or expectations, refer to estimates or use similar terms. Actual results could differ materially, because the realization of those results is subject to many uncertainties including regulatory approvals and results, unanticipated construction costs or delays, economic conditions in our service territories, and other factors, some of which are discussed in more detail in the Company s Form 10-K for the year ended December 31, 2017 and Form 10-Q for the quarter ended September 30, All forward looking statements included in this presentation are based upon information presently available and the Company assumes no obligation to update any forward looking statements. In addition, this presentation contains non-gaap financial measures. The reconciliations between the non-gaap and GAAP measures are provided in this presentation. 1

3 Attractive total return Investment considerations Long term earnings growth rate of 5-7% using 2017 non-gaap temperature normalized base of $1.99 per share. Projected 6% earnings growth for 2018 and Target dividend payout of 60-70% of consolidated earnings. Forecasting a dividend of $1.42 per share for 2019, a 6% increase over Future strategic investments focused on electric and gas distribution, as well as renewable and gas generation Constructive regulatory environments Strong balance sheet and liquidity 99% of non-gaap earnings from continuing operations generated by regulated operations in

4 Regulated utility profile 2017 data IPL WPL Total Electric Customers 490, , ,121 Electric Retail Sales (000s MWh) 14,356 10,739 25,095 Electric Wholesale Sales (000s MWH) 1,338 2,301 3,639 Summer Peak Demand (MW) 2,968 2,476 Gas Customers 224, , ,054 Gas Sales (000s Dths) 65,945 60, ,166 Operating Revenues (millions) $1,870 $1,473 $3,382 Service Territory Advantages Favorable commission rankings Economic diversity High quality renewable resources Access to ANR, Northern Border, and Northern Natural Gas pipelines Access to Powder River Basin coal Iowa IPL Wisconsin WPL 3

5 Customer Focused Strategy Enables Growth Early termination of nuclear contract due to economics Deliver tax reform savings Lower energy efficiency charges Increase operational efficiency Renegotiate rail and coal contracts Lower cost of capital Reduced independence adder for ITC Lower fuel and production tax credits offset wind investments Highly efficient gas generation compliments renewable generation By the end of 2018, retired or converted approximately 50% of our 2010 coal fired generation capacity By 2050, we will eliminate coal from our energy mix Increase line voltage levels to enable distributed energy Grid automation and AMI to increase operational efficiency Underground electric distribution to increase resiliency Natural gas distribution expansion to enable customer growth 4

6 Transitioning our energy resources* 5

7 Benefits of wind energy Helps keeps rates low Turbine cost has dropped ~40% in the last 10 years Improvements in turbine technology increase energy output Generation production tax credits for 10 years No associated fuel expense, helping provide cost stability Reduced fuel, along with tax credits, offset capital recovery Strengthens our communities Provides tax revenues to support local services Creates jobs and helps grow local economies Lease payments for land owners Helps spur improvements to strengthen the power grid Attracts companies focused on sustainability 6

8 Wind development progress Iowa (IPL) Regulatory Approvals Wisconsin (WPL) RPU I: IUB approval for up to 500 MW in 2016 RPU II: IUB approval for up to 500 MW in 2018 Docket 6680 CE 181 Filed a request for construction authority from the PSCW for up to 150 MW of wind Project Owner Size (MW) NCF * In Service Cedar Ridge WPL 68 MW 30% 2008 Forward Energy WPL 55 MW (of 129) 30% 2008 Whispering Willow East / Franklin County IPL 300 MW 36% 2009 / 2012 Bent Tree WPL 200 MW 32% 2011 Upland Prairie IPL ~300 MW 44 46% 2019 English Farms IPL ~170 MW 42 44% 2019 Whispering Willow Expansion IPL ~200 MW 47 49% 2020 Kossuth WPL ~150 MW 47 49% 2020 Golden Plains IPL ~200 MW 45 47% 2020 Richland IPL ~130 MW 46 48% 2020 * NCF = Net Capacity Factor for 2017, for developed sites 7

9 Alliant Energy solar Over 8.5MW in operation Future development Rock River PPA: Environmental Mitigation Madison HQ: Research and Education Projects in Capital Expenditure Plan: Marshalltown: ~3 MW offset plant auxiliary power West Riverside: ~8 MW offset plant auxiliary power Indian Creek Nature Center: Partnership and Community Driven Dubuque: Utility scale Solar Considerations for additional solar investments: Site solar assets where they provide grid benefits (defer Transmission and Distribution investment, address congestion issues, provide non-wires alternative, etc.) 8

10 Gas generation investments drive growth complement renewables WPL has provided book-value purchase options for partial ownership of the facility. WPL s West Riverside Energy Center Need resulting from planned coal and gas retirements and modest load growth An approximate 730 MW combined-cycle natural gas facility WPL s share of estimated cost is $640 million for facility, excluding transmission network upgrades and allowance for funds used during construction (AFUDC) Approved by Public Service Commission of Wisconsin (PSCW) in May 2016 AECOM selected as engineering, procurement and construction contractor GE Frame 7FA.05 combustion turbines Heat rate is expected to be just under 6,500 btu/kwh In-service by end of 2019 Utilities and electric cooperatives Purchase option amount Option timing Adams Columbia Electric Cooperative (ACEC) Rock Energy Cooperative (REC) approximately 65 megawatts Options exercised January 2018 Central Wisconsin Electric Cooperative (CWEC) Wisconsin Public Service Corporation (WPS) up to 200 megawatts Madison Gas and Electric Company (MGE) up to 50 megawatts

11 Electric Distribution Customer Focused Increase reliability, expand distributed energy, accelerate growth, and continued focus on affordability Infrastructure Replace systems of varying voltages with standard 25kV Resiliency improvements (incl. underground/hardening) Increase capacity and contingency capability Communication/Information Enhanced communication network Increase remote monitoring and control (including AMI) Actionable data for operations/engineering/customers Automation Fault detection via smart devices Self healing to reduce outage minutes Sustainability Distributed Generation/Renewable integration Batteries to manage system load variability Customer solutions 10

12 Gas Distribution Customer Focused Safety, reliability, accelerate growth, and continued focus on affordability Safety Preparing for expected PHMSA rules Modifying existing pipes for enhanced inspection and verification requirements Replacing and making modifications to aging gas transmission lines Replacing distribution line made of certain material through the Integrity Management program Reliability Increasing remote monitoring Economic Development Add capacity to areas of growth potential Modify tariffs to promote growth Customer Solutions and Experience Utility as trusted advisor for natural gas solutions Advanced metering infrastructure in Iowa 11

13 Capital expenditures Capital expenditures $7.0 Billion $2.0 $1.7 $1.6 Gas Distribution Electric Distribution Other Generation West Riverside Renewable Projects (In billions) $1.5 $1.0 $0.5 $1.3 $1.0 $1.3 Other $ We are proposing to earn a return on and of the $110 million DAEC PPA Termination payment in This payment is not part of the capital expenditure plan. 12

14 Estimated capital expenditures post 2022 ( estimated capital expenditures, excluding AFUDC) Electric Distribution $5.7 billion New generation Generation improvements and maintenance Gas distribution 13

15 Interstate Power & Light Company Iowa Utilities Board Key regulatory initiatives Estimated Dates Decision regarding Retail Electric Base Rate Review Test Year 2016 (RPU ) Decision regarding ratemaking treatment of the effect of the Tax Cuts and Jobs Act of 2017 (INU ) Decision regarding Wind Expansion Advance Ratemaking Principles (RPU ) Decision regarding Retail Gas Base Rate Review Test Year 2017 (RPU ) Q Decision regarding DAEC PPA Amendment (SPU ) Q Decision regarding Energy Efficiency Plan (EEP ) Q File IPL Retail Base Rate Review (both historical test year 2018 for electric and one or more future forecasted test periods for electric and gas) Q Federal Energy Regulatory Commission (FERC) Decision regarding authorized return on equity (ROE) amounts for MISO transmission owners second complaint H Wisconsin Power & Light Company Public Service Commission of Wisconsin Decision regarding the purchase of an interest in Forward Wind Energy Center (5 BS 226) Decision regarding ratemaking treatment of the effect of the Tax Cuts and Jobs Act of 2017 (05 AF 101) Decision regarding Retail Electric and Gas Rate Review Test Periods 2019 and 2020 (6680 UR 121) Decision regarding Wind Expansion Construction Authority (6680 CE 181) Q FERC Decision regarding the purchase of an interest in Forward Wind Energy Center (FERC 203 filing) Decision regarding authorized ROE amounts for MISO transmission owners second complaint H

16 Iowa retail gas rate review test year 2017 (RPU ) First retail gas rate review in six years Primarily seeking recovery of investments in gas distribution system and providing Tax Reform benefits to customers Unanimous settlement on all issues filed September 7, 2018 Settlement with all intervenors; Office of Consumer Advocate, Iowa Business Energy Coalition, Wood River Energy LLC Interim rates Settlement Agreement Annualized Revenue Requirement Increase $11.3 million $13.9 million Return on Equity (ROE) 9.8% 9.6% Common Equity Percentage 49.6% 51.0% Rate Base $460 million $491 million Procedural schedule Implementation of Interim Rate Increase May 14, 2018 Customer Comment Meetings May 17 through June 26, 2018 OCA & Intervenor Rebuttal Testimony to IPL August 17, 2018 OCA & Intervenor Reply Testimony to Each Other August 28, 2018 Unanimous settlement filed by all major intervenors September 7, 2018 IUB decision anticipated Q

17 DAEC PPA amendment (SPU ) Replacing Iowa nuclear energy with additive Iowa wind energy Significant customer cost reductions as a result of this agreement including nearly $300 million in energy cost savings, or a 2 to 3 percent reduction in a customer s bill, depending on customer class, starting in 2021 Shorten term of DAEC purchase power agreement (PPA) to December 31, 2020, 5 years earlier than current expiration One time payment to buyout current PPA in the amount of $110 million. Requesting regulatory approval from the Iowa Utilities Board for recovery of buyout payment and financing costs at IPL s pretax weighted average cost of capital over a five year period. Requested recovery through Energy Adjustment Clause. Enter into 20 year wind repower PPAs ~340 MW commencing in 2020 and 2021 Settlement agreement filed 10/25/2018. Office of Consumer Advocate, Iowa Business Energy Coalition, Large Energy Group and Resale Power Group of Iowa agreed to terms and conditions of the settlement. Proposed Procedural Schedule IPL Direct Testimony 7/27/2018 Settlement Agreement Filed 10/25/2018 Decision from Iowa Utilities Board Q

18 WPL retail electric and gas rate settlement for test periods (6680-UR-121) Maintain 2017 base rates through 2020 for Wisconsin customers Retail electric revenue requirements increase of $61 million in 2019 and $133 million in 2020 offset by lower fuel costs and tax reform savings The key drivers include the West Riverside Generating Facility (a) startup AFUDC treatment for 100% of CWIP balances for new CA/CPCNs not reflected in rate review, deferral of related incremental depreciation if placed in service prior to January 1, 2021 (Applies to CA for 150 MW of wind) Written order issued September 14, ($ in millions) Average rate base (b) Return on NIRB (b) Average rate base (b) Return on NIRB (b) Retail electric $3, % $3, % Retail gas $ % $ % Return on common equity 10.0% 10.0% Common equity component of regulatory capital structure 52.57% 52.53% Updated ROE sharing mechanism 10.00% % No sharing 10.25% % 50/50 sharing >10.75% 100% customer (a) WPL s 2019 and 2020 retail revenue requirements reflect impacts of the joint ownership by certain wholesale customers, but do not reflect the estimated impact of potential future joint ownership by other investor-owned Wisconsin public utilities. (b) Average rate base amounts are higher than previous forecasts for and the adjusted cost of capital amounts are lower than prior rate case periods due to impacts of accounting and rate making treatment of excess deferred taxes (EDT) balances authorized by the PSCW. The net impact on revenue requirements from the higher rate base amounts and lower adjusted cost of capital amounts is not material. 17

19 Key takeaways Tax reform Benefits utilized to lower costs for customers Higher rate base resulting from lower tax rate causing a decrease in deferred taxes Expect to issue additional debt and equity to maintain authorized capital structures at utilities Regulatory decisions Current year (2018) income tax benefits Electric - Deliver 2018 income tax benefits to customers through billing credits Gas - IPL Deliver tax benefits to gas customers by adjusting interim rates in effect in Q WPL Deliver 2018 income tax benefits to customers through billing credits Excess deferred tax benefits IPL - Deferring excess deferred tax benefits until next Iowa electric rate review planned in 2019 WPL - A portion of the excess deferred tax benefits will be utilized in 2019 and 2020 electric and gas rate settlement 18

20 Iowa energy law (Senate File 2311) Signed into law on May 4, 2018 Optional future test year Amendments to Iowa Administrative Code are in process. These amendments will establish the rules for utilizing a future test year. Permanent transmission rider Pre-approval of natural gas extensions Advance ratemaking for repowering of renewables Establishes parameters for energy efficiency and demand response plans 19

21 Financing investments ($ in millions) 2018 plan 2018 Completed Financings 2019 plan Common Equity Up to $200 ~$190 Up to $400 Long-Term Debt Issuances Maturities Issuances Maturities Interstate Power and Light $500 $350 $500 of 4.10% ten year debentures Green Bond Up to $600 $-- Wisconsin Power and Light $-- $-- - Up to $400 $250 Alliant Energy Finance $1,000 $595 $300 two year term loan $400 of 3.75% five year senior notes $300 of 4.25% ten year senior notes $-- $-- Interest rates of 2018 and 2019 maturities 2018 IPL - $100 million of 5.875% Senior Debentures IPL - $250 million of 7.25% Senior Debentures AEF - $500 million variable rate term loan, ~2% at 12/31/2017 AEF - $95 million variable rate term loan, ~2% at 12/31/ WPL - $250 million of 5% Senior Debentures 20

22 Attractive growth in earnings, dividends and total returns $1.79 Adjusted (non-gaap temperature normalized) Earnings per Share from continuing operations $1.88 $1.99 $2.11 $2.24 $250 $200 Total Shareholder Return Dividends per Common Share $1.42 (a) $1.34 $1.26 $1.18 $1.10 $ E 2019E $ Alliant Energy Corporation (LNT) S&P 500 Index EEI Utilities Comparison of cumulative five-year total return when investing $100 on December 31, E 2019E (a) Annual common stock dividend target. Payment of the quarterly dividends is subject to the actual dividend declaration by the Board of Directors. 21

23 Environmental, social, governance Fossil generation water withdrawals 2030 targeted reduction 75% from 2005 levels Carbon dioxide emissions 2030 targeted reduction 40% from 2005 levels At end of 2017, achieved 40% At end of 2017, achieved 25% 2050 targeted reduction 80% from 2005 levels Charitable contributions by Alliant Energy and its employees $7 million in 2017 Renewable investments $2 billion Board Diversity Gender diversity in the boardroom Women 50% 22

24 Reconciliation between GAAP and non-gaap measures GAAP EPS from continuing operations $1.69 $1.65 $1.99 $2.18 Temperature impacts (0.05) Non GAAP Adjustments: Losses from sales of Minnesota distribution assets 0.04 Voluntary employee separation charges 0.02 Valuation charge related to the Franklin County wind farm 0.23 Tax Reform (0.08) (0.02) Net write down of regulatory assets due to IPL electric rate review 0.02 settlement Non GAAP temperature normalized EPS from continuing operations $1.79 $1.88 $1.99 $