This MDA includes information relating to Alliant Energy, and IPL and WPL
(collectively, the Utilities), as well as ATC Holdings, 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 the Notes included
in this report, as well as the financial statements, notes and MDA included in
the 2020 Form 10-K . Unless otherwise noted, all "per share" references in
MDA refer to earnings per diluted share.
21
--------------------------------------------------------------------------------
Table of Contents
2021 HIGHLIGHTS
Key highlights since the filing of the 2020 Form 10-K include the following:
Customer Investments:
•In March 2021, WPL filed a Certificate of Authority with the PSCW for approval
to acquire, construct, own, and operate up to 414 MW of new solar generation by
the end of 2023 in the following Wisconsin counties: Dodge (150 MW), Waushara
(99 MW), Rock (65 MW), Grant (50 MW) and Green (50 MW). In April 2021, WPL
received an oral decision from the PSCW authorizing WPL to acquire, own and
operate 675 MW of new solar generation in various Wisconsin counties, and a
written order from the PSCW is currently expected in May 2021. A significant
majority of the capital expenditures for these 1,089 MWs of solar generation
projects were included in the anticipated construction and acquisition
expenditures included in "Liquidity and Capital Resources" in the 2020 Form
10-K . WPL proposes to own and operate the solar generation projects, which are
currently expected to qualify for 30% investment tax credits, through a tax
equity partnership, with approximately 35% to 45% of the construction costs
financed with capital from the tax equity partner. WPL requested to include $355
million and $585 million in rate base for the 414 MW and 675 MW of new solar
generation, respectively, which reflects its portion of capital expenditures,
less the amounts financed by the tax equity partner. The 1,089 MW of new solar
generation would replace energy and capacity being eliminated with the planned
retirement of the coal-fired Edgewater Generating Station (414 MW) by the end of
2022, and Columbia Unit 1 by the end of 2023 and Columbia Unit 2 by the end of
2024 (595 MW in aggregate).
Rate Matters:
•In May 2021, WPL filed a notice with the PSCW of its intent to enter into a
settlement agreement with certain intervenor groups for annual base rate
increases of $70 million and $15 million for WPL's retail electric and gas
customers, respectively, covering the 2022/2023 forward looking Test Period. The
key drivers for the proposed annual base rate increases include lower excess
deferred income tax benefits in 2022 and 2023 and revenue requirement impacts of
increasing electric and gas rate base, including investments in solar
generation. In addition, tentative agreement has been reached proposing WPL
maintain its current authorized return on common equity of 10%, implement a 54%
common equity component of regulatory capital structure, as well as receive a
recovery of and a return on the remaining net book value of Edgewater Unit 5,
which is currently expected to be retired by the end of 2022. WPL currently
plans to file its related rate review request with the PSCW in the second
quarter of 2021 and expects any rate changes granted from this request to be
effective on January 1, 2022 and extend through the end of 2023.
•In April 2021, the IUB issued an order that new rules are to be adopted, which
would establish minimum filing requirements for rate reviews using a
forward-looking test period, and the related subsequent proceeding review after
the close of the forward-looking test period. The rules provide that in the
subsequent proceeding review, a utility's actual costs and revenues shall be
presumed to be reasonably consistent with the forward-looking test period if the
utility's actual return on common equity falls with a standard of reasonableness
of 50 basis points above or 50 basis points below the authorized return on
common equity. The new rules are currently expected to be effective later in
2021.
Legislative Matters:
•In March 2021, the American Rescue Plan Act of 2021 (Act) was enacted. The most
significant provision of the Act for Alliant Energy is reduced minimum pension
plan funding requirements, which Alliant Energy is currently evaluating. The Act
also provides additional funding to the Low Income Home Energy Assistance
Program, which assists certain of Alliant Energy's customers with managing their
energy costs, as well as provides financial support for certain of Alliant
Energy's residential, small business and non-profit customers.
•In April 2021, legislation was enacted in Iowa prohibiting counties and cities
from regulating the sale of natural gas and propane.
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.
22
--------------------------------------------------------------------------------
Table of Contents
Additionally, the table below includes EPS for Utilities and Corporate Services,
ATC Holdings, and Non-utility and Parent, which are non-GAAP financial measures.
Alliant Energy believes these non-GAAP financial measures are useful to
investors because they facilitate an understanding of segment performance and
trends, and provide additional information about Alliant Energy's operations on
a basis consistent with the measures that management uses to manage its
operations and evaluate its performance.
Financial Results Overview - Alliant Energy's net income and EPS attributable to
Alliant Energy common shareowners for the three months ended March 31 were as
follows (dollars in millions, except per share amounts):
© Edgar Online, source Glimpses