Company Quick10K Filing
Quick10K
Alliant Energy
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$45.17 236 $10,660
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
8-K 2019-02-21 Earnings, Exhibits
8-K 2019-02-11 Officers
8-K 2018-12-13 Amend Bylaw, Other Events, Exhibits
8-K 2018-12-13 Enter Agreement, Other Events, Exhibits
8-K 2018-12-13 Officers
8-K 2018-11-06 Earnings, Exhibits
8-K 2018-09-19 Other Events, Exhibits
8-K 2018-08-02 Earnings, Exhibits
8-K 2018-07-25 Officers, Amend Bylaw, Exhibits
8-K 2018-06-06 Enter Agreement, Off-BS Arrangement, Other Events, Exhibits
8-K 2018-05-17 Shareholder Vote
8-K 2018-04-26 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-03-09 Officers, Amend Bylaw, Exhibits
8-K 2018-02-22 Earnings, Exhibits
8-K 2018-01-15 Shareholder Rights, Exhibits
EXC Exelon
PEG Public Service Enterprise Group
XEL Xcel Energy
ED Consolidated Edison
AEE Ameren
PCG Pg&E
NWE Northwestern
AVA Avista
VVPR VivoPower
ENO Enodis
LNT 2018-12-31
Part I
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Mine Safety Disclosures
Part II
Item 5. Market for Registrants' Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Item 6. Selected Financial Data
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 8. Financial Statements and Supplementary Data
Note 1. Summary of Significant Accounting Policies
Note 1(A) General -
Note 1(E) Property, Plant and Equipment -
Note 1(F) Revenue Recognition -
Note 1(G) Utility Cost Recovery Mechanisms -
Note 1(I) Asset Impairments -
Note 1(N) New Accounting Standards -
Note 2. Regulatory Matters
Note 3. Property, Plant and Equipment
Note 4. Jointly-Owned Electric Utility Plant
Note 5. Receivables
Note 5(A) Accounts Receivable - Details for Accounts Receivable Included on The Balance Sheets As of December 31 Were As Follows (In Millions):
Note 6. Investments
Note 7. Common Equity
Note 8. Preferred Stock
Note 9. Debt
Note 9(B) Long-Term Debt - Long-Term Debt, Net As of December 31 Was As Follows (Dollars in Millions):
Note 10. Leases
Note 10(B) Capital Leases -
Note 11. Revenues
Note 12. Income Taxes
Note 13. Benefit Plans
Note 14. Asset Retirement Obligations
Note 15. Derivative Instruments
Note 16. Fair Value Measurements
Note 17. Commitments and Contingencies
Note 17(D) Guarantees and Indemnifications -
Note 18. Segments of Business
Note 19. Related Parties
Note 20. Selected Consolidated Quarterly Financial Data (Unaudited)
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A. Controls and Procedures
Item 9B. Other Information
Part III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14. Principal Accounting Fees and Services
Part IV
Item 15. Exhibits, Financial Statement Schedules
Item 16. Form 10-K Summary
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Alliant Energy Earnings 2018-12-31

LNT 10K Annual Report

Balance SheetIncome StatementCash Flow

10-K 1 lnt1231201810-k.htm 10-K Document

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, 2018

or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    

alliantenergylogo201810k.jpg
Commission
File Number
 
Name of Registrant, State of Incorporation,
Address of Principal Executive Offices and Telephone Number
 
IRS Employer
Identification Number
1-9894
 
ALLIANT ENERGY CORPORATION
 
39-1380265
 
 
(a Wisconsin corporation)
 
 
 
 
4902 N. Biltmore Lane
 
 
 
 
Madison, Wisconsin 53718
 
 
 
 
Telephone (608) 458-3311
 
 
 
 
 
1-4117
 
INTERSTATE POWER AND LIGHT COMPANY
 
42-0331370
 
 
(an Iowa corporation)
 
 
 
 
Alliant Energy Tower
 
 
 
 
Cedar Rapids, Iowa 52401
 
 
 
 
Telephone (319) 786-4411
 
 
 
 
 
0-337
 
WISCONSIN POWER AND LIGHT COMPANY
 
39-0714890
 
 
(a Wisconsin corporation)
 
 
 
 
4902 N. Biltmore Lane
 
 
 
 
Madison, Wisconsin 53718
 
 
 
 
Telephone (608) 458-3311
 
 
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:
 
Title of Each Class
Name of Each Exchange on Which Registered
Alliant Energy Corporation
Common Stock, $0.01 Par Value
Nasdaq Global Select Market
Interstate Power and Light Company
5.100% Series D Cumulative Perpetual Preferred Stock, $0.01 Par Value
Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.
Yes   No  

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes   No  
Indicate by check mark whether the registrants (1) have 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) have been subject to such filing requirements for the past 90 days.    Yes   No  
Indicate by check mark whether the registrants have 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 registrants were required to submit such files).    Yes   No  

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
 
Accelerated Filer
 
Non-accelerated Filer
 
Smaller Reporting Company
 
Emerging Growth Company
Alliant Energy Corporation
 
 
 
 
 
 
 
 
Interstate Power and Light Company
 
 
 
 
 
 
 
 
Wisconsin Power and Light 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.

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).    Yes   No  

The aggregate market value of the voting and non-voting common equity held by nonaffiliates as of June 30, 2018:
Alliant Energy Corporation
$9.9 billion
Interstate Power and Light Company
$—
Wisconsin Power and Light Company
$—
Number of shares outstanding of each class of common stock as of January 31, 2019:
Alliant Energy Corporation
Common stock, $0.01 par value, 236,074,475 shares outstanding
 
 
Interstate Power and Light Company
Common stock, $2.50 par value, 13,370,788 shares outstanding (all of which 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 of which 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 2019 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
 
Page Number
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




DEFINITIONS

The following abbreviations or acronyms used in this report are defined below:
Abbreviation or Acronym
Definition
Abbreviation or Acronym
Definition
2019 Alliant Energy Proxy Statement
Alliant Energy’s Proxy Statement for the 2019 Annual Meeting of Shareowners
IPL
Interstate Power and Light Company
AEF
Alliant Energy Finance, LLC
IRS
Internal Revenue Service
AFUDC
Allowance for funds used during construction
ITC
ITC Midwest LLC
Alliant Energy
Alliant Energy Corporation
IUB
Iowa Utilities Board
ARO
Asset retirement obligation
KWh
Kilowatt-hour
ATC
American Transmission Company LLC
Marshalltown
Marshalltown Generating Station
ATC Holdings
Interest in American Transmission Company LLC and ATC Holdco LLC
MDA
Management’s Discussion and Analysis of Financial Condition and Results of Operations
ATI
AE Transco Investments, LLC
MGP
Manufactured gas plant
CA
Certificate of authority
MISO
Midcontinent Independent System Operator, Inc.
CAA
Clean Air Act
MW
Megawatt
CCR
Coal combustion residuals
MWh
Megawatt-hour
CO2
Carbon dioxide
N/A
Not applicable
Corporate Services
Alliant Energy Corporate Services, Inc.
Note(s)
Combined Notes to Consolidated Financial Statements
CPCN
Certificate of Public Convenience and Necessity
NOx
Nitrogen oxide
CWIP
Construction work in progress
OIP
Alliant Energy 2010 Omnibus Incentive Plan
DAEC
Duane Arnold Energy Center
OPEB
Other postretirement benefits
DCP
Alliant Energy Deferred Compensation Plan
PPA
Purchased power agreement
DLIP
Alliant Energy Director Long Term Incentive Plan
PSCW
Public Service Commission of Wisconsin
Dth
Dekatherm
Receivables Agreement
Receivables Purchase and Sale Agreement
EEP
Energy efficiency plan
RES
Renewable energy standards
EGU
Electric generating unit
Riverside
Riverside Energy Center
EPA
U.S. Environmental Protection Agency
SCR
Selective catalytic reduction
EPB
Emissions plan and budget
SEC
Securities and Exchange Commission
EPS
Earnings per weighted average common share
SO2
Sulfur dioxide
FASB
Financial Accounting Standards Board
Federal Tax Reform
Tax Cuts and Jobs Act
FERC
Federal Energy Regulatory Commission
U.S.
United States of America
Financial Statements
Consolidated Financial Statements
VEBA
Voluntary Employees’ Beneficiary Association
FTR
Financial transmission right
VIE
Variable interest entity
Fuel-related
Electric production fuel and purchased power
Whiting Petroleum
Whiting Petroleum Corporation
FWEC
Forward Wind Energy Center
WPL
Wisconsin Power and Light Company
GAAP
U.S. generally accepted accounting principles
WPL Transco
WPL Transco, LLC
GHG
Greenhouse gases
 
 

 
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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:

IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, earning a return on rate base additions and the recovery of costs, including fuel costs, operating costs, transmission costs, environmental compliance and remediation costs, deferred expenditures, deferred tax assets, capital expenditures, and remaining costs related to EGUs that may be permanently closed, 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 energy, tax, financial and health care legislation, and regulatory agency orders;
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;
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 direct or indirect effects resulting from terrorist incidents, including physical attacks and cyber attacks, or responses to such incidents;
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;
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;
weather effects on results of utility operations;
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 the EPA’s regulations for CO2 emissions reductions from new and existing fossil-fueled EGUs, and litigation associated with environmental requirements;
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;
the impact of the economy in IPL’s and WPL’s service territories and the resulting impacts on sales volumes, margins and the ability to collect unpaid bills;
the ability to complete construction of wind projects within the cost caps set by regulators and to meet all requirements to qualify for the full level of production tax credits;
changes in the price of delivered natural gas, 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;
changes in the price of transmission services and the ability to recover the cost of transmission services in a timely manner;
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;
issues related to the availability and operations of EGUs, including start-up risks, breakdown or failure of equipment, 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;

 
2
 


impacts that storms or natural disasters in IPL’s and WPL’s service territories may have on their operations and recovery of costs associated with restoration activities;
any material post-closing adjustments related to any past asset divestitures, including the sales of IPL’s Minnesota electric and natural gas assets, and Whiting Petroleum, which could result from, among other things, indemnification agreements, warranties, parental guarantees or litigation;
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, life expectancies and demographics;
material changes in employee-related benefit and compensation costs;
risks associated with operation and ownership of non-utility holdings;
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 due to further 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;
the impacts of adjustments made to deferred tax assets and liabilities from changes in the tax laws;
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
other factors listed in MDA and Item 1A Risk Factors.

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.

ITEM 1. BUSINESS

A. GENERAL
Alliant Energy was incorporated in Wisconsin in 1981 and maintains its principal executive offices in Madison, Wisconsin. Alliant Energy operates as a regulated investor-owned public utility holding company. Alliant Energy’s primary focus is to provide regulated electric and natural gas service to approximately 965,000 electric and approximately 415,000 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 - was incorporated in 1925 in Iowa as Iowa Railway and Light Corporation. 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, 2018, IPL supplied electric and natural gas service to

 
3
 


approximately 490,000 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. In 2018, 2017 and 2016, IPL had no single customer for which electric, gas, steam and/or other sales accounted for 10% or more of IPL’s consolidated revenues.

2) WPL - was incorporated in 1917 in Wisconsin as Eastern Wisconsin Electric Company. 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, 2018, WPL supplied electric and natural gas service to approximately 475,000 and 190,000 retail customers, respectively. WPL also sells electricity to wholesale customers in Wisconsin. In 2018, 2017 and 2016, WPL had no single customer for which electric, gas and/or other sales accounted for 10% or more of WPL’s consolidated revenues.

3) CORPORATE SERVICES - was incorporated in 1997 in Iowa. Corporate Services provides administrative services to Alliant Energy, IPL, WPL and AEF.

4) AEF - was created in 2016 in Wisconsin as a limited liability company. Alliant Energy’s non-utility holdings are organized under AEF, which manages a portfolio of wholly-owned subsidiaries and additional holdings through 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 is expected to acquire, build, own and operate new electric transmission infrastructure in North America.

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.

Transportation - includes a short-line railway that provides freight service between Cedar Rapids, Iowa and Iowa City, Iowa; a barge terminal and hauling services on the Mississippi River; and other transfer and storage services.

B. INFORMATION RELATING TO ALLIANT ENERGY ON A CONSOLIDATED BASIS

1) EMPLOYEES - At December 31, 2018, 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
3,885
 
2,151
 
55%
IPL
1,628
 
1,031
 
63%
WPL
1,234
 
1,012
 
82%

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, 2020. 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, 2019.

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.


 
4
 


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.

Energy Policy Act - The Energy Policy Act 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 - FERC also has jurisdiction, under the Federal Power Act, over certain electric utility facilities and operations, electric wholesale and transmission rates, dividend payments, issuance of IPL’s securities, and accounting practices of Corporate Services, IPL and WPL.

Electric Wholesale Rates - IPL and WPL receive wholesale electric market-based rate authority from FERC. Market-based rate authorization allows for wholesale sales of electricity within 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 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. Due to the formula rates used by ITC and ATC to charge their customers and possible future changes to these rates, there is uncertainty regarding IPL’s and WPL’s future electric transmission service expense.

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. In May 2018, Iowa enacted new energy-related legislation. The most significant provisions of the legislation for Alliant Energy and IPL include the option for energy providers to use a forward-looking test period instead of a historical test year approach for electric and gas rate reviews, and adjustment of electric transmission service costs through a permanent transmission rider.

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 (forward-looking test periods are allowable under Iowa’s new energy-related legislation that was enacted in 2018). 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. Interim retail rates can be placed in effect as soon as 10 days after the rate application filing, subject to refund, and must be based on previously established regulatory principles. The IUB must decide on requests for retail rate changes within 10 months of the date of the application for which changes are filed, or the interim rates granted become permanent.

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. In July 2018, IPL filed an EEP with the IUB, which includes IPL spending approximately $240 million for electric and natural gas energy efficiency programs in Iowa from 2019 through 2023. The budget requested for the EEP is lower than previous EEPs due to legislative changes that set budget caps, as well as to reflect lower customer participation in the energy efficiency programs. A decision from the IUB on IPL’s EEP for 2019 through 2023 is currently expected in 2019. Refer to Note 1(g) for discussion of the recovery of these costs from IPL’s retail electric and gas customers.


 
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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 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 or coal-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.

Electric Generating Unit Environmental Controls Projects - IPL is required to submit an updated EPB 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 - 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. WPL is also 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.

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 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.

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 bill surcharge of up to 3% of customers’ utilities bills. 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 $11.0 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 $11.0 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 $2.5 million or more and at any time that WPL requests to extend gas service to a new portion of its service territory.


 
6
 


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 a number of environmental rules and regulations discussed below. Given the dynamic nature of environmental regulations and other related regulatory requirements, Alliant Energy, IPL and WPL have 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 Gases Regulations - There is continued debate regarding the public policy response that the U.S. should adopt to address climate change, involving both domestic actions and international efforts. 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 carbon 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 awareness of climate change is driving efforts to decarbonize the environment through voluntary emissions reductions. The primary GHG emitted from Alliant Energy’s utility operations is CO2 from the combustion of fossil fuels at their larger EGUs.

Clean Air Act Section 111(d) - In 2015, the EPA published final standards under Section 111(d) of the CAA, referred to as the Clean Power Plan, to reduce CO2 emissions from existing fossil-fueled EGUs. In 2016, the Supreme Court issued a stay of the Clean Power Plan, which placed implementation of the final standards on hold indefinitely. In August 2018, the EPA published the proposed Affordable Clean Energy rule, which is a replacement rule for the Clean Power Plan, and is based on a narrower legal interpretation of regulating CO2 emissions from existing coal-fired EGUs. The EPA is expected to finalize the repeal of the Clean Power Plan and issuance of the Affordable Clean Energy rule in 2019. Litigation related to the Clean Power Plan is suspended while the EPA proceeds with its repeal and replacement rulemaking processes. Alliant Energy, IPL and WPL are currently unable to predict with certainty the final outcome or impact of these matters, but expect that expenditures to comply with such requirements could be significant.

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. Litigation related to Section 111(b) is suspended while the EPA revises Section 111(b), and Alliant Energy, IPL and WPL are currently unable to predict with certainty the impact of these standards. In addition, in order for the EPA to regulate existing fossil-fueled EGUs under Section 111(d) of the CAA, the EPA must have valid regulation of new fossil-fueled EGUs under Section 111(b) of the CAA. If Section 111(b) is vacated, the EPA’s ability to implement regulations for CO2 emissions at existing fossil-fueled EGUs, as well as any future Clean Power Plan replacement rule, could be limited.

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 generating facilities. Compliance for existing steam generating facilities is determined by each facility’s wastewater discharge permit and will generally be required by December 31, 2023. Projects required for compliance are facility-specific. Compliance for new steam generating facilities, such as West Riverside, is required immediately upon operation. Estimated capital expenditures to comply with these guidelines for 2019 through 2022 are included in the “Other Generation” line in the construction and acquisition expenditures table in “Liquidity and Capital Resources” in MDA.

Land and Solid Waste -
Coal Combustion Residuals Rule - The final CCR Rule, which regulates CCR as a non-hazardous waste, was published and became effective in 2015. IPL and WPL have seven and three coal-fired EGUs, respectively, with coal ash ponds that are impacted by this rule. In addition, IPL and WPL both have two active CCR landfills that are impacted by this rule. Expenditures incurred by IPL and WPL to comply with the CCR Rule are anticipated to be recovered in rates from their customers.

 
7
 



MGP Sites - Refer to Note 17(e) for discussion of IPL’s and WPL’s MGP sites.

Renewable Energy Standards - Iowa and Wisconsin have RES, 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 projects 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 RES requirements.

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
chart-d4c3e1de19f359dba74.jpgchart-d77cdf8b5cfb5764982.jpgchart-0d683339bf2d5430a0a.jpgchart-b8b207aaa2575c9e93e.jpg
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) and packaging 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 WPL’s construction of West Riverside, IPL’s and WPL’s planned additional wind generation and the proposed retirement and/or fuel switching of various EGUs. Long-term generation plans are intended to meet customer demand, reduce CO2 emissions, reduce reliance on wholesale market purchases and mitigate the impacts of future EGU retirements while maintaining compliance with long-

 
8
 


term electric demand planning reserve margins, environmental requirements and RES established by regulators. Alliant Energy continues to take voluntary action to reduce CO2 emissions by implementing a strategy to cost-effectively meet the energy needs of customers while recognizing the importance of using resources in efficient and environmentally responsible ways. In August 2018, Alliant Energy announced voluntary goals to guide this transition by targeting to reduce CO2 emissions from its fossil-fueled generation 40% by 2030 and 80% by 2050 from 2005 levels. Coal-fired EGUs are targeted to be eliminated from Alliant Energy’s overall energy mix by 2050. To achieve these long-term goals, Alliant Energy will transition away from coal-fired EGUs and incorporate more renewable energy, energy efficiency, demand response, and highly-efficient natural gas-fired EGUs.

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 16.8% and the required unforced capacity reserve margin is 7.9% for the June 1, 2019 through May 31, 2020 MISO planning year. IPL and WPL currently have adequate capacity to meet such MISO planning reserve margin requirements.

Generation - 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.

Fuel Costs - The average cost of delivered fuel per million British Thermal Units used for electric generation was as follows:
 
IPL
 
WPL
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
All fuels

$2.46

 

$2.22

 

$2.17

 

$2.72

 

$2.53

 

$2.61

Natural gas (a)
3.12

 
2.72

 
2.86

 
3.30

 
3.28

 
3.25

Coal
1.97

 
2.00

 
1.98

 
2.45

 
2.38

 
2.47


(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 generally during peak hour demands and 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.

Wind - IPL owns the Whispering Willow - East and Franklin County wind farms, and WPL owns the Cedar Ridge and Bent Tree wind farms and has a partial ownership interest in the assets of the FWEC wind farm. All or some of the renewable energy attributes associated with generation from these sources may be used in future years to comply with RES or other regulatory requirements.

Coal - Coal is one of the fuel sources for owned EGUs. Coal contracts entered into with different suppliers help ensure that a specified supply of coal is available, and delivered, at known prices for IPL’s and WPL’s coal-fired EGUs for several years. 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.


 
9
 


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. Refer to Note 17(b) for discussion of purchased power commitments.

Electric Transmission - IPL and WPL do not own electric transmission assets and currently receive electric 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.

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 MISO’s 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.


 
10
 


Electric Operating Information - Alliant Energy
2018
 
2017
 
2016
Revenues (in millions):
 
 
 
 
 
Retail

$2,687.8

 

$2,569.6

 

$2,564.8

Sales for resale
259.2

 
268.8

 
266.7

Other
53.3

 
56.3

 
44.0

Total

$3,000.3

 

$2,894.7

 

$2,875.5

Sales (000s MWh):
 
 
 
 
 
Retail
25,684

 
25,095

 
25,339

Sales for resale
5,804

 
5,003

 
4,399

Other
96

 
94

 
100

Total
31,584

 
30,192

 
29,838

Customers (End of Period):
 
 
 
 
 
Retail
962,654

 
959,295

 
955,533

Other
2,860

 
2,826

 
2,785

Total
965,514

 
962,121

 
958,318

Other Selected Electric Data:
 
 
 
 
 
Maximum summer peak hour demand (MW)
5,459

 
5,375

 
5,615

Maximum winter peak hour demand (MW)
4,556

 
4,504

 
4,559

Cooling degree days (a):
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 793)
1,032

 
747

 
971

Madison, Wisconsin (WPL) (normal - 672)
799

 
578

 
780

Sources of electric energy (000s MWh):
 
 
 
 
 
Gas
9,731

 
5,315

 
4,505

Purchased power:
 
 
 
 
 
Nuclear
3,538

 
3,727

 
3,444

Wind (b)
1,086

 
1,268

 
1,079

Other (b)
4,076

 
6,242

 
8,912

Wind (b)
1,603

 
1,591

 
1,382

Coal
12,113

 
12,380

 
11,019

Other (b)
240

 
239

 
228

Total
32,387

 
30,762

 
30,569

Revenue per KWh sold to retail customers (cents)
10.46

 
10.24

 
10.12

(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.

 
11
 


Electric Operating Information
IPL
 
WPL
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Revenues (in millions):
 
 
 
 
 
 
 
 
 
 
 
Retail

$1,578.2

 

$1,448.0

 

$1,442.5

 

$1,109.6

 

$1,121.6

 

$1,122.3

Sales for resale
117.3

 
114.6

 
97.8

 
141.9

 
154.2

 
168.9

Other
35.6

 
36.3

 
29.4

 
17.7

 
20.0

 
14.6

Total

$1,731.1

 

$1,598.9

 

$1,569.7

 

$1,269.2

 

$1,295.8

 

$1,305.8

Sales (000s MWh):
 
 
 
 
 
 
 
 
 
 
 
Retail
14,670

 
14,356

 
14,523

 
11,014

 
10,739

 
10,816

Sales for resale
2,980

 
2,169

 
1,406

 
2,824

 
2,834

 
2,993

Other
37

 
38

 
41

 
59

 
56

 
59

Total
17,687

 
16,563

 
15,970

 
13,897

 
13,629

 
13,868

Customers (End of Period):
 
 
 
 
 
 
 
 
 
 
 
Retail
489,831

 
489,717

 
489,005

 
472,823

 
469,578

 
466,528

Other
900

 
878

 
862

 
1,960

 
1,948

 
1,923

Total
490,731

 
490,595

 
489,867

 
474,783

 
471,526

 
468,451

Other Selected Electric Data:
 
 
 
 
 
 
 
 
 
 
 
Maximum summer peak hour demand (MW)
2,929

 
2,968

 
2,996

 
2,647

 
2,476

 
2,681

Maximum winter peak hour demand (MW)
2,553

 
2,421

 
2,479

 
2,011

 
2,100

 
2,131

Cooling degree days (a):
 
 
 
 
 
 
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 793)
1,032

 
747

 
971

 
N/A

 
N/A

 
N/A

Madison, Wisconsin (WPL) (normal - 672)
N/A

 
N/A

 
N/A

 
799

 
578

 
780

Sources of electric energy (000s MWh):
 
 
 
 
 
 
 
 
 
 
 
Gas
5,930

 
3,342

 
1,838

 
3,801

 
1,973

 
2,667

Purchased power:
 
 
 
 
 
 
 
 
 
 
 
Nuclear
3,538

 
3,727

 
3,444

 
N/A

 
N/A

 
N/A

Wind (b)
549

 
613

 
635

 
537

 
655

 
444

Other (b)
1,472

 
2,456

 
4,267

 
2,604

 
3,786

 
4,645

Wind (b)
890

 
851

 
630

 
713

 
740

 
752

Coal
5,690

 
5,766

 
5,598

 
6,423

 
6,614

 
5,421

Other (b)
40

 
22

 
6

 
200

 
217

 
222

Total
18,109

 
16,777

 
16,418

 
14,278

 
13,985

 
14,151

Revenue per KWh sold to retail customers (cents)
10.76

 
10.09

 
9.93

 
10.07

 
10.44

 
10.38

(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.

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

 
12
 


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 extend 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 4% and 3%, respectively, above their forecasted maximum daily system demand requirements from November 2018 through March 2019.

Gas Operating Information - Alliant Energy
2018
 
2017
 
2016
Revenues (in millions):
 
 
 
 
 
Retail

$402.3

 

$364.6

 

$322.4

Transportation/other
44.3

 
36.3

 
33.0

Total

$446.6

 

$400.9

 

$355.4

Sales (000s Dths):
 
 
 
 
 
Retail
53,389

 
49,250

 
47,743

Transportation/other
90,357

 
76,916

 
77,485

Total
143,746

 
126,166

 
125,228

Retail Customers at End of Period
415,174

 
413,054

 
411,758

Other Selected Gas Data:
 
 
 
 
 
Heating degree days (a):
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 6,655)
6,868

 
6,076

 
5,933

Madison, Wisconsin (WPL) (normal - 6,939)
7,303

 
6,569

 
6,420

Revenue per Dth sold to retail customers

$7.54

 

$7.40

 

$6.75

Purchased gas costs per Dth sold to retail customers

$4.27

 

$4.23

 

$3.99

Gas Operating Information
IPL
 
WPL
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Revenues (in millions):
 
 
 
 
 
 
 
 
 
 
 
Retail

$238.4

 

$202.2

 

$183.1

 

$163.9

 

$162.4

 

$139.3

Transportation/other
27.8

 
23.8

 
20.9

 
16.5

 
12.5

 
12.1

Total

$266.2

 

$226.0

 

$204.0

 

$180.4

 

$174.9

 

$151.4

Sales (000s Dths):
 
 
 
 
 
 
 
 
 
 
 
Retail
28,651

 
26,580

 
26,230

 
24,738

 
22,670

 
21,513

Transportation/other
37,899

 
39,365

 
37,158

 
52,458

 
37,551

 
40,327

Total
66,550

 
65,945

 
63,388

 
77,196

 
60,221

 
61,840

Retail Customers at End of Period
224,413

 
224,041

 
224,420

 
190,761

 
189,013

 
187,338

Other Selected Gas Data:
 
 
 
 
 
 
 
 
 
 
 
Maximum daily winter peak demand (Dth)
264,787

 
237,203

 
262,409

 
220,784

 
201,947

 
203,655

Heating degree days (a):
 
 
 
 
 
 
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 6,655)
6,868

 
6,076

 
5,933

 
N/A

 
N/A

 
N/A

Madison, Wisconsin (WPL) (normal - 6,939)
N/A

 
N/A

 
N/A

 
7,303

 
6,569

 
6,420

Revenue per Dth sold to retail customers

$8.32

 

$7.61

 

$6.98

 

$6.63

 

$7.16

 

$6.48

Purchased gas cost per Dth sold to retail customers

$4.51

 

$4.34

 

$4.21

 

$3.99

 

$4.11

 

$3.72

(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.


 
13
 


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.

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 Pipeline and Hazardous Materials Safety Administration, and the Midcontinent Independent System Operator, Inc. The impacts on our operations include: our ability to site and construct new generating facilities and recover associated costs, such as renewable energy projects; the installation of environmental controls and the recovery of associated costs; our ability to decommission generating facilities and recover related costs and the remaining carrying value of these facilities; 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; the rates paid to transmission operators and how those costs are recovered from customers; our ability to enter into purchased power agreements and recover the costs associated therewith; resource adequacy requirements, energy capacity standards, what forms of energy are considered when determining whether we meet those standards, and when new facilities such as IPL’s Marshalltown Generating Station, WPL’s West Riverside Energy Center, and IPL’s and WPL’s planned additional wind generation may be fully accredited with energy capacity; 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; 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.

Provisions of the Wisconsin Utility Holding Company Act 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.

Our strategy includes large construction projects, which are subject to risks - Our strategy includes constructing renewable generating facilities, constructing a natural gas-fired generating facility, making other large-scale improvements to generating facilities, implementing advanced metering infrastructure for IPL customers, 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 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; delays caused by construction accidents or injuries; shortages in materials, equipment and qualified labor; changes to the scope or timing of the projects; general contractors or subcontractors not performing as required under their contracts; the inability to agree to contract terms or disputes in contract terms; poor initial cost estimates; work stoppages; adverse weather conditions; government actions; legal action; unforeseen engineering or technology issues; limited access to capital; 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, for example, if IPL’s expansion of wind generation exceeds the respective cost cap approved by the IUB. Inability to recover costs, or inability to complete the project in a timely manner, could adversely impact our financial condition and results of operations.


 
14
 


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 economic conditions, proliferation of customer- and third party-owned generation, loss of service territory or franchises, energy efficiency measures, technological advances that increase energy efficiency, and loss of wholesale customers. 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.

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 extension of bonus depreciation deductions for certain expenditures for property. These tax planning strategies and extensions of bonus depreciation deductions have generated large annual 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. If the IRS does not agree with the deductions resulting from our tax planning strategies or our position on the qualification of production tax credits from wind generating facilities, our financial condition and results of operations may be adversely impacted.

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 level of electricity output generated by our wind farms and the applicable tax credit rate. A variety of operating and economic parameters, including significant 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.

Finally, FERC regulates utility income tax policies, including partnership tax policies, which impact our interest in American Transmission Company LLC and ATC Holdco LLC (ATC Holdings). FERC is currently investigating these income tax issues in addition to rate of return policies as a result of a court decision. The results of this investigation may lead to changes in FERC’s income tax policies, which would impact partnership entities, particularly ATC Holdings. We are currently unable to determine what impacts these potential changes will have on our financial condition or results of operations; however, it is possible that a change could reduce Alliant Energy’s equity earnings and distributions from ATC Holdings.

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, and phishing attacks. 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. 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 cannot guarantee that such safeguards will be completely successful in the event of a cyber attack. 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. Anthem was the target of a 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.


 
15
 


We are subject to employee workforce factors that could affect our businesses - We operate in an industry that requires specialized technical skills. It may be difficult to hire and retain such a skilled workforce due to labor market conditions, the length of time employees need to acquire the skills, and general competition for talent. Further, we must build a work force that is innovative, customer-focused and competitive to thrive in the future in order to successfully implement our strategy. We are also subject to collective bargaining agreements with approximately 2,200 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.

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. Conversely, 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 effect on our financial condition and results of operations.

Our utility businesses are subject to numerous environmental laws and regulations - Our utilities are subject to numerous stringent 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, effluents into the water, use of water, wetlands preservation, remediation of contamination, waste disposal, 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 distribution are complex and subject to continued uncertainty, but have tended to become more stringent over time. These laws and regulations have imposed, and proposed laws and regulations could impose in the future, additional costs on the operation of our generating facilities. 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 gases (GHG) emissions could negatively impact us - Regulators, customers and investors continue to raise concerns about climate change and GHG emissions. National regulatory action is in flux 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 GHG. Further, investors may determine that we are too reliant on fossil fuels and not buy shares of our common stock, or sell their shares of our common stock, which may cause our stock price to decrease, or not buy our debt securities, which may cause our cost of debt to increase. We could face additional pressures from customers or investors to more rapidly reduce CO2 on a voluntary-basis, including faster adoption of lower carbon technologies and management of excess renewable energy credits. The EPA’s approach and timing for implementing rules to regulate carbon emissions at fossil-fueled electric generating units remains undecided and subject to litigation. Regulation of CO2 emissions could materially increase costs, causing some electric generating units to be uneconomical to operate or maintain. We cannot provide any assurance regarding the potential impacts of climate change policy or GHG regulations on our operations and these could have a material adverse impact on 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 $5 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, 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.

 
16
 



We rely on our strong credit ratings to access the credit markets. If our credit ratings are downgraded for any reason, such as Federal Tax Reform impacts 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 or other factors, our financial condition and results of operations could be adversely affected.

Regional and national economic conditions could have an unfavorable impact on us - Our utility and non-utility businesses follow the economic cycles of the customers we serve and credit risk of counterparties we do business with. Adverse economic conditions in our service territories can adversely affect the financial condition of our customers and reduce their demand for electricity and natural gas. Economic conditions may not create enough growth to replace lost energy demand or to grow energy demand. Reduced volumes of electricity and natural gas sold, or the inability to collect unpaid bills from our customers, could adversely impact our financial condition and results of operations.

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. 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 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 MISO energy market. 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, especially during 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. 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.

We face risks associated with operating electric and natural gas infrastructure - The operation of electric generating facilities involves many risks, including start-up risks, breakdown or failure of equipment, failure of generating facilities including wind turbines, 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, employee safety, operator error and compliance with mandatory reliability standards. Our energy delivery infrastructure is aging, which increases certain risks, including breakdown or failure of equipment and fires developing from our power lines. In addition, the North American transmission grid is highly interconnected and, in extraordinary circumstances, disruptions at particular points within the grid could cause an extensive power outage in our delivery systems. Increased utilization of customer- and third party-owned generation technologies could disrupt the reliability and balance of the electricity grid. Further, the transmission system in our utilities’ service territories can experience constraints limiting the ability to transmit electric energy within our service territories. The transmission constraints could result in an inability to deliver energy from generating facilities, particularly wind generating facilities, to the national grid, or to access lower cost sources of electric energy. We also have obligations to provide electric service under regulatory requirements and contractual commitments. Failure to meet our service obligations could adversely impact our financial condition and results of operations.


 
17
 


The operation of our gas transmission and distribution infrastructure also involves many risks, such as leaks, explosions, mechanical problems and employee and public safety, which could cause substantial financial losses. These risks could result in loss of human life, significant damage to property, environmental emissions, impairment of our operations and substantial losses to us. We are also responsible for compliance with new and changing mandatory reliability and safety standards, including anticipated new regulations under the Pipeline and Hazardous Materials Safety Administration. Our infrastructure is aging, which could impact safety and compliance with possible new regulations. Failure to meet these standards could result in substantial fines. We also have obligations to provide service 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, blizzards, ice storms, extreme cold temperatures, fires, solar flares or pandemics may adversely impact our ability to generate, 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.

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), as well as regulated assets such as our Minnesota electric and natural gas distribution assets. 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 and/or its assignees. Any required payments on retained liabilities, guarantees or indemnification obligations with respect to Whiting Petroleum, the sales of our Minnesota electric and natural gas distribution assets, or other future asset or business divestitures, could adversely impact our financial condition and results of operations.

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 us, whether by dividends, distributions, loans or other payments. The ability of our subsidiaries to pay dividends or make distributions to us 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 any outstanding preferred stock and 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.

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 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.

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 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 a significant adverse impact on our financial condition and results of operations.

 
18
 



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 a material 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, 2018, IPL’s and WPL’s EGUs by primary fuel type were as follows:
IPL
 
 
 
Primary
 
Generating
 
 
In-service
 
Dispatch
 
Capacity
Name of EGU and Location
 
Dates
 
Type (a)
 
in MW (b)
Marshalltown Generating Station (Units 1-3); Marshalltown, IA
 
2017
 
IN
 
630

Emery Generating Station (Units 1-3); Mason City, IA
 
2004
 
IN
 
547

Marshalltown Combustion Turbines (Units 1-3); Marshalltown, IA
 
1978
 
PK
 
143

Prairie Creek Generating Station (Unit 4); Cedar Rapids, IA
 
1967
 
PK
 
109

Burlington Combustion Turbines (Units 1-4); Burlington, IA
 
1994-1996
 
PK
 
46

Total Gas
 
 
 
 
 
1,475

 
 
 
 
 
 
 
Ottumwa Generating Station (Unit 1); Ottumwa, IA (c)
 
1981
 
BL
 
315

Lansing Generating Station (Unit 4); Lansing, IA
 
1977
 
BL
 
223

Burlington Generating Station (Unit 1); Burlington, IA
 
1968
 
BL
 
192

George Neal Generating Station (Unit 4); Sioux City, IA (d)
 
1979
 
BL
 
162

George Neal Generating Station (Unit 3); Sioux City, IA (e)
 
1975
 
BL
 
135

Prairie Creek Generating Station (Units 1 and 3); Cedar Rapids, IA
 
1958-1997
 
BL
 
28

Louisa Generating Station (Unit 1); Louisa, IA (f)
 
1983
 
BL
 
29

Total Coal
 
 
 
 
 
1,084

 
 
 
 
 
 
 
Lime Creek Combustion Turbines (Units 1-2); Mason City, IA
 
1991
 
PK
 
68

Total Oil
 
 
 
 
 
68

 
 
 
 
 
 
 
Whispering Willow - East (121 Units); Franklin Co., IA
 
2009
 
IN
 
30

Franklin County (60 Units); Franklin Co., IA
 
2012
 
IN
 
15

Total Wind
 
 
 
 
 
45

 
 
 
 
 
 
 
Dubuque Solar Garden; Dubuque, IA
 
2017
 
IN
 
3

 
 
 
 
 
 
 
Total capacity
 
 
 
 
 
2,675


 
19
 


WPL
 
 
 
Primary
 
Generating
 
 
In-service
 
Dispatch
 
Capacity
Name of EGU and Location
 
Dates
 
Type (a)
 
in MW (b)
Riverside Energy Center (Units 1-3); Beloit, WI
 
2004
 
IN
 
552

Neenah Energy Facility (Units 1-2); Neenah, WI
 
2000
 
PK
 
294

South Fond du Lac Combustion Turbines (2 Units); Fond du Lac, WI (g)
 
1994
 
PK
 
143

Rock River Combustion Turbines (Units 3-6); Beloit, WI
 
1967-1972
 
PK
 
132

Sheepskin Combustion Turbine (Unit 1); Edgerton, WI
 
1971
 
PK
 
34

Total Gas
 
 
 
 
 
1,155

 
 
 
 
 
 
 
Columbia Energy Center (Units 1-2); Portage, WI (h)
 
1975-1978
 
BL
 
554

Edgewater Generating Station (Unit 5); Sheboygan, WI
 
1985
 
BL
 
401

Total Coal
 
 
 
 
 
955

 
 
 
 
 
 
 
Bent Tree (122 Units); Freeborn Co., MN
 
2010-2011
 
IN
 
28

Cedar Ridge (41 Units); Fond du Lac Co., WI
 
2008
 
IN
 
8

Forward Wind Energy Center; Dodge and Fond du Lac Co, WI (i)
 
2008
 
IN
 
6

Total Wind
 
 
 
 
 
42

 
 
 
 
 
 
 
Prairie du Sac Hydro Plant (8 Units); Prairie due Sac, WI
 
1914-1940
 
IN
 
12

Kilbourn Hydro Plant (4 Units); Wisconsin Dells, WI
 
1926-1939
 
IN
 
6

Total Hydro
 
 
 
 
 
18

 
 
 
 
 
 
 
Total capacity
 
 
 
 
 
2,170


(a)
Base load EGUs (BL) are designed for nearly continuous operation at or near full capacity to provide the system base load. Intermediate EGUs (IN) follow system load changes with frequent starts and curtailments of output during low demand. Peak load EGUs (PK) are generally low efficiency, quick response units that run primarily when there is high demand.
(b)
Based on the accredited generating capacity of the EGUs as of December 31, 2018 included in MISO’s resource adequacy process for the planning period from June 2018 through May 2019.
(c)
Represents IPL’s 48% ownership interest in this 656 MW (generating capacity) EGU, which is operated by IPL.
(d)
Represents IPL’s 25.695% ownership interest in this 629 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(e)
Represents IPL’s 28% ownership interest in this 481 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(f)
Represents IPL’s 4% ownership interest in this 718 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(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 52.5% ownership interest in this 1,055 MW (generating capacity) EGU, which is operated by WPL.
(i)
Represents WPL’s 42.64% ownership interest in this 15 MW (generating capacity) EGU, which is operated by Invenergy Services, LLC.

At December 31, 2018, IPL owned approximately 17,200 miles of overhead electric distribution line and approximately 3,500 miles of underground electric distribution cable, as well as approximately 560 substation distribution transformers, substantially all of which are located in Iowa. At December 31, 2018, WPL owned approximately 16,000 miles of overhead electric distribution line and approximately 5,900 miles of underground electric distribution cable, as well as approximately 310 substation distribution transformers, substantially all of which are located in Wisconsin.

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. At December 31, 2018, IPL’s gas distribution facilities included approximately 5,100 miles of gas mains located in Iowa and WPL’s included approximately 4,600 miles of gas mains located in Wisconsin.

Other - IPL’s and WPL’s other property consists primarily of operating and storeroom facilities, vehicles, computer hardware and software, communication equipment and other miscellaneous tools and equipment. IPL’s other property also includes steam service assets. Refer to Note 10(b) for information regarding WPL’s lease of the Sheboygan Falls Energy Facility from AEF’s Non-utility Generation business.

AEF - AEF’s principal properties included in “Property, plant and equipment, net” on Alliant Energy’s balance sheet at December 31, 2018 were as follows:


 
20
 


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 291 MW of generating capacity for MISO’s resource adequacy process for the planning period from June 2018 through May 2019.

Transportation - Includes a short-line railway in Iowa with 116 miles of railroad track and 10 active locomotives; and a barge terminal on the Mississippi River.

Corporate Services - Corporate Services’ property included in “Property, plant and equipment, net” on Alliant Energy’s balance sheet at December 31, 2018 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.

ITEM 3. LEGAL PROCEEDINGS

None. 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.

EXECUTIVE OFFICERS OF THE REGISTRANTS
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
Patricia L. Kampling
 
59
 
Alliant Energy
 
Ms. Kampling has served as a director since January 2012, as Chairman of the Board and Chief Executive Officer (CEO) since April 2012, and as President from February 2011 to December 2017.
 
 
 
 
IPL and WPL
 
Ms. Kampling has served as a director since January 2012, as Chairman of the Board since April 2012, and as CEO from April 2012 to December 2018.
John O. Larsen
 
55
 
Alliant Energy
 
Mr. Larsen has served as President and Chief Operating Officer since January 2019 and as a director since February 2019. He previously served as President since January 2018, Senior Vice President (VP) from February 2014 to January 2018, and as Senior VP-Generation from January 2010 to February 2014.
 
 
 
 
IPL
 
Mr. Larsen has served as CEO since January 2019 and as a director since February 2019. He previously served as Senior VP since February 2014 and as Senior VP-Generation from January 2010 to February 2014.
 
 
 
 
WPL
 
Mr. Larsen has served as CEO since January 2019 and as a director since February 2019. He previously served as President since December 2010.
Robert J. Durian
 
48
 
Alliant Energy, IPL and WPL
 
Mr. Durian has served as Senior VP and Chief Financial Officer (CFO) since February 2019. He previously served as Senior VP, CFO and Treasurer since January 2018; as VP, CFO and Treasurer from December 2016 to January 2018; as VP, Chief Accounting Officer (CAO) and Treasurer from July 2016 to December 2016; as VP, CAO and Controller from July 2015 to July 2016; and as Controller and CAO from February 2011 to July 2015.
James H. Gallegos
 
58
 
Alliant Energy, IPL and WPL
 
Mr. Gallegos has served as Senior VP, General Counsel and Corporate Secretary since February 2015. He previously served as Senior VP and General Counsel since February 2014; and as VP and General Counsel from November 2010 to February 2014.
David A. de Leon
 
56
 
Alliant Energy and IPL
 
Mr. de Leon has served as Senior VP since January 2019. He previously served as VP since April 2017, as Director-Generation Construction from February 2014 to April 2017, and as Director-Construction from January 2011 to February 2014.
 
 
 
 
WPL
 
Mr. de Leon has served as President since January 2019. He previously served as VP since April 2017, as Director-Generation Construction from February 2014 to April 2017, and as Director-Construction from January 2011 to February 2014.
Terry L. Kouba
 
60
 
Alliant Energy and WPL
 
Mr. Kouba has served as Senior VP since January 2019. He previously served as VP since February 2014, and as Director-Generation Operations from January 2011 to February 2014.
 
 
 
 
IPL
 
Mr. Kouba has served as President since January 2019. He previously served as VP since February 2014, and as Director-Generation Operations from January 2011 to February 2014.
Benjamin M. Bilitz
 
44
 
Alliant Energy, IPL and WPL
 
Mr. Bilitz has served as CAO and Controller since December 2016. He previously served as Controller since July 2016 and as Assistant Controller from March 2011 to July 2016.

 
21
 


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, 2018 was $42.25.

Shareowners - At December 31, 2018, there were 25,029 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 2018, Alliant Energy announced an increase in its targeted 2019 annual common stock dividend to $1.42 per share, which is equivalent to a quarterly rate of $0.355 per share, beginning with the February 2019 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, 2018 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
 
3,591

 

$42.68

 
 
N/A
November 1 to November 30
 
3,090

 
45.05

 
 
N/A
December 1 to December 31
 
175

 
43.62

 
 
N/A
 
 
6,856

 
43.77

 
 
 

(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.


 
22
 


ITEM 6. SELECTED FINANCIAL DATA

Financial Information
Alliant Energy
2018 (a)
 
2017 (a)
 
2016 (a)
 
2015
 
2014
 
(dollars in millions, except per share data)
Income Statement Data:
 
Revenues

$3,534.5

 

$3,382.2

 

$3,320.0

 

$3,253.6

 

$3,350.3

Amounts attributable to Alliant Energy common shareowners:
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of tax
512.1

 
455.9

 
373.8

 
380.7

 
385.5

Income (loss) from discontinued operations, net of tax

 
1.4

 
(2.3
)
 
(2.5
)
 
(2.4
)
Net income
512.1

 
457.3

 
371.5

 
378.2

 
383.1

Common Stock Data:
 
 
 
 
 
 
 
 
 
Earnings per weighted average common share attributable to Alliant Energy common shareowners (basic and diluted):
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of tax

$2.19

 

$1.99

 

$1.65

 

$1.69

 

$1.74

Loss from discontinued operations, net of tax

$—

 

$—

 

($0.01
)
 

($0.01
)
 

($0.01
)
Net income

$2.19

 

$1.99

 

$1.64

 

$1.68

 

$1.73

Common shares outstanding at year-end (000s)
236,063

 
231,349

 
227,674

 
226,918

 
221,871

Dividends declared per common share

$1.34

 

$1.26

 

$1.175

 

$1.10

 

$1.02

Market value per share at year-end

$42.25

 

$42.61

 

$37.89

 

$31.225

 

$33.21

Book value per share at year-end

$19.43

 

$18.08

 

$16.96

 

$16.41

 

$15.50

Market capitalization at year-end

$9,973.7

 

$9,857.8

 

$8,626.6

 

$7,085.5

 

$7,368.3

Other Selected Financial Data:
 
 
 
 
 
 
 
 
 
Cash flows from operating activities (b)

$527.7

 

$521.6

 

$392.8

 

$871.2

 

$891.6

Construction and acquisition expenditures

$1,633.9

 

$1,466.9

 

$1,196.8

 

$1,034.3

 

$902.8

Total assets at year-end

$15,426.0

 

$14,187.8

 

$13,373.8

 

$12,495.2

 

$12,063.5

Long-term obligations, net

$5,506.1

 

$4,870.6

 

$4,325.1

 

$3,837.0

 

$3,768.7

IPL
 
 
 
 
 
 
 
 
 
Revenues

$2,042.3

 

$1,870.3

 

$1,820.4

 

$1,774.5

 

$1,848.1

Earnings available for common stock
264.0

 
216.8

 
215.6

 
186.0

 
181.6

Cash dividends declared on common stock
168.0

 
156.1

 
151.9

 
140.0

 
140.0

Cash flows from (used for) operating activities (b)
(5.0
)
 
(21.8
)
 
(104.9
)
 
385.0

 
406.1

Total assets
8,411.4

 
7,606.0

 
7,304.7

 
6,709.1

 
6,450.2

Long-term obligations, net
2,552.8

 
2,406.6

 
2,154.0

 
1,857.4

 
1,758.6

 
 
 
 
 
 
 
 
 
 
WPL
 
 
 
 
 
 
 
 
 
Revenues

$1,452.6

 

$1,472.8

 

$1,459.1

 

$1,435.1

 

$1,449.1

Earnings available for common stock
208.1

 
186.6

 
190.4

 
176.3

 
180.4

Cash dividends declared on common stock
140.1

 
125.9

 
135.0

 
126.9

 
118.7

Cash flows from operating activities
457.0

 
465.7

 
521.4

 
449.8

 
424.4

Total assets
6,152.5

 
5,756.5

 
5,290.3

 
5,270.4

 
5,117.6

Long-term obligations, net
1,905.4

 
1,914.3

 
1,623.2

 
1,624.2

 
1,658.3


(a)
Refer to “Results of Operations” in MDA for discussion of the 2018, 2017 and 2016 results of operations.
(b)
Alliant Energy’s and IPL’s cash flows from operating activities were restated for 2017 and 2016 as a result of the adoption of a new cash flows presentation accounting standard as discussed in Note 1(n). Alliant Energy’s and IPL’s cash flows from operating activities for 2015 and 2014 were not retrospectively amended for this new presentation standard as the information was not available due to the implementation of a new customer billing and information system in 2016.

Alliant Energy is the sole common shareowner of all 13,370,788 and 13,236,601 shares of IPL’s and WPL’s common stock outstanding, respectively. As such, earnings per share data is not disclosed herein for IPL and WPL.


 
23
 


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.

OVERVIEW

Description of Business
General - Alliant Energy is a Midwest U.S. energy holding company whose primary subsidiaries are IPL, WPL, AEF and Corporate Services. IPL and WPL are public utilities, and AEF is the parent company for Alliant Energy’s non-utility businesses and holds all of Alliant Energy’s interest in ATC Holdings. Corporate Services provides administrative services to Alliant Energy and its subsidiaries.

Utilities and Corporate Services - IPL and WPL own a portfolio of EGUs located in Iowa, Wisconsin and Minnesota with a diversified fuel mix including natural gas, renewable resources and coal. The output from these EGUs, supplemented with purchased power, is used to provide electric service to approximately 965,000 electric customers in the upper Midwest. The utility business also procures natural gas from various suppliers to provide service to approximately 415,000 retail gas customers in the upper Midwest. Alliant Energy’s utility business is its primary source of earnings and cash flows. The earnings and cash flows from the utilities and Corporate Services business are sensitive to various external factors including, but not limited to, the amount and timing of rates approved by regulatory authorities, the impact of weather and economic conditions on electric and gas sales volumes, and other factors listed in “Risk Factors” in Item 1A and “Forward-looking Statements.”

ATC Holdings - ATI, a wholly-owned subsidiary of AEF, holds all of Alliant Energy’s interest in ATC Holdings.

Non-utility Business and Parent - AEF also manages various businesses including Transportation (short-line railway and barge transportation services), a non-utility wind farm, the Sheboygan Falls Energy Facility and several other modest holdings.

Strategic Overview
Alliant Energy’s mission is to deliver energy solutions and exceptional service that its customers and communities count on - safely, efficiently and responsibly. Our mission is supported by a strategy focused on meeting the evolving expectations of customers while providing an attractive return for investors. 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 in 2018 (refer to “Rate Matters” for details) -
Federal Tax Reform savings provided to retail electric and gas customers.
Amendment to shorten the term of the DAEC nuclear PPA and the execution of four new wind PPAs approved by the IUB in December 2018.
Rate settlement approved by the PSCW in December 2018 authorizing electric and gas base rates for WPL retail customers to remain flat until 2020.

Making customer-focused investments - 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.
Key Highlights in 2018 (refer to “Customer Investments” for details) -
Expansion of renewable generation with the required regulatory approvals and progress with construction of IPL’s new wind projects located in Iowa, as well as WPL’s acquisition of FWEC in April 2018.
Expansion of natural gas-fired generation with the construction of WPL’s West Riverside facility.
Completion of the remaining major environmental controls at IPL’s and WPL’s newer, larger and more efficient coal-fired generating units with the installation of an SCR at WPL’s Columbia Unit 2.
Progress with implementing advanced metering infrastructure for IPL customers.


 
24
 


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 in 2018 -
Progress with certifying development-ready sites throughout Iowa and Wisconsin, including finalizing certification of the Big Cedar Industrial Center Mega-site, a 1,300-acre rail-served ready-to-build manufacturing and industrial site in Cedar Rapids, Iowa, which is in close proximity to the regional airport and interstate freeways and accesses IPL’s electric services.

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 from continuing operations 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):
 
2018
 
2017
 
Income
 
EPS
 
Income
 
EPS
Continuing operations:
 
 
 
 
 
 
 
Utilities and Corporate Services

$485.7

 

$2.08

 

$416.7

 

$1.82

ATC Holdings
28.4

 
0.12

 
25.4

 
0.11

Non-utility and Parent
(2.0
)
 
(0.01
)
 
13.8

 
0.06

Income from continuing operations
512.1

 
2.19

 
455.9

 
1.99

Income from discontinued operations

 

 
1.4

 

Net income

$512.1

 

$2.19

 

$457.3

 

$1.99


Alliant Energy’s Utilities and Corporate Services income from continuing operations increased $69 million in 2018 compared to 2017. The increase was primarily due to higher margins resulting from IPL’s and WPL’s increasing rate base, higher retail electric and gas sales due to temperatures in 2018 compared to 2017, and higher AFUDC. These items were partially offset by higher depreciation expense.


 
25
 


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
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
 
2018
 
2017
 
2016
Operating income

$694.4

 

$671.2

 

$554.1

 

$350.8

 

$304.1

 

$277.6

 

$312.9

 

$333.7

 

$337.2