Powering Beyond. UBS investor meeting August 24, 2018

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Transcription:

Powering Beyond UBS investor meeting August 24, 2018

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 June 30, 2018. 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

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. Target dividend payout of 60-70% of consolidated earnings. Forecasting a dividend of $1.34 per share for 2018, a 6% increase over 2017. 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 2017 2

Regulated utility profile 2017 data IPL WPL Total Electric Customers 490,595 471,526 962,121 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 224,041 189,013 413,054 Gas Sales (000s Dths) 65,945 60,221 126,166 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

Transitioning our energy resources* 4

Benefits of wind energy Helps keeps rates low Turbine cost has dropped ~40% in the last 10 years Improvements in turbine technology maximize 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 5

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 up to 300 MW 44 46% 2019 English Farms IPL up to 170 MW 42 44% 2019 Whispering Willow Expansion IPL up to 200 MW 47 49% 2020 Kossuth WPL up to 150 MW 47 49% 2020 Golden Plains IPL up to 200 MW 45 47% 2020 Richland IPL up to 210 MW 46 48% 2020 * NCF = Net Capacity Factor for 2017, for developed sites 6

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: 5 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.) 7

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 In-service in Q3 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 2020 2024 Madison Gas and Electric Company (MGE) up to 50 megawatts 2020 2025 8

Electric distribution strategy - grid enhancements and customer need Distributed Generation/Renewable integration Integrate planning with generation and transmission Increase remote monitoring and control Eliminate lower voltage systems Resiliency improvements (incl. underground/hardening) Enhanced communication network Increased data and analytics Utility as trusted advisor for technical solutions Advanced metering infrastructure in Iowa 9

Natural gas strategy - reliability and customer growth Preparing for expected PHMSA rules Modifying existing pipes for enhanced inspection and verification requirements Replacing and making modifications to aging gas transmission lines Increasing remote monitoring Replacing distribution line made of certain material through the Integrity Management program Add capacity to areas of growth potential Modify tariffs to promote growth Utility as trusted advisor for natural gas solutions Advanced metering infrastructure in Iowa 10

Capital expenditures 2018 2021 Capital expenditures $5.4 Billion $2.0 $1.7 $1.7 Renewable Projects West Riverside Other Generation Other Gas Distribution Electric Distribution (In billions) $1.5 $1.0 $0.5 $- $1.0 $1.0 2018 2019 2020 2021 11

Estimated capital expenditures post 2021 (2022-2026 estimated capital expenditures, excluding AFUDC) Electric distribution $5.0 billion New generation Generation improvements and maintenance Gas distribution 12

Rate base growth drives earnings growth $12,000 (in millions) $10,000 $8,000 $6,000 $4,000 $2,000 Dilution Rising Interest Expense Regulatory Lag 5-7% projected Earnings per Share growth rate through 2021 $0 2017 2018 2019 2020 13

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 14

DAEC PPA amendment (SPU-2018-0008) 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. Enter into wind repower PPAs below: Wind Project Nameplate Capacity Term of PPA Crystal Lake I 150 MW 20 years (commencing in 2020) Endeavor II 50 MW 20 years (commencing in 2020) Cerro Cordo 39 MW 20 years (commencing in 2021) Hancock County 77 MW 20 years (commencing in 2021) Requested decision from the Iowa Utilities Board by November 2018 15

WPL retail electric and gas rate settlement for 2019 2020 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 $133 million in 2020 offset by lower fuel costs and tax reform savings The key drivers include the West Riverside Generating Facility (a) startup AFUDC treatment for 100% of CWIP balances for new CA/CPCNs not reflected in rate review, deferral of related incremental depreciation if placed in service prior to January 1, 2021 (Applies to CA for 150 MW of wind) Comprehensive rate settlement approved by the Public Service Commission of Wisconsin on August 2, 2018 2019 2020 ($ in millions) Average rate base (b) Return on NIRB (b) Average rate base (b) Return on NIRB (b) Retail electric $3,507 6.95% $3,955 7.08% Retail gas $363 6.84% $387 6.97% 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% - 10.25% No sharing 10.25% - 10.75% 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 2019-2020 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. 16

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 Q2 2018 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 17

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 Up to $600 $350 - Up to $500 $-- 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 12/31/2017 2019 WPL - $250 million of 5% Senior Debentures 18

Interstate Power & Light Company Iowa Utilities Board Key regulatory initiatives Estimated Dates Decision regarding Retail Electric Base Rate Review Test Year 2016 (RPU 2017 0001) Decision regarding ratemaking treatment of the effect of the Tax Cut and Jobs Act of 2017 (INU 2018 0001) Decision regarding Wind Expansion Advance Ratemaking Principles (RPU 2017 0002) Decision regarding DAEC PPA Amendment (SPU 2018 0008) Q4 2018 Decision regarding 2019 2023 Energy Efficiency Plan (EEP 2018 003) Q1 2019 Decision regarding Retail Gas Base Rate Review Test Year 2017 (RPU 2018 0002) Q1 2019 Federal Energy Regulatory Commission (FERC) Decision regarding authorized return on equity (ROE) amounts for MISO transmission owners second complaint H2 2018 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 Cut 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) Q1 2019 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 H2 2018 19

Incremental growth opportunity ATC ATC s Midwest Operations (16% equity ownership interest): Projected capital expenditures of $2.8 to $3.6 billion over 10 years from 2017-2026 $600 $500 $400 $300 $200 $100 $- ATC Midwest Operations Projected Capital Expenditures (in millions) 2018 2019 2020 2021 2022 Rate Base: 2017 13-month average rate base approx. $3.5 billion Capital structure: Hypothetical 50% equity component Annual true-up mechanism for revenue requirement Current return on construction work-in-progress ATC s Business Development (20% equity ownership interest): ATC Alaska Project 6 munis or coops develop a Transco model for Alaska s Railbelt Established 50/50 Joint Venture with Duke Energy in 2011 (Duke-ATC LLC or DATC) 20

Attractive growth in earnings, dividends and total returns $1.70 Adjusted (non-gaap temperature normalized) Earnings per Share from continuing operations $1.79 $1.88 $1.99 $2.11 $250 $200 Total Shareholder Return Dividends per Common Share $1.34 (a) $1.26 $1.18 $1.10 $1.02 $150 2014 2015 2016 2017 2018E $100 2012 2013 2014 2015 2016 2017 Alliant Energy Corporation (LNT) S&P 500 Index EEI Utilities Comparison of cumulative five-year total return when investing $100 on December 31, 2012 2014 2015 2016 2017 2018E (a) Annual common stock dividend target. Payment of the quarterly dividends is subject to the actual dividend declaration by the Board of Directors. 21

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 2016-2020 Board Diversity Gender diversity in the boardroom Women 50% 22

Reconciliation between GAAP and non-gaap measures 2014 2015 2016 2017 GAAP EPS from continuing operations $1.74 $1.69 $1.65 $1.99 Temperature impacts (0.04) 0.04 0.06 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) Net write down of regulatory assets due to IPL electric rate review settlement 0.02 Non GAAP temperature normalized EPS from continuing operations $1.70 $1.79 $1.88 $1.99 23