Companies: 10,652     total market cap: $140.732 T
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Alliant Energy
LNT
#1296
Rank
$17.91 B
Marketcap
๐Ÿ‡บ๐Ÿ‡ธ United States
Country
$69.68
Share price
2.13%
Change (1 day)
16.80%
Change (1 year)
๐Ÿ”‹ Electricity๐Ÿšฐ Utility companies โšก Energy
Categories
Alliant Energy Corporation is an American public utility holding company.
  1. Alliant Energy
  2. Quarterly Reports (10-Q)
  3. Financial Year FY2020 Q3

Alliant Energy - 10-Q quarterly report FY2020 Q3


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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
 
 
FORM 10-Q
 
 
 
 
 
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2020

or

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

alliantenergylogo.jpg

Name of Registrant, State of Incorporation, Address of Principal Executive Offices, Telephone Number, Commission File Number, IRS Employer Identification Number

ALLIANT ENERGY CORPORATION
(a Wisconsin Corporation)
4902 N. Biltmore Lane
Madison, Wisconsin 53718
Telephone (608) 458-3311
Commission File Number - 1-9894
IRS Employer Identification Number - 39-1380265

INTERSTATE POWER & LIGHT COMPANY
(an Iowa corporation)
Alliant Energy Tower
Cedar Rapids, Iowa 52401
Telephone (319) 786-4411
Commission File Number - 1-4117
IRS Employer Identification Number - 42-0331370

WISCONSIN POWER & LIGHT COMPANY
(a Wisconsin corporation)
4902 N. Biltmore Lane
Madison, Wisconsin 53718
Telephone (608) 458-3311
Commission File Number - 0-337
IRS Employer Identification Number - 39-0714890
This combined Form 10-Q is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-Q relating to Interstate Power and Light Company and Wisconsin Power and Light Company is filed by each such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself.

Securities registered pursuant to Section 12(b) of the Act:
Alliant Energy Corporation, Common Stock, $0.01 Par Value, Trading Symbol LNT, Nasdaq Global Select Market
Interstate Power and Light Company, 5.100% Series D Cumulative Perpetual Preferred Stock, $0.01 Par Value, Trading Symbol IPLDP, Nasdaq Global Select Market

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.
Alliant Energy Corporation - Yes ☒ No ☐
Interstate Power and Light Company - Yes ☒ No ☐
Wisconsin Power and Light Company - Yes ☒ No ☐

Indicate by check mark whether the 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).
Alliant Energy Corporation - Yes ☒ No ☐
Interstate Power and Light Company - Yes ☒ No ☐
Wisconsin Power and Light Company - Yes ☒ No ☐
Indicate by check mark whether the 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.
Alliant Energy Corporation - Large Accelerated Filer ☒ Accelerated Filer ☐ Non-accelerated Filer ☐ Smaller Reporting Company ☐ Emerging Growth Company ☐
Interstate Power and Light Company - Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐
Wisconsin Power and Light Company - Large Accelerated Filer ☐ Accelerated Filer ☐ Non-accelerated Filer ☒ Smaller Reporting Company ☐ Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Alliant Energy Corporation ☐
Interstate Power and Light Company ☐
Wisconsin Power and Light Company ☐

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).
Alliant Energy Corporation - Yes ☐ No ☒
Interstate Power and Light Company - Yes ☐ No ☒
Wisconsin Power and Light Company - Yes ☐ No ☒
Number of shares outstanding of each class of common stock as of September 30, 2020:
Alliant Energy Corporation, Common Stock, $0.01 par value, 249,760,663 shares outstanding
Interstate Power and Light Company, Common Stock, $2.50 par value, 13,370,788 shares outstanding (all outstanding shares are owned beneficially and of record by Alliant Energy Corporation)
Wisconsin Power and Light Company, Common Stock, $5 par value, 13,236,601 shares outstanding (all outstanding shares are owned beneficially and of record by Alliant Energy Corporation)



TABLE OF CONTENTS
 
Page
Definitions
1
Forward-looking Statements
1
Part I. Financial Information
3
Item 1. Condensed Consolidated Financial Statements (Unaudited)
3
Alliant Energy Corporation
3
Interstate Power and Light Company
6
Wisconsin Power and Light Company
9
Combined Notes to Condensed Consolidated Financial Statements
12
1. Summary of Significant Accounting Policies
12
2. Regulatory Matters
13
3. Receivables
14
4. Investments
14
5. Common Equity
15
6. Debt
17
7. Revenues
18
8. Income Taxes
19
9. Benefit Plans
19
10. Asset Retirement Obligations
20
11. Derivative Instruments
20
12. Fair Value Measurements
21
13. Commitments and Contingencies
23
14. Segments of Business
25
15. Related Parties
26
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
27
Item 3. Quantitative and Qualitative Disclosures About Market Risk
36
Item 4. Controls and Procedures
37
Part II. Other Information
37
Item 1A. Risk Factors
37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
38
Item 6. Exhibits
38
Signatures
39


DEFINITIONS
The following abbreviations or acronyms used in this report are defined below:
Abbreviation or Acronym
Definition
Abbreviation or Acronym
Definition
2019 Form 10-K
Combined Annual Report on Form 10-K filed by Alliant Energy, IPL and WPL for the year ended Dec. 31, 2019
GAAP
U.S. generally accepted accounting principles
AEF
Alliant Energy Finance, LLC
IPL
Interstate Power and Light Company
Alliant Energy
Alliant Energy Corporation
IUB
Iowa Utilities Board
ATC
American Transmission Company LLC
MDA
Management’s Discussion and Analysis of Financial Condition and Results of Operations
ATC Holdings
Interest in American Transmission Company LLC and ATC Holdco LLC
MISO
Midcontinent Independent System Operator, Inc.
Corporate Services
Alliant Energy Corporate Services, Inc.
MW
Megawatt
COVID-19
Novel coronavirus
MWh
Megawatt-hour
DAEC
Duane Arnold Energy Center
N/A
Not applicable
Dth
Dekatherm
Note(s)
Combined Notes to Condensed Consolidated Financial Statements
EGU
Electric generating unit
OPEB
Other postretirement benefits
EPA
U.S. Environmental Protection Agency
PPA
Purchased power agreement
EPS
Earnings per weighted average common share
PSCW
Public Service Commission of Wisconsin
Federal Tax Reform
Tax Cuts and Jobs Act
U.S.
United States of America
FERC
Federal Energy Regulatory Commission
West Riverside
West Riverside Energy Center
Financial Statements
Condensed Consolidated Financial Statements
Whiting Petroleum
Whiting Petroleum Corporation
FTR
Financial transmission right
WPL
Wisconsin Power and Light Company

FORWARD-LOOKING STATEMENTS

Statements contained in this report that are not of historical fact are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified as such because the statements include words such as “may,” “believe,” “expect,” “anticipate,” “plan,” “project,” “will,” “projections,” “estimate,” or other words of similar import. Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all, of the risks and uncertainties of Alliant Energy, IPL and WPL that could materially affect actual results include:

•
IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of and/or the return on costs, including fuel costs, operating costs, transmission costs, deferred expenditures, deferred tax assets, tax expense, capital expenditures, and remaining costs related to EGUs that may be permanently closed and certain other retired assets, decreases in sales volumes, earning their authorized rates of return, and the payments to their parent of expected levels of dividends;
•
federal and state regulatory or governmental actions, including the impact of legislation, and regulatory agency orders;
•
the direct or indirect effects resulting from the COVID-19 pandemic on sales volumes, margins, operations, employees, contractors, vendors, the ability to complete construction projects, supply chains, customers’ inability to pay bills, suspension of disconnects and waiving of late fees applied to past due accounts, the market value of the assets that fund pension plans and the potential for additional funding requirements, the ability of counterparties to meet their obligations, compliance with regulatory requirements, the ability to implement regulatory plans, economic conditions and access to capital markets;
•
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;
•
any material post-closing payments related to any past asset divestitures, including the sale of Whiting Petroleum, which could result from, among other things, indemnification agreements, warranties, guarantees or litigation;

 
1
 

•
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 Coal Combustion Residuals Rule, future changes in environmental laws and regulations, including federal, state or local regulations for carbon dioxide emissions reductions from new and existing fossil-fueled EGUs, and litigation associated with environmental requirements;
•
increased pressure from customers, investors and other stakeholders to more rapidly reduce carbon dioxide emissions;
•
the ability to defend against environmental claims brought by state and federal agencies, such as the EPA, state natural resources agencies or third parties, such as the Sierra Club, and the impact on operating expenses of defending and resolving such claims;
•
continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;
•
inflation and interest rates;
•
the ability to complete construction of solar projects within the cost caps set by regulators and to meet all requirements to qualify for the full level of renewable 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;
•
the direct or indirect effects resulting from breakdown or failure of equipment in the operation of electric and gas distribution systems, such as mechanical problems and explosions or fires, and compliance with electric and gas transmission and distribution safety regulations, including regulations promulgated by the Pipeline and Hazardous Materials Safety Administration;
•
issues related to the availability and operations of EGUs, including start-up risks, breakdown or failure of equipment, performance below expected or contracted levels of output or efficiency, operator error, employee safety, transmission constraints, compliance with mandatory reliability standards and risks related to recovery of resulting incremental costs through rates;
•
impacts that excessive heat, storms or natural disasters may have on Alliant Energy’s, IPL’s and WPL’s operations and recovery of costs associated with restoration activities, including those related to the August 2020 derecho windstorm, or on the operations of Alliant Energy’s investments;
•
Alliant Energy’s ability to sustain its dividend payout ratio goal;
•
changes to costs of providing benefits and related funding requirements of pension and OPEB plans due to the market value of the assets that fund the plans, economic conditions, financial market performance, interest rates, timing and form of benefits payments, life expectancies and demographics;
•
material changes in employee-related benefit and compensation costs;
•
risks associated with operation and ownership of non-utility holdings;
•
changes in technology that alter the channels through which customers buy or utilize Alliant Energy’s, IPL’s or WPL’s products and services;
•
impacts on equity income from unconsolidated investments from valuations and potential changes to ATC’s authorized return on equity;
•
impacts of IPL’s future tax benefits from Iowa rate-making practices, including deductions for repairs expenditures, allocation of mixed service costs and state depreciation, and recoverability of the associated regulatory assets from customers, when the differences reverse in future periods;
•
the impacts of changes in tax rates, including adjustments made to deferred tax assets and liabilities;
•
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, as well as Risk Factors in Item 1A in the 2019 Form 10-K.

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.

 
2
 

PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2020
 
2019
 
2020
 
2019
 
(in millions, except per share amounts)
Revenues:
 
 
 
 
 
 
 
Electric utility

$852

 

$916

 

$2,257

 

$2,350

Gas utility
42

 
42

 
253

 
323

Other utility
10

 
11

 
32

 
33

Non-utility
16

 
21

 
57

 
62

Total revenues
920

 
990

 
2,599

 
2,768

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and purchased power
179

 
219

 
527

 
602

Electric transmission service
132

 
127

 
326

 
363

Cost of gas sold
11

 
9

 
117

 
151

Other operation and maintenance
143

 
174

 
465

 
527

Depreciation and amortization
156

 
144

 
454

 
424

Taxes other than income taxes
27

 
27

 
82

 
84

Total operating expenses
648

 
700

 
1,971

 
2,151

Operating income
272

 
290

 
628

 
617

Other (income) and deductions:
 
 
 
 
 
 
 
Interest expense
68

 
68

 
207

 
204

Equity income from unconsolidated investments, net
(15
)
 
(12
)
 
(46
)
 
(35
)
Allowance for funds used during construction
(13
)
 
(22
)
 
(51
)
 
(66
)
Other
3

 
4

 
7

 
11

Total other (income) and deductions
43

 
38

 
117

 
114

Income before income taxes
229

 
252

 
511

 
503

Income tax expense (benefit)
(20
)
 
23

 
(47
)
 
49

Net income
249

 
229

 
558

 
454

Preferred dividend requirements of Interstate Power and Light Company
3

 
3

 
8

 
8

Net income attributable to Alliant Energy common shareowners

$246

 

$226

 

$550

 

$446

Weighted average number of common shares outstanding:
 
 
 
 
 
 
 
Basic
249.7

 
239.1

 
247.9

 
237.7

Diluted
250.0

 
239.9

 
248.1

 
238.2

Earnings per weighted average common share attributable to Alliant Energy common shareowners:
 
 
 
 
 
 
 
Basic

$0.99

 

$0.95

 

$2.22

 

$1.88

Diluted

$0.98

 

$0.94

 

$2.22

 

$1.87


Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
3
 

ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2020
 
December 31,
2019
 
(in millions, except per
share and share amounts)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents

$189

 

$16

Accounts receivable, less allowance for expected credit losses
399

 
402

Production fuel, at weighted average cost
62

 
78

Gas stored underground, at weighted average cost
48

 
49

Materials and supplies, at weighted average cost
113

 
100

Regulatory assets
74

 
87

Prepaid gross receipts tax
30

 
42

Other
118

 
102

Total current assets
1,033

 
876

Property, plant and equipment, net
14,199

 
13,527

Investments:
 
 
 
ATC Holdings
328

 
320

Other
150

 
148

Total investments
478

 
468

Other assets:
 
 
 
Regulatory assets
1,762

 
1,758

Deferred charges and other
68

 
72

Total other assets
1,830

 
1,830

Total assets

$17,540

 

$16,701

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current maturities of long-term debt

$7

 

$657

Commercial paper
422

 
337

Accounts payable
417

 
422

Regulatory liabilities
163

 
212

Other
286

 
426

Total current liabilities
1,295

 
2,054

Long-term debt, net (excluding current portion)
6,574

 
5,533

Other liabilities:
 
 
 
Deferred tax liabilities
1,803

 
1,714

Regulatory liabilities
1,188

 
1,212

Pension and other benefit obligations
423

 
484

Other
348

 
299

Total other liabilities
3,762

 
3,709

Commitments and contingencies (Note 13)


 


Equity:
 
 
 
Alliant Energy Corporation common equity:
 
 
 
Common stock - $0.01 par value - 480,000,000 shares authorized; 249,760,663 and 245,022,800 shares
2

 
2

Additional paid-in capital
2,693

 
2,446

Retained earnings
3,026

 
2,766

Accumulated other comprehensive income (loss)
(1
)
 
1

Shares in deferred compensation trust - 374,246 and 381,232 shares at a weighted average cost of $28.28 and $26.24 per share
(11
)
 
(10
)
Total Alliant Energy Corporation common equity
5,709

 
5,205

Cumulative preferred stock of Interstate Power and Light Company
200

 
200

Total equity
5,909

 
5,405

Total liabilities and equity

$17,540

 

$16,701



Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
4
 

ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2020
 
2019
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$558

 

$454

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
454

 
424

Deferred tax expense (benefit) and tax credits
(48
)
 
53

Equity component of allowance for funds used during construction
(36
)
 
(46
)
Other
19

 
17

Other changes in assets and liabilities:
 
 
 
Accounts receivable
(316
)
 
(359
)
Regulatory liabilities
(72
)
 
(12
)
Deferred income taxes
143

 
45

Pension and other benefit obligations
(61
)
 
(33
)
DAEC PPA amendment buyout payment
(110
)
 
—

Other
(95
)
 
(34
)
Net cash flows from operating activities
436

 
509

Cash flows used for investing activities:
 
 
 
Construction and acquisition expenditures:
 
 
 
Utility business
(935
)
 
(1,004
)
Other
(39
)
 
(71
)
Cash receipts on sold receivables
318

 
256

Other
(23
)
 
(42
)
Net cash flows used for investing activities
(679
)
 
(861
)
Cash flows from financing activities:
 
 
 
Common stock dividends
(281
)
 
(253
)
Proceeds from issuance of common stock, net
241

 
185

Proceeds from issuance of long-term debt
1,050

 
950

Payments to retire long-term debt
(654
)
 
(253
)
Net change in commercial paper
85

 
(92
)
Other
(22
)
 
(11
)
Net cash flows from financing activities
419

 
526

Net increase in cash, cash equivalents and restricted cash
176

 
174

Cash, cash equivalents and restricted cash at beginning of period
18

 
26

Cash, cash equivalents and restricted cash at end of period

$194

 

$200

Supplemental cash flows information:
 
 
 
Cash (paid) refunded during the period for:
 
 
 
Interest

($197
)
 

($195
)
Income taxes, net

$6

 

$1

Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$202

 

$254

Beneficial interest obtained in exchange for securitized accounts receivable

$201

 

$237


Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
5
 

INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2020
 
2019
 
2020
 
2019
 
(in millions)
Revenues:
 
 
 
 
 
 
 
Electric utility

$519

 

$561

 

$1,332

 

$1,373

Gas utility
24

 
25

 
141

 
188

Steam and other
10

 
11

 
31

 
32

Total revenues
553

 
597

 
1,504

 
1,593

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and purchased power
102

 
127

 
304

 
339

Electric transmission service
93

 
92

 
212

 
257

Cost of gas sold
6

 
6

 
63

 
80

Other operation and maintenance
85

 
100

 
269

 
306

Depreciation and amortization
89

 
84

 
264

 
243

Taxes other than income taxes
16

 
14

 
45

 
46

Total operating expenses
391

 
423

 
1,157

 
1,271

Operating income
162

 
174

 
347

 
322

Other (income) and deductions:
 
 
 
 
 
 
 
Interest expense
35

 
32

 
104

 
93

Allowance for funds used during construction
(6
)
 
(11
)
 
(21
)
 
(34
)
Other
1

 
2

 
3

 
5

Total other (income) and deductions
30

 
23

 
86

 
64

Income before income taxes
132

 
151

 
261

 
258

Income tax expense (benefit)
(19
)
 
7

 
(37
)
 
11

Net income
151

 
144

 
298

 
247

Preferred dividend requirements
3

 
3

 
8

 
8

Net income available for common stock

$148

 

$141

 

$290

 

$239

Earnings per share data is not disclosed given Alliant Energy Corporation is the sole shareowner of all shares of IPL’s common stock outstanding during the periods presented.
Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
6
 

INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2020
 
December 31,
2019
 
(in millions, except per
share and share amounts)
ASSETS
 
Current assets:
 
 
 
Cash and cash equivalents

$185

 

$9

Accounts receivable, less allowance for expected credit losses
219

 
203

Production fuel, at weighted average cost
45

 
47

Gas stored underground, at weighted average cost
21

 
22

Materials and supplies, at weighted average cost
63

 
55

Regulatory assets
52

 
44

Other
53

 
29

Total current assets
638

 
409

Property, plant and equipment, net
7,818

 
7,481

Other assets:
 
 
 
Regulatory assets
1,366

 
1,356

Deferred charges and other
36

 
31

Total other assets
1,402

 
1,387

Total assets

$9,858

 

$9,277

LIABILITIES AND EQUITY
 
Current liabilities:
 
 
 
Current maturities of long-term debt

$—

 

$200

Accounts payable
231

 
207

Regulatory liabilities
117

 
116

Other
198

 
307

Total current liabilities
546

 
830

Long-term debt, net (excluding current portion)
3,344

 
2,947

Other liabilities:
 
 
 
Deferred tax liabilities
1,028

 
1,008

Regulatory liabilities
574

 
599

Pension and other benefit obligations
149

 
168

Other
287

 
253

Total other liabilities
2,038

 
2,028

Commitments and contingencies (Note 13)


 


Equity:
 
 
 
Interstate Power and Light Company common equity:
 
 
 
Common stock - $2.50 par value - 24,000,000 shares authorized; 13,370,788 shares outstanding
33

 
33

Additional paid-in capital
2,693

 
2,348

Retained earnings
1,004

 
891

Total Interstate Power and Light Company common equity
3,730

 
3,272

Cumulative preferred stock
200

 
200

Total equity
3,930

 
3,472

Total liabilities and equity

$9,858

 

$9,277


Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
7
 

INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2020
 
2019
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$298

 

$247

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
264

 
243

Equity component of allowance for funds used during construction
(15
)
 
(25
)
Deferred tax benefit and tax credits
(42
)
 
(14
)
Other
6

 
2

Other changes in assets and liabilities:
 
 
 
Accounts receivable
(337
)
 
(365
)
Regulatory assets
(32
)
 
(13
)
Deferred income taxes
62

 
32

Pension and other benefit obligations
(19
)
 
(13
)
DAEC PPA amendment buyout payment
(110
)
 
—

Other
(56
)
 
45

Net cash flows from operating activities
19

 
139

Cash flows used for investing activities:
 
 
 
Construction and acquisition expenditures
(465
)
 
(696
)
Cash receipts on sold receivables
318

 
256

Other
(55
)
 
(44
)
Net cash flows used for investing activities
(202
)
 
(484
)
Cash flows from financing activities:
 
 
 
Common stock dividends
(177
)
 
(126
)
Capital contributions from parent
345

 
100

Proceeds from issuance of long-term debt
400

 
600

Payments to retire long-term debt
(200
)
 
—

Net change in commercial paper
—

 
(50
)
Other
(9
)
 
(6
)
Net cash flows from financing activities
359

 
518

Net increase in cash, cash equivalents and restricted cash
176

 
173

Cash, cash equivalents and restricted cash at beginning of period
9

 
12

Cash, cash equivalents and restricted cash at end of period

$185

 

$185

Supplemental cash flows information:
 
 
 
Cash (paid) refunded during the period for:
 
 
 
Interest

($109
)
 

($94
)
Income taxes, net

($12
)
 

$8

Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$150

 

$180

Beneficial interest obtained in exchange for securitized accounts receivable

$201

 

$237


Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
8
 

WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2020
 
2019
 
2020
 
2019
 
(in millions)
Revenues:
 
 
 
 
 
 
 
Electric utility

$333

 

$355

 

$925

 

$977

Gas utility
18

 
17

 
112

 
135

Other
—

 
—

 
1

 
1

Total revenues
351

 
372

 
1,038

 
1,113

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and purchased power
78

 
92

 
223

 
263

Electric transmission service
39

 
36

 
114

 
106

Cost of gas sold
4

 
3

 
53

 
71

Other operation and maintenance
65

 
62

 
172

 
188

Depreciation and amortization
65

 
59

 
186

 
177

Taxes other than income taxes
11

 
12

 
35

 
35

Total operating expenses
262

 
264

 
783

 
840

Operating income
89

 
108

 
255

 
273

Other (income) and deductions:
 
 
 
 
 
 
 
Interest expense
26

 
25

 
78

 
77

Allowance for funds used during construction
(6
)
 
(11
)
 
(29
)
 
(31
)
Other
1

 
1

 
3

 
4

Total other (income) and deductions
21

 
15

 
52

 
50

Income before income taxes
68

 
93

 
203

 
223

Income tax expense (benefit)
(5
)
 
17

 
(17
)
 
40

Net income

$73

 

$76

 

$220

 

$183

Earnings per share data is not disclosed given Alliant Energy Corporation is the sole shareowner of all shares of WPL’s common stock outstanding during the periods presented.
Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
9
 

WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2020
 
December 31,
2019
 
(in millions, except per
share and share amounts)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents

$2

 

$4

Accounts receivable, less allowance for expected credit losses
170

 
191

Production fuel, at weighted average cost
17

 
31

Gas stored underground, at weighted average cost
27

 
27

Materials and supplies, at weighted average cost
48

 
43

Regulatory assets
22

 
43

Prepaid gross receipts tax
30

 
42

Other
22

 
62

Total current assets
338

 
443

Property, plant and equipment, net
5,977

 
5,638

Other assets:
 
 
 
Regulatory assets
396

 
402

Deferred charges and other
33

 
24

Total other assets
429

 
426

Total assets

$6,744

 

$6,507

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current maturities of long-term debt

$—

 

$150

Commercial paper
139

 
168

Accounts payable
126

 
160

Regulatory liabilities
46

 
96

Other
117

 
116

Total current liabilities
428

 
690

Long-term debt, net (excluding current portion)
2,130

 
1,783

Other liabilities:
 
 
 
Deferred tax liabilities
696

 
626

Regulatory liabilities
614

 
613

Finance lease obligations - Sheboygan Falls Energy Facility
44

 
51

Pension and other benefit obligations
189

 
211

Other
161

 
169

Total other liabilities
1,704

 
1,670

Commitments and contingencies (Note 13)

 

Equity:
 
 
 
Wisconsin Power and Light Company common equity:
 
 
 
Common stock - $5 par value - 18,000,000 shares authorized; 13,236,601 shares outstanding
66

 
66

Additional paid-in capital
1,459

 
1,434

Retained earnings
957

 
864

Total Wisconsin Power and Light Company common equity
2,482

 
2,364

Total liabilities and equity

$6,744

 

$6,507


Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
10
 

WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2020
 
2019
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$220

 

$183

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
186

 
177

Deferred tax expense (benefit) and tax credits
(9
)
 
55

Other
(8
)
 
(8
)
Other changes in assets and liabilities:
 
 
 
Regulatory liabilities
(61
)
 
(29
)
Deferred income taxes
79

 
16

Other
(5
)
 
(34
)
Net cash flows from operating activities
402

 
360

Cash flows used for investing activities:
 
 
 
Construction and acquisition expenditures
(470
)
 
(308
)
Other
5

 
(27
)
Net cash flows used for investing activities
(465
)
 
(335
)
Cash flows from (used for) financing activities:
 
 
 
Common stock dividends
(127
)
 
(108
)
Capital contributions from parent
25

 
100

Proceeds from issuance of long-term debt
350

 
350

Payments to retire long-term debt
(150
)
 
(250
)
Net change in commercial paper
(29
)
 
(105
)
Other
(8
)
 
(11
)
Net cash flows from (used for) financing activities
61

 
(24
)
Net increase (decrease) in cash, cash equivalents and restricted cash
(2
)
 
1

Cash, cash equivalents and restricted cash at beginning of period
4

 
9

Cash, cash equivalents and restricted cash at end of period

$2

 

$10

Supplemental cash flows information:
 
 
 
Cash (paid) refunded during the period for:
 
 
 
Interest

($71
)
 

($74
)
Income taxes, net

$5

 

($7
)
Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$50

 

$70


Refer to accompanying Combined Notes to Condensed Consolidated Financial Statements.

 
11
 

ALLIANT ENERGY CORPORATION
INTERSTATE POWER AND LIGHT COMPANY
WISCONSIN POWER AND LIGHT COMPANY

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NOTE 1(a) General - The interim unaudited Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. These Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the latest combined Annual Report on Form 10-K.

In the opinion of management, all adjustments, which unless otherwise noted are normal and recurring in nature, necessary for a fair presentation of the results of operations, financial position and cash flows have been made. Results for the nine months ended September 30, 2020 are not necessarily indicative of results that may be expected for the year ending December 31, 2020.

In March 2020, COVID-19 was declared a global pandemic, which has resulted in widespread travel restrictions, closures of commercial spaces and industrial facilities, and more people working from home in Alliant Energy’s service territories. For the three and nine months ended September 30, 2020, Alliant Energy, IPL and WPL considered the impact of COVID-19 on their overall business operations, financial condition, results of operations and cash flows, along with assumptions and estimates used. While the total expected impact of COVID-19 on future sales is currently unknown, Alliant Energy, IPL and WPL have experienced higher electric residential sales and lower electric commercial and industrial sales since the outset of the pandemic. The degree to which the COVID-19 pandemic may impact Alliant Energy, IPL and WPL in the future is currently unknown and will depend on future developments of the pandemic as well as possible additional actions by government and regulatory authorities.

A change in management’s estimates or assumptions could have a material impact on financial condition and results of operations during the period in which such change occurred. Certain prior period amounts in the Financial Statements and Notes have been reclassified to conform to the current period presentation for comparative purposes.

NOTE 1(b) Cash and Cash Equivalents - At September 30, 2020, Alliant Energy’s and IPL’s cash and cash equivalents included $183 million and $183 million of money market fund investments, with weighted average interest rates of 0.1% and 0.1%, respectively.

NOTE 1(c) Current Expected Credit Losses Estimates - Current expected credit losses are estimated for trade and other receivables and credit exposures on guarantees of the performance by third parties. The current expected credit losses for short-term trade receivables are based on estimates of losses resulting from the inability of customers to make required payments. The methodology used to estimate losses is based on historical write-offs, regional economic conditions, significant events that could impact collectability, such as impacts related to COVID-19, the derecho windstorm and related regulatory actions, and forecasted changes to the accounts receivable aging portfolio and write-offs. The current expected credit losses related to guarantees of the performance by third parties are estimated using both quantitative and qualitative information, which utilizes potential outcomes in a range of possible estimated amounts.

NOTE 1(d) New Accounting Standards -
Credit Losses - In June 2016, the Financial Accounting Standards Board issued an accounting standard requiring use of a current expected credit loss model rather than an incurred loss method, which is intended to result in more timely recognition of credit losses on trade receivables, certain other assets and off-balance sheet credit exposures. Alliant Energy, IPL and WPL adopted this standard on January 1, 2020 using a modified retrospective method of adoption, which required cumulative effect adjustments to retained earnings on January 1, 2020. IPL and WPL did not record a cumulative effect adjustment to retained earnings and Alliant Energy recorded a pre-tax $12 million (after-tax $9 million) cumulative effect adjustment to decrease retained earnings related to Alliant Energy’s guarantees in the partnership obligations of an affiliate of Whiting Petroleum (refer to Note 13(c) for further discussion). This adjustment is included in “Adoption of new accounting standard” in Alliant Energy’s summary of changes in shareowners’ equity in Note 5 for the nine months ended September 30, 2020.


 
12
 

NOTE 2. REGULATORY MATTERS
Regulatory Assets and Regulatory Liabilities -
Regulatory assets were comprised of the following items (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2020
 
December 31,
2019
 
September 30,
2020
 
December 31,
2019
 
September 30,
2020
 
December 31,
2019
Tax-related

$877

 

$818

 

$829

 

$777

 

$48

 

$41

Pension and OPEB costs
492

 
524

 
247

 
263

 
245

 
261

Assets retired early
118

 
134

 
79

 
88

 
39

 
46

Asset retirement obligations
115

 
112

 
79

 
76

 
36

 
36

IPL’s DAEC PPA amendment
110

 
108

 
110

 
108

 
—

 
—

Derivatives
20

 
39

 
8

 
18

 
12

 
21

Emission allowances
19

 
21

 
19

 
21

 
—

 
—

Other
85

 
89

 
47

 
49

 
38

 
40

 

$1,836

 

$1,845

 

$1,418

 

$1,400

 

$418

 

$445



Regulatory liabilities were comprised of the following items (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2020
 
December 31,
2019
 
September 30,
2020
 
December 31,
2019
 
September 30,
2020
 
December 31,
2019
Tax-related

$746

 

$836

 

$334

 

$351

 

$412

 

$485

Cost of removal obligations
371

 
388

 
241

 
257

 
130

 
131

Electric transmission cost recovery
62

 
88

 
30

 
51

 
32

 
37

Derivatives
40

 
20

 
27

 
17

 
13

 
3

WPL’s West Riverside liquidated damages
36

 
—

 
—

 
—

 
36

 
—

Commodity cost recovery
22

 
24

 
19

 
9

 
3

 
15

WPL’s earnings sharing mechanism
22

 
22

 
—

 
—

 
22

 
22

Other
52

 
46

 
40

 
30

 
12

 
16

 

$1,351

 

$1,424

 

$691

 

$715

 

$660

 

$709



Tax-related - Alliant Energy’s, IPL’s and WPL’s tax-related regulatory liabilities are primarily related to excess deferred tax benefits resulting from the remeasurement of accumulated deferred income taxes caused by Federal Tax Reform. During the nine months ended September 30, 2020, Alliant Energy’s, IPL’s and WPL’s tax-related regulatory liabilities decreased primarily from returning a portion of these excess deferred tax benefits back to customers.

IPL’s DAEC PPA amendment - In September 2020, IPL made a buyout payment of $110 million in exchange for shortening the term of its DAEC PPA by 5 years. The payment was recorded as a reduction to “Other current liabilities” on Alliant Energy’s and IPL’s balance sheets and was included in “DAEC PPA amendment buyout payment” in Alliant Energy’s and IPL’s cash flows used for operating activities for the nine months ended September 30, 2020. The buyout payment will be recovered from IPL’s retail and wholesale customers beginning in the fourth quarter of 2020 through the end of 2025.

Electric transmission cost recovery - In the second quarter of 2020, pursuant to a June 2020 IUB order, IPL issued $42 million of credits to its retail electric customers through its transmission cost rider for amounts previously collected in rates, which resulted in a corresponding reduction to “Electric transmission service” expense in Alliant Energy’s and IPL’s income statements for the nine months ended September 30, 2020.

Refer to Note 13(f) for discussion of refunds received by IPL and WPL in 2020 related to MISO transmission owner return on equity complaints.

WPL’s West Riverside liquidated damages - Pursuant to terms included in the related West Riverside construction procurement contracts, WPL reached agreement with the contractor on liquidated damages in the third quarter of 2020. A significant portion of the liquidated damages was settled by WPL offsetting amounts owed to the contractor that were previously withheld for payment, which were non-cash investing activities. The liquidated damages are expected to be returned to WPL’s customers as determined in future regulatory proceedings.

August 2020 Derecho Windstorm - In August 2020, a derecho windstorm caused considerable damage to IPL’s electric distribution system in its service territory, and over 250,000 of its customers lost power. IPL completed its initial restoration and rebuilding efforts in August 2020 and expects permanent repairs to the system to continue throughout 2020. IPL’s current estimate of the total cost of the windstorm is approximately $140 million, and as of September 30, 2020, approximately $130 million was recorded substantially to “Property, plant and equipment, net” on Alliant Energy’s and IPL’s balance sheets. Tax benefits and the incremental operation and maintenance expenses resulting from the windstorm were deferred and recorded

 
13
 

as a net regulatory liability of $7 million as of September 30, 2020, which is included in “Other” regulatory liabilities in the above table. In November 2020, IPL filed a request with the IUB for utilization of a regulatory account to track certain incremental costs and benefits incurred resulting from the windstorm until IPL’s next rate proceeding.

NOTE 3. RECEIVABLES
Note 3(a) Accounts Receivable - Details for accounts receivable included on the balance sheets were as follows (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30, 2020
 
December 31, 2019
 
September 30, 2020
 
December 31, 2019
 
September 30, 2020
 
December 31, 2019
Customer

$95

 

$92

 

$—

 

$—

 

$86

 

$84

Unbilled utility revenues
62

 
82

 
—

 
—

 
62

 
82

Deferred proceeds
201

 
188

 
201

 
188

 
—

 
—

Other
54

 
47

 
20

 
16

 
33

 
31

Allowance for expected credit losses
(13
)
 
(7
)
 
(2
)
 
(1
)
 
(11
)
 
(6
)
 

$399

 

$402

 

$219

 

$203

 

$170

 

$191



Note 3(b) Sales of Accounts Receivable - IPL maintains a Receivables Purchase and Sale Agreement (Receivables Agreement) whereby it may sell its customer accounts receivables, unbilled revenues and certain other accounts receivables to a third party through wholly-owned and consolidated special purpose entities. The transfers of receivables meet the criteria for sale accounting established by the transfer of financial assets accounting rules. As of September 30, 2020, IPL had $109 million of available capacity under its sales of accounts receivable program. IPL’s maximum and average outstanding cash proceeds (based on daily outstanding balances) related to the sales of accounts receivable program for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
Maximum outstanding aggregate cash proceeds

$1

 

$103

 

$96

 

$108

Average outstanding aggregate cash proceeds
1

 
45

 
12

 
43



The attributes of IPL’s receivables sold under the Receivables Agreement were as follows (in millions):
 
September 30, 2020
 
December 31, 2019
Customer accounts receivable

$148

 

$125

Unbilled utility revenues
67

 
95

Other receivables
—

 
1

Receivables sold to third party
215

 
221

Less: cash proceeds
1

 
27

Deferred proceeds
214

 
194

Less: allowance for expected credit losses
13

 
6

Fair value of deferred proceeds

$201

 

$188


As of September 30, 2020, outstanding receivables past due under the Receivables Agreement were $27 million. Additional attributes of IPL’s receivables sold under the Receivables Agreement for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
Collections

$561

 

$592

 

$1,555

 

$1,636

Write-offs, net of recoveries
1

 
3

 
4

 
11



NOTE 4. INVESTMENTS
Unconsolidated Equity Investments - Alliant Energy’s equity (income) loss from unconsolidated investments accounted for under the equity method of accounting for the three and nine months ended September 30 was as follows (in millions):
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
ATC Holdings

($11
)
 

($11
)
 

($36
)
 

($30
)
Non-utility wind farm in Oklahoma
(2
)
 
—

 
(6
)
 
(3
)
Other
(2
)
 
(1
)
 
(4
)
 
(2
)
 

($15
)
 

($12
)
 

($46
)
 

($35
)



 
14
 

NOTE 5. COMMON EQUITY
Common Share Activity - A summary of Alliant Energy’s common stock activity was as follows:
Shares outstanding, January 1, 2020
245,022,800

Equity forward agreements
4,275,127

Shareowner Direct Plan
364,531

Equity-based compensation plans
98,205

Shares outstanding, September 30, 2020
249,760,663



Equity Forward Agreements - In November 2019, Alliant Energy entered into forward sale agreements with a counterparty in connection with a public offering of 4,275,127 shares of Alliant Energy common stock. The initial forward sale price of $52.235 per share was subject to daily adjustment based on a floating interest rate factor, and decreased by other fixed amounts specified in the forward sale agreements. In the first quarter of 2020, Alliant Energy settled $222 million under the forward sale agreements by delivering 4,275,127 shares of newly issued Alliant Energy common stock at a weighted average forward sale price of $51.98 per share. Alliant Energy used the net proceeds from the settlements for general corporate purposes.

Changes in Shareowners’ Equity - A summary of changes in shareowners’ equity was as follows (in millions):
Alliant Energy
Total Alliant Energy Common Equity
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
Shares in
 
Cumulative
 
 
 
 
 
Additional
 
 
 
Other
 
Deferred
 
Preferred
 
 
 
Common
 
Paid-In
 
Retained
 
Comprehensive
 
Compensation
 
Stock
 
Total
 
Stock
 
Capital
 
Earnings
 
Income (Loss)
 
Trust
 
of IPL
 
Equity
Three Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, June 30, 2020

$2

 

$2,683

 

$2,874

 

($1
)
 

($10
)
 

$200

 

$5,748

Net income attributable to Alliant Energy common shareowners
 
 
 
 
246

 
 
 
 
 
 
 
246

Common stock dividends ($0.38 per share)
 
 
 
 
(94
)
 
 
 
 
 
 
 
(94
)
Shareowner Direct Plan issuances


 
6

 
 
 
 
 
 
 
 
 
6

Equity-based compensation plans and other
 
 
4

 
 
 
 
 
(1
)
 
 
 
3

Ending balance, September 30, 2020

$2

 

$2,693

 

$3,026

 

($1
)
 

($11
)
 

$200

 

$5,909

Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, June 30, 2019

$2

 

$2,109

 

$2,598

 

$1

 

($10
)
 

$200

 

$4,900

Net income attributable to Alliant Energy common shareowners
 
 
 
 
226

 
 
 
 
 
 
 
226

Common stock dividends ($0.355 per share)
 
 
 
 
(85
)
 
 
 
 
 
 
 
(85
)
Equity forward settlements and Shareowner Direct Plan issuances


 
125

 
 
 
 
 
 
 
 
 
125

Equity-based compensation plans and other
 
 
3

 
 
 
 
 


 
 
 
3

Ending balance, September 30, 2019

$2

 

$2,237

 

$2,739

 

$1

 

($10
)
 

$200

 

$5,169


 
15
 

Alliant Energy
Total Alliant Energy Common Equity
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
Shares in
 
Cumulative
 
 
 
 
 
Additional
 
 
 
Other
 
Deferred
 
Preferred
 
 
 
Common
 
Paid-In
 
Retained
 
Comprehensive
 
Compensation
 
Stock
 
Total
 
Stock
 
Capital
 
Earnings
 
Income (Loss)
 
Trust
 
of IPL
 
Equity
Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, December 31, 2019

$2

 

$2,446

 

$2,766

 

$1

 

($10
)
 

$200

 

$5,405

Net income attributable to Alliant Energy common shareowners
 
 
 
 
550

 
 
 
 
 
 
 
550

Common stock dividends ($1.14 per share)
 
 
 
 
(281
)
 
 
 
 
 
 
 
(281
)
Equity forward settlements and Shareowner Direct Plan issuances


 
241

 
 
 
 
 
 
 
 
 
241

Equity-based compensation plans and other
 
 
6

 
 
 
 
 
(1
)
 
 
 
5

Adoption of new accounting standard, net of tax (refer to Note 1(d))
 
 
 
 
(9
)
 
 
 
 
 
 
 
(9
)
Other comprehensive loss, net of tax
 
 
 
 
 
 
(2
)
 
 
 
 
 
(2
)
Ending balance, September 30, 2020

$2

 

$2,693

 

$3,026

 

($1
)
 

($11
)
 

$200

 

$5,909

Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance, December 31, 2018

$2

 

$2,046

 

$2,546

 

$2

 

($10
)
 

$200

 

$4,786

Net income attributable to Alliant Energy common shareowners
 
 
 
 
446

 
 
 
 
 
 
 
446

Common stock dividends ($1.065 per share)
 
 
 
 
(253
)
 
 
 
 
 
 
 
(253
)
Equity forward settlements and Shareowner Direct Plan issuances
 
 
185

 
 
 
 
 
 
 
 
 
185

Equity-based compensation plans and other
 
 
6

 
 
 
 
 


 
 
 
6

Other comprehensive loss, net of tax
 
 
 
 
 
 
(1
)
 
 
 
 
 
(1
)
Ending balance, September 30, 2019

$2

 

$2,237

 

$2,739

 

$1

 

($10
)
 

$200

 

$5,169

IPL
Total IPL Common Equity
 
 
 
 
 
 
 
Additional
 
 
 
Cumulative
 
 
 
Common
 
Paid-In
 
Retained
 
Preferred
 
Total
 
Stock
 
Capital
 
Earnings
 
Stock
 
Equity
Three Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
Beginning balance, June 30, 2020

$33

 

$2,523

 

$915

 

$200

 

$3,671

Net income available for common stock
 
 
 
 
148

 
 
 
148

Common stock dividends
 
 
 
 
(59
)
 
 
 
(59
)
Capital contributions from parent
 
 
170

 
 
 
 
 
170

Ending balance, September 30, 2020

$33

 

$2,693

 

$1,004

 

$200

 

$3,930

Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
Beginning balance, June 30, 2019

$33

 

$2,323

 

$789

 

$200

 

$3,345

Net income available for common stock
 
 
 
 
141

 
 
 
141

Common stock dividends
 
 
 
 
(42
)
 
 
 
(42
)
Ending balance, September 30, 2019

$33

 

$2,323

 

$888

 

$200

 

$3,444

IPL
Total IPL Common Equity
 
 
 
 
 
 
 
Additional
 
 
 
Cumulative
 
 
 
Common
 
Paid-In
 
Retained
 
Preferred
 
Total
 
Stock
 
Capital
 
Earnings
 
Stock
 
Equity
Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
Beginning balance, December 31, 2019

$33

 

$2,348

 

$891

 

$200

 

$3,472

Net income available for common stock
 
 
 
 
290

 
 
 
290

Common stock dividends
 
 
 
 
(177
)
 
 
 
(177
)
Capital contributions from parent
 
 
345

 
 
 
 
 
345

Ending balance, September 30, 2020

$33

 

$2,693

 

$1,004

 

$200

 

$3,930

Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
Beginning balance, December 31, 2018

$33

 

$2,223

 

$775

 

$200

 

$3,231

Net income available for common stock
 
 
 
 
239

 
 
 
239

Common stock dividends
 
 
 
 
(126
)
 
 
 
(126
)
Capital contributions from parent
 
 
100

 
 
 
 
 
100

Ending balance, September 30, 2019

$33

 

$2,323

 

$888

 

$200

 

$3,444


 
16
 

WPL
 
 
Additional
 
 
 
Total
 
Common
 
Paid-In
 
Retained
 
Common
 
Stock
 
Capital
 
Earnings
 
Equity
Three Months Ended September 30, 2020
 
 
 
 
 
 
 
Beginning balance, June 30, 2020

$66

 

$1,459

 

$927

 

$2,452

Net income
 
 
 
 
73

 
73

Common stock dividends
 
 
 
 
(43
)
 
(43
)
Ending balance, September 30, 2020

$66

 

$1,459

 

$957

 

$2,482

Three Months Ended September 30, 2019
 
 
 
 
 
 
 
Beginning balance, June 30, 2019

$66

 

$1,309

 

$810

 

$2,185

Net income
 
 
 
 
76

 
76

Common stock dividends
 
 
 
 
(36
)
 
(36
)
Capital contributions from parent
 
 
100

 
 
 
100

Ending balance, September 30, 2019

$66

 

$1,409

 

$850

 

$2,325


WPL
 
 
Additional
 
 
 
Total
 
Common
 
Paid-In
 
Retained
 
Common
 
Stock
 
Capital
 
Earnings
 
Equity
Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
Beginning balance, December 31, 2019

$66

 

$1,434

 

$864

 

$2,364

Net income
 
 
 
 
220

 
220

Common stock dividends
 
 
 
 
(127
)
 
(127
)
Capital contributions from parent
 
 
25

 
 
 
25

Ending balance, September 30, 2020

$66

 

$1,459

 

$957

 

$2,482

Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
Beginning balance, December 31, 2018

$66

 

$1,309

 

$775

 

$2,150

Net income
 
 
 
 
183

 
183

Common stock dividends
 
 
 
 
(108
)
 
(108
)
Capital contributions from parent
 
 
100

 
 
 
100

Ending balance, September 30, 2019

$66

 

$1,409

 

$850

 

$2,325



NOTE 6. DEBT
NOTE 6(a) Short-term Debt - Information regarding Alliant Energy’s, IPL’s and WPL’s commercial paper, and Alliant Energy’s and WPL’s borrowings under the single credit facility, which currently expires in August 2023, classified as short-term debt was as follows (dollars in millions):
September 30, 2020
Alliant Energy
 
IPL
 
WPL
Amount outstanding
$422
 
$—
 
$139
Weighted average interest rates
0.2%
 
N/A
 
0.1%
Available credit facility capacity
$578
 
$250
 
$161

 
Alliant Energy
 
IPL
 
WPL
Three Months Ended September 30
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Maximum amount outstanding (based on daily outstanding balances)

$422

 

$472

 

$—

 

$—

 

$139

 

$90

Average amount outstanding (based on daily outstanding balances)

$252

 

$400

 

$—

 

$—

 

$83

 

$27

Weighted average interest rates
0.2%
 
2.5%
 
N/A
 
N/A
 
0.2%
 
2.3%
Nine Months Ended September 30
 
 
 
 
 
 
 
 
 
 
 
Maximum amount outstanding (based on daily outstanding balances)

$463

 

$601

 

$8

 

$50

 

$212

 

$195

Average amount outstanding (based on daily outstanding balances)

$252

 

$476

 

$—

 

$—

 

$86

 

$102

Weighted average interest rates
1.1%
 
2.6%
 
0.5%
 
2.8%
 
1.2%
 
2.5%


NOTE 6(b) Long-term Debt - In March 2020, AEF entered into a $300 million variable rate (1% as of September 30, 2020) term loan credit agreement (with Alliant Energy as guarantor) and used the borrowings under this agreement to retire its $300 million variable rate term loan credit agreement that would have expired in April 2020. AEF’s current term loan credit agreement expires in March 2022 and includes substantially the same financial covenants that are included in Alliant Energy’s credit facility agreement.


 
17
 

In April 2020, WPL issued $350 million of 3.65% debentures due 2050. The net proceeds from the issuance were used by WPL to reduce borrowings under the single credit facility and for general corporate purposes. In June 2020, WPL retired its $150 million 4.6% debentures.

In June 2020, IPL issued $400 million of 2.3% senior debentures due 2030. The net proceeds from the issuance were used by IPL to retire its $200 million 3.65% senior debentures that would have matured in September 2020 and for general corporate purposes.

NOTE 7. REVENUES
Disaggregation of revenues from contracts with customers, which correlates to revenues for each reportable segment, was as follows (in millions):
 
Alliant Energy
 
IPL
 
WPL
Three Months Ended September 30
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Electric Utility:
 
 
 
 
 
 
 
 
 
 
 
Retail - residential

$328

 

$332

 

$189

 

$196

 

$139

 

$136

Retail - commercial
210

 
231

 
142

 
158

 
68

 
73

Retail - industrial
241

 
264

 
149

 
158

 
92

 
106

Wholesale
47

 
50

 
17

 
18

 
30

 
32

Bulk power and other
26

 
39

 
22

 
31

 
4

 
8

Total Electric Utility
852

 
916

 
519

 
561

 
333

 
355

Gas Utility:
 
 
 
 
 
 
 
 
 
 
 
Retail - residential
22

 
20

 
12

 
12

 
10

 
8

Retail - commercial
10

 
10

 
6

 
6

 
4

 
4

Retail - industrial
2

 
3

 
1

 
2

 
1

 
1

Transportation/other
8

 
9

 
5

 
5

 
3

 
4

Total Gas Utility
42

 
42

 
24

 
25

 
18

 
17

Other Utility:
 
 
 
 
 
 
 
 
 
 
 
Steam
8

 
9

 
8

 
9

 
—

 
—

Other utility
2

 
2

 
2

 
2

 
—

 
—

Total Other Utility
10

 
11

 
10

 
11

 
—

 
—

Non-Utility and Other:
 
 
 
 
 
 
 
 
 
 
 
Transportation and other
16

 
21

 
—

 
—

 
—

 
—

Total Non-Utility and Other
16

 
21

 
—

 
—

 
—

 
—

Total revenues

$920

 

$990

 

$553

 

$597

 

$351

 

$372

 
Alliant Energy
 
IPL
 
WPL
Nine Months Ended September 30
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Electric Utility:
 
 
 
 
 
 
 
 
 
 
 
Retail - residential

$845

 

$840

 

$472

 

$470

 

$373

 

$370

Retail - commercial
556

 
583

 
371

 
386

 
185

 
197

Retail - industrial
648

 
686

 
384

 
392

 
264

 
294

Wholesale
127

 
137

 
44

 
49

 
83

 
88

Bulk power and other
81

 
104

 
61

 
76

 
20

 
28

Total Electric Utility
2,257

 
2,350

 
1,332

 
1,373

 
925

 
977

Gas Utility:
 
 
 
 
 
 
 
 
 
 
 
Retail - residential
146

 
187

 
79

 
109

 
67

 
78

Retail - commercial
70

 
90

 
38

 
50

 
32

 
40

Retail - industrial
8

 
10

 
5

 
7

 
3

 
3

Transportation/other
29

 
36

 
19

 
22

 
10

 
14

Total Gas Utility
253

 
323

 
141

 
188

 
112

 
135

Other Utility:
 
 
 
 
 
 
 
 
 
 
 
Steam
27

 
27

 
27

 
27

 
—

 
—

Other utility
5

 
6

 
4

 
5

 
1

 
1

Total Other Utility
32

 
33

 
31

 
32

 
1

 
1

Non-Utility and Other:
 
 
 
 
 
 
 
 
 
 
 
Transportation and other
57

 
62

 
—

 
—

 
—

 
—

Total Non-Utility and Other
57

 
62

 
—

 
—

 
—

 
—

Total revenues

$2,599

 

$2,768

 

$1,504

 

$1,593

 

$1,038

 

$1,113




 
18
 

NOTE 8. INCOME TAXES
Income Tax Rates - Overall effective income tax rates, which were computed by dividing income tax expense (benefit) by income before income taxes, were as follows. The effective income tax rates were different than the federal statutory rate primarily due to state income taxes, production tax credits, amortization of excess deferred taxes and the effect of rate-making on property-related differences. The decreases in overall effective income tax rates for the three and nine months ended September 30, 2020 compared to the same periods in 2019 were primarily due to increases in production tax credits as a result of increased wind production in 2020 and increased amortization of excess deferred taxes primarily at WPL, which were used to offset increases in WPL’s 2020 increased revenue requirements.
 
Alliant Energy
 
IPL
 
WPL
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Overall income tax rate
(9%)
 
9%
 
(9%)
 
10%
 
(14%)
 
5%
 
(14%)
 
4%
 
(7%)
 
18%
 
(8%)
 
18%


Deferred Tax Assets and Liabilities -
Carryforwards - At September 30, 2020, carryforwards and expiration dates were estimated as follows (in millions):
 
Range of Expiration Dates
 
Alliant Energy
 
IPL
 
WPL
Federal net operating losses
2037
 

$371

 

$343

 

$3

State net operating losses
2020-2040
 
623

 
10

 
2

Federal tax credits
2022-2040
 
446

 
252

 
173



NOTE 9. BENEFIT PLANS
NOTE 9(a) Pension and OPEB Plans -
Net Periodic Benefit Costs - The components of net periodic benefit costs for sponsored defined benefit pension and OPEB plans for the three and nine months ended September 30 are included below (in millions). For IPL and WPL, amounts represent those for their plan participants covered under plans they sponsor, as well as amounts directly assigned to them related to certain participants in the Alliant Energy and Corporate Services sponsored plans.
 
Defined Benefit Pension Plans
 
OPEB Plans
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
Alliant Energy
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Service cost

$3

 

$2

 

$8

 

$7

 

$1

 

$1

 

$3

 

$3

Interest cost
10

 
13

 
32

 
37

 
2

 
2

 
5

 
6

Expected return on plan assets
(17
)
 
(15
)
 
(52
)
 
(45
)
 
(1
)
 
(1
)
 
(4
)
 
(4
)
Amortization of actuarial loss
9

 
9

 
26

 
27

 
—

 
1

 
2

 
2

Settlement losses (a)
—

 
—

 
4

 
—

 
—

 
—

 
—

 
—

 

$5

 

$9

 

$18

 

$26

 

$2

 

$3

 

$6

 

$7

 
Defined Benefit Pension Plans
 
OPEB Plans
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
IPL
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Service cost

$2

 

$1

 

$5

 

$4

 

$—

 

$—

 

$1

 

$1

Interest cost
5

 
6

 
15

 
17

 
1

 
1

 
2

 
3

Expected return on plan assets
(8
)
 
(7
)
 
(24
)
 
(21
)
 
(1
)
 
(1
)
 
(3
)
 
(3
)
Amortization of actuarial loss
4

 
4

 
11

 
12

 
—

 
1

 
1

 
1

 

$3

 

$4

 

$7

 

$12

 

$—

 

$1

 

$1

 

$2

 
Defined Benefit Pension Plans
 
OPEB Plans
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
WPL
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Service cost

$1

 

$1

 

$3

 

$3

 

$—

 

$—

 

$1

 

$1

Interest cost
5

 
5

 
14

 
16

 
1

 
1

 
2

 
3

Expected return on plan assets
(8
)
 
(6
)
 
(23
)
 
(20
)
 
(1
)
 
—

 
(1
)
 
(1
)
Amortization of actuarial loss
4

 
4

 
12

 
13

 
1

 
—

 
2

 
1

 

$2

 

$4

 

$6

 

$12

 

$1

 

$1

 

$4

 

$4



(a)
Settlement losses related to payments made to retired executives of Alliant Energy.

NOTE 9(b) Equity-based Compensation Plans - A summary of compensation expense, including amounts allocated to IPL and WPL, and the related income tax benefits recognized for share-based compensation awards for the three and nine months ended September 30 was as follows (in millions):

 
19
 

 
Alliant Energy
 
IPL
 
WPL
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Compensation expense

$5

 

$8

 

$10

 

$16

 

$3

 

$4

 

$6

 

$9

 

$2

 

$3

 

$4

 

$6

Income tax benefits
1

 
2

 
3

 
4

 
1

 
1

 
2

 
2

 
—

 
1

 
1

 
2



As of September 30, 2020, Alliant Energy’s, IPL’s and WPL’s total unrecognized compensation cost related to share-based compensation awards was $7 million, $4 million and $3 million, respectively, which is expected to be recognized over a weighted average period of between 1 year and 2 years.

For the nine months ended September 30, 2020, performance shares, performance restricted stock units and restricted stock units were granted to key employees as follows. These shares and units will be paid out in shares of common stock, and are therefore accounted for as equity awards. As of September 30, 2020, 276,070 shares were included in the calculation of diluted EPS related to the nonvested equity awards.
 
 
 
Weighted Average
 
Grants
 
Grant Date Fair Value
Performance shares
55,303

 

$64.04

Performance restricted stock units
55,303

 
59.47

Restricted stock units
60,284

 
59.49



NOTE 10. ASSET RETIREMENT OBLIGATIONS
A reconciliation of the changes in asset retirement obligations associated with long-lived assets for the nine months ended September 30, 2020 is as follows (in millions):
 
Alliant Energy
 
IPL
Balance, January 1

$196

 

$134

Revisions in estimated cash flows
1

 
—

Liabilities settled
(7
)
 
(5
)
Liabilities incurred (a)
38

 
38

Accretion expense
5

 
4

Balance, September 30

$233

 

$171


(a)
During the nine months ended September 30, 2020, Alliant Energy and IPL recognized additional asset retirement obligations related to IPL’s newly constructed Whispering Willow North, Golden Plains and Richland wind sites. The increases in asset retirement obligations resulted in corresponding increases in property, plant and equipment, net on the respective balance sheets.

NOTE 11. DERIVATIVE INSTRUMENTS
Commodity Derivatives -
Notional Amounts - As of September 30, 2020, gross notional amounts and settlement/delivery years related to outstanding swap contracts, option contracts, physical forward contracts and FTRs that were accounted for as commodity derivative instruments were as follows (units in thousands):
 
FTRs
 
Natural Gas
 
Coal
 
Diesel Fuel
 
MWhs
 
Years
 
Dths
 
Years
 
Tons
 
Years
 
Gallons
 
Years
Alliant Energy
14,365

 
2020-2021
 
218,581

 
2020-2028
 
8,151

 
2020-2023
 
6,174

 
2020-2022
IPL
5,401

 
2020-2021
 
114,747

 
2020-2028
 
3,373

 
2020-2023
 
—

 
—
WPL
8,964

 
2020-2021
 
103,834

 
2020-2027
 
4,778

 
2020-2023
 
6,174

 
2020-2022


Financial Statement Presentation - Derivative instruments are recorded at fair value each reporting date on the balance sheets as assets or liabilities as follows (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2020
 
December 31,
2019
 
September 30,
2020
 
December 31,
2019
 
September 30,
2020
 
December 31,
2019
Current derivative assets

$33

 

$16

 

$23

 

$12

 

$10

 

$4

Non-current derivative assets
15

 
11

 
11

 
10

 
4

 
1

Current derivative liabilities
6

 
19

 
2

 
9

 
4

 
10

Non-current derivative liabilities
13

 
19

 
6

 
9

 
7

 
10




 
20
 

Credit Risk-related Contingent Features - Various agreements contain credit risk-related contingent features, including requirements to maintain certain credit ratings and/or limitations on liability positions under the agreements based on credit ratings. Certain of these agreements with credit risk-related contingency features are accounted for as derivative instruments. In the event of a material change in creditworthiness or if liability positions exceed certain contractual limits, credit support may need to be provided in the form of letters of credit or cash collateral up to the amount of exposure under the contracts, or the contracts may need to be unwound and underlying liability positions paid. At September 30, 2020 and December 31, 2019, the aggregate fair value of all derivative instruments with credit risk-related contingent features in a net liability position was not materially different than amounts that would be required to be posted as credit support to counterparties by Alliant Energy, IPL or WPL if the most restrictive credit risk-related contingent features for derivative agreements in a net liability position were triggered.

Balance Sheet Offsetting - The fair value amounts of derivative instruments subject to a master netting arrangement are not netted by counterparty on the balance sheets. However, if the fair value amounts of derivative instruments by counterparty were netted, amounts would not be materially different from gross amounts of derivative assets and derivative liabilities at September 30, 2020 and December 31, 2019. Fair value amounts recognized for the right to reclaim cash collateral (receivable) or the obligation to return cash collateral (payable) are not offset against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement.

NOTE 12. FAIR VALUE MEASUREMENTS
Fair Value of Financial Instruments - The carrying amounts of current assets and current liabilities approximate fair value because of the short maturity of such financial instruments. Carrying amounts and related estimated fair values of other financial instruments were as follows (in millions):
Alliant Energy
September 30, 2020
 
December 31, 2019
 
 
 
Fair Value
 
 
 
Fair Value
 
Carrying
 
Level
 
Level
 
Level
 
 
 
Carrying
 
Level
 
Level
 
Level
 
 
 
Amount
 
1
 
2
 
3
 
Total
 
Amount
 
1
 
2
 
3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market fund investments

$183

 

$183

 

$—

 

$—

 

$183

 

$5

 

$5

 

$—

 

$—

 

$5

Derivatives
48

 
—

 
17

 
31

 
48

 
27

 
—

 
5

 
22

 
27

Deferred proceeds
201

 
—

 
—

 
201

 
201

 
188

 
—

 
—

 
188

 
188

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
19

 
—

 
18

 
1

 
19

 
38

 
—

 
37

 
1

 
38

Long-term debt (incl. current maturities)
6,581

 
—

 
7,849

 
2

 
7,851

 
6,190

 
—

 
6,918

 
2

 
6,920

IPL
September 30, 2020
 
December 31, 2019
 
 
 
Fair Value
 
 
 
Fair Value
 
Carrying
 
Level
 
Level
 
Level
 
 
 
Carrying
 
Level
 
Level
 
Level
 
 
 
Amount
 
1
 
2
 
3
 
Total
 
Amount
 
1
 
2
 
3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money market fund investments

$183

 

$183

 

$—

 

$—

 

$183

 

$5

 

$5

 

$—

 

$—

 

$5

Derivatives
34

 
—

 
7

 
27

 
34

 
22

 
—

 
3

 
19

 
22

Deferred proceeds
201

 
—

 
—

 
201

 
201

 
188

 
—

 
—

 
188

 
188

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
8

 
—

 
7

 
1

 
8

 
18

 
—

 
17

 
1

 
18

Long-term debt (incl. current maturities)
3,344

 
—

 
3,987

 
—

 
3,987

 
3,147

 
—

 
3,489

 
—

 
3,489

WPL
September 30, 2020
 
December 31, 2019
 
 
 
Fair Value
 
 
 
Fair Value
 
Carrying
 
Level
 
Level
 
Level
 
 
 
Carrying
 
Level
 
Level
 
Level
 
 
 
Amount
 
1
 
2
 
3
 
Total
 
Amount
 
1
 
2
 
3
 
Total
Assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives

$14

 

$—

 

$10

 

$4

 

$14

 

$5

 

$—

 

$2

 

$3

 

$5

Liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
11

 
—

 
11

 
—

 
11

 
20

 
—

 
20

 
—

 
20

Long-term debt (incl. current maturities)
2,130

 
—

 
2,667

 
—

 
2,667

 
1,933

 
—

 
2,268

 
—

 
2,268




 
21
 

Information for Alliant Energy’s and IPL’s fair value measurements using significant unobservable inputs (Level 3 inputs) was as follows (in millions). Such amounts for WPL were not material.
Alliant Energy
Commodity Contract Derivative
 
 
 
Assets and (Liabilities), net
 
Deferred Proceeds
Three Months Ended September 30
2020
 
2019
 
2020
 
2019
Beginning balance, July 1

$36

 

$13

 

$194

 

$215

Total net gains included in changes in net assets (realized/unrealized)
—

 
13

 
—

 
—

Transfers out of Level 3
—

 
(1
)
 
—

 
—

Sales
(1
)
 
—

 
—

 
—

Settlements (a)
(5
)
 
(3
)
 
7

 
22

Ending balance, September 30

$30

 

$22

 

$201

 

$237

The amount of total net gains (losses) for the period included in changes in net assets attributable to the change in unrealized gains (losses) relating to assets and liabilities held at September 30

($1
)
 

$13

 

$—

 

$—

Alliant Energy
Commodity Contract Derivative
 
 
 
Assets and (Liabilities), net
 
Deferred Proceeds
Nine Months Ended September 30
2020
 
2019
 
2020
 
2019
Beginning balance, January 1

$21

 

$12

 

$188

 

$119

Total net gains included in changes in net assets (realized/unrealized)
8

 
7

 
—

 
—

Transfers out of Level 3
—

 
3

 
—

 
—

Purchases
14

 
14

 
—

 
—

Sales
(1
)
 
—

 
—

 
—

Settlements (a)
(12
)
 
(14
)
 
13

 
118

Ending balance, September 30

$30

 

$22

 

$201

 

$237

The amount of total net gains for the period included in changes in net assets attributable to the change in unrealized gains relating to assets and liabilities held at September 30

$8

 

$10

 

$—

 

$—

IPL
Commodity Contract Derivative
 
 
 
Assets and (Liabilities), net
 
Deferred Proceeds
Three Months Ended September 30
2020
 
2019
 
2020
 
2019
Beginning balance, July 1

$32

 

$9

 

$194

 

$215

Total net gains (losses) included in changes in net assets (realized/unrealized)
(1
)
 
12

 
—

 
—

Transfers out of Level 3
—

 
(1
)
 
—

 
—

Sales
(1
)
 
—

 
—

 
—

Settlements (a)
(4
)
 
(2
)
 
7

 
22

Ending balance, September 30

$26

 

$18

 

$201

 

$237

The amount of total net gains (losses) for the period included in changes in net assets attributable to the change in unrealized gains (losses) relating to assets and liabilities held at September 30

($1
)
 

$12

 

$—

 

$—

IPL
Commodity Contract Derivative
 
 
 
Assets and (Liabilities), net
 
Deferred Proceeds
Nine Months Ended September 30
2020
 
2019
 
2020
 
2019
Beginning balance, January 1

$18

 

$9

 

$188

 

$119

Total net gains included in changes in net assets (realized/unrealized)
7

 
9

 
—

 
—

Transfers out of Level 3
—

 
2

 
—

 
—

Purchases
11

 
9

 
—

 
—

Sales
(1
)
 
—

 
—

 
—

Settlements (a)
(9
)
 
(11
)
 
13

 
118

Ending balance, September 30

$26

 

$18

 

$201

 

$237

The amount of total net gains for the period included in changes in net assets attributable to the change in unrealized gains relating to assets and liabilities held at September 30

$7

 

$10

 

$—

 

$—



(a)
Settlements related to deferred proceeds are due to the change in the carrying amount of receivables sold less the allowance for doubtful accounts associated with the receivables sold and cash amounts received from the receivables sold.

 
22
 


Commodity Contracts - The fair value of FTR and natural gas commodity contracts categorized as Level 3 was recognized as net derivative assets as follows (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
Excluding FTRs
 
FTRs
 
Excluding FTRs
 
FTRs
 
Excluding FTRs
 
FTRs
September 30, 2020

$18

 

$12

 

$17

 

$9

 

$1

 

$3

December 31, 2019
15

 
7

 
14

 
5

 
1

 
2



NOTE 13. COMMITMENTS AND CONTINGENCIES
NOTE 13(a) Capital Purchase Commitments - Various contractual obligations contain minimum future commitments related to capital expenditures for certain construction projects. WPL’s projects include the expansion of solar and wind generation and its gas distribution system in Western Wisconsin. At September 30, 2020, Alliant Energy’s and WPL’s minimum future commitments for these projects were $21 million and $18 million, respectively.

NOTE 13(b) Other Purchase Commitments - Various commodity supply, transportation and storage contracts help meet obligations to provide electricity and natural gas to utility customers. In addition, there are various purchase commitments associated with other goods and services. At September 30, 2020, related minimum future commitments were as follows (in millions):
 
Alliant Energy
 
IPL
 
WPL
Natural gas

$983

 

$508

 

$475

Coal (a)
125

 
70

 
55

Other (b)
111

 
49

 
31

 

$1,219

 

$627

 

$561



(a)
Corporate Services has historically entered into system-wide coal contracts on behalf of IPL and WPL that include minimum future commitments. Such commitments were assigned to IPL and WPL based on information available as of September 30, 2020 regarding expected future usage, which is subject to change.
(b)
Includes individual commitments incurred during the normal course of business that exceeded $1 million at September 30, 2020.

Refer to Note 2 for discussion of an amendment to shorten the term of the DAEC PPA, which resulted in IPL making a buyout payment in September 2020.

NOTE 13(c) Guarantees and Indemnifications -
Whiting Petroleum - Whiting Petroleum is an independent oil and gas company. In 2004, Alliant Energy sold its remaining interest in Whiting Petroleum. Alliant Energy Resources, LLC, as the successor to a predecessor entity that owned Whiting Petroleum, and a wholly-owned subsidiary of AEF, continues to guarantee the partnership obligations of an affiliate of Whiting Petroleum under multiple general partnership agreements in the oil and gas industry. The guarantees do not include a maximum limit. Based on information made available to Alliant Energy by Whiting Petroleum, the Whiting Petroleum affiliate holds an approximate 6% share in the partnerships, and currently known obligations include costs associated with the future abandonment of certain facilities owned by the partnerships. The general partnerships were formed under California law, and Alliant Energy Resources, LLC may need to perform under the guarantees if the affiliate of Whiting Petroleum is unable to meet its partnership obligations.

As of September 30, 2020, the currently known partnership obligations for the abandonment obligations are estimated at $68 million, which represents Alliant Energy’s currently estimated maximum exposure under the guarantees. Alliant Energy estimates its expected loss to be a portion of the $68 million of known partnership abandonment obligations of the Whiting Petroleum affiliate and the other partners. Alliant Energy is not aware of any material liabilities related to these guarantees that it is probable that it will be obligated to pay; however, the new credit loss accounting standard adopted on January 1, 2020 requires recognition of a liability for expected credit losses related to the contingent obligations that are in the scope of these guarantees. With the adoption of this standard, Alliant Energy recorded a pre-tax $12 million cumulative effect adjustment to decrease the opening balance of retained earnings as of January 1, 2020.

Whiting Petroleum’s creditworthiness deteriorated in the first quarter of 2020, likely from significantly depressed oil and gas prices and general market conditions, and as a result, the credit loss liability was increased to $20 million in the first quarter of 2020. In April 2020, Whiting Petroleum filed for bankruptcy, and in September 2020, Whiting Petroleum completed its reorganization and emerged from bankruptcy. As a result of Whiting Petroleum’s completed bankruptcy proceedings, as well as additional information regarding the guarantees obtained from the bankruptcy proceedings, the credit loss liability was decreased to $5 million in the third quarter of 2020. The credit loss liability is recorded in “Other liabilities” on Alliant Energy’s balance sheet as of September 30, 2020. For the three and nine months ended September 30, 2020, the pre-tax credit loss adjustments of $15 million and $7 million, respectively, were recorded as reductions in Alliant Energy’s “Other operation and maintenance” expenses.

 
23
 


Non-utility Wind Farm in Oklahoma - In 2017, a wholly-owned subsidiary of AEF acquired a cash equity ownership interest in a non-utility wind farm located in Oklahoma. The wind farm provides electricity to a third-party under a long-term PPA. Alliant Energy provided a parent guarantee of its subsidiary’s indemnification obligations under the related operating agreement and PPA. Alliant Energy’s obligations under the operating agreement were $74 million as of September 30, 2020 and will reduce annually until expiring in July 2047. Alliant Energy’s obligations under the PPA are subject to a maximum limit of $17 million and expire in December 2031, subject to potential extension. Alliant Energy is not aware of any material liabilities related to this guarantee that it is probable that it will be obligated to pay and therefore has not recognized any material liabilities related to this guarantee as of September 30, 2020 and December 31, 2019.

IPL’s Minnesota Electric Distribution Assets - IPL provided indemnifications associated with the 2015 sale of its Minnesota electric distribution assets for losses resulting from potential breach of IPL’s representations, warranties and obligations under the sale agreement. IPL has not recorded any material liabilities related to these indemnifications as of September 30, 2020 and December 31, 2019. The general terms of the indemnifications provided by IPL included a maximum limit of $17 million and expired in October 2020.

NOTE 13(d) Environmental Matters -
Manufactured Gas Plant (MGP) Sites - IPL and WPL have current or previous ownership interests in various sites that are previously associated with the production of gas for which IPL and WPL have, or may have in the future, liability for investigation, remediation and monitoring costs. IPL and WPL are working pursuant to the requirements of various federal and state agencies to investigate, mitigate, prevent and remediate, where necessary, the environmental impacts to property, including natural resources, at and around these former MGP sites in order to protect public health and the environment. At September 30, 2020, estimated future costs expected to be incurred for the investigation, remediation and monitoring of the MGP sites, as well as environmental liabilities recorded on the balance sheets for these sites, which are not discounted, were as follows (in millions). At September 30, 2020, such amounts for WPL were not material.
 
Alliant Energy
 
IPL
Range of estimated future costs

$12

-
$29
 

$9

-
$24
Current and non-current environmental liabilities
16
 
13


IPL Consent Decree - In 2015, the U.S. District Court for the Northern District of Iowa approved a Consent Decree that IPL entered into with the EPA, the Sierra Club, the State of Iowa and Linn County in Iowa, thereby resolving potential Clean Air Act issues associated with emissions from IPL’s coal-fired generating facilities in Iowa. IPL has completed various requirements under the Consent Decree. IPL’s remaining requirements include fuel switching or retiring Burlington by December 31, 2021 and Prairie Creek Units 1 and 3 by December 31, 2025. Alliant Energy and IPL currently expect to recover material costs incurred by IPL related to compliance with the terms of the Consent Decree from IPL’s electric customers.

Other Environmental Contingencies - In addition to the environmental liabilities discussed above, various environmental rules are monitored that may have a significant impact on future operations. Several of these environmental rules are subject to legal challenges, reconsideration and/or other uncertainties. Given uncertainties regarding the outcome, timing and compliance plans for these environmental matters, the complete financial impact of each of these rules is not able to be determined; however, future capital investments and/or modifications to EGUs to comply with certain of these rules could be significant. Specific current, proposed or potential environmental matters include, among others: Effluent Limitation Guidelines, Coal Combustion Residuals Rule, and various legislation and EPA regulations to monitor and regulate the emission of greenhouse gases, including the Clean Air Act.

NOTE 13(e) Collective Bargaining Agreements - In August 2020, IPL’s collective bargaining agreement with International Brotherhood of Electrical Workers Local 204 (Cedar Rapids) expired and a new agreement was reached, which expires August 31, 2024.

NOTE 13(f) MISO Transmission Owner Return on Equity Complaints - A group of MISO cooperative and municipal utilities previously filed complaints with FERC requesting a reduction to the base return on equity used by MISO transmission owners, including ITC Midwest LLC and ATC. The first complaint covered the period from November 12, 2013 through February 11, 2015. In 2017, IPL and WPL received refunds related to the first complaint period, which were subsequently refunded to their retail and wholesale customers. The second complaint covered the period from February 12, 2015 through May 11, 2016. In November 2019, FERC issued an order on the previously filed complaints and reduced the base return on equity used by the MISO transmission owners to 9.88% effective for the first complaint period and subsequent to September 28, 2016. The November 2019 FERC order also dismissed the second complaint; therefore, FERC did not direct refunds to be made for that complaint. In May 2020, FERC issued an order in response to various rehearing requests and increased the base return on equity used by the MISO transmission owners from 9.88% to 10.02% for the first complaint period and subsequent to September 28, 2016, which reduces the refunds originally anticipated to be received by IPL and WPL as a result of FERC’s November 2019 order.

For the nine months ended September 30, 2020, IPL and WPL received $15 million and $5 million, respectively, in refunds related to the FERC orders. In October 2020, FERC extended the time to complete additional refunds to September 2021.

 
24
 

IPL currently expects that all refunds will be returned to its retail electric customers after refund amounts and timing are known and a refund plan is approved by the IUB. WPL proposed to retain the refunds as part of WPL’s application with the PSCW to maintain its current retail electric base rates through the end of 2021. WPL currently expects that any refunds not utilized to maintain base rates would be returned to its customers in WPL’s next retail electric rate review proceeding. Any further changes in FERC’s decisions may have an impact on Alliant Energy’s share of ATC’s future earnings and customer costs.

NOTE 14. SEGMENTS OF BUSINESS
Certain financial information relating to Alliant Energy’s, IPL’s and WPL’s business segments is as follows. Intersegment revenues were not material to their respective operations.
Alliant Energy
 
 
 
 
 
 
 
 
ATC Holdings,
 
Alliant
 
Utility
 
Non-Utility,
 
Energy
 
Electric
 
Gas
 
Other
 
Total
 
Parent and Other
 
Consolidated
 
(in millions)
Three Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
Revenues

$852

 

$42

 

$10

 

$904

 

$16

 

$920

Operating income (loss)
251

 
(1
)
 
1

 
251

 
21

 
272

Net income attributable to Alliant Energy common shareowners
 
 
 
 
 
 
221

 
25

 
246

Three Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Revenues

$916

 

$42

 

$11

 

$969

 

$21

 

$990

Operating income (loss)
284

 
(5
)
 
3

 
282

 
8

 
290

Net income attributable to Alliant Energy common shareowners
 
 
 
 
 
 
217

 
9

 
226

Alliant Energy
 
 
 
 
 
 
 
 
ATC Holdings,
 
Alliant
 
Utility
 
Non-Utility,
 
Energy
 
Electric
 
Gas
 
Other
 
Total
 
Parent and Other
 
Consolidated
 
(in millions)
Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
 
 
 
 
Revenues

$2,257

 

$253

 

$32

 

$2,542

 

$57

 

$2,599

Operating income
549

 
48

 
5

 
602

 
26

 
628

Net income attributable to Alliant Energy common shareowners
 
 
 
 
 
 
510

 
40

 
550

Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
 
 
 
 
Revenues

$2,350

 

$323

 

$33

 

$2,706

 

$62

 

$2,768

Operating income
543

 
47

 
5

 
595

 
22

 
617

Net income attributable to Alliant Energy common shareowners
 
 
 
 
 
 
422

 
24

 
446


IPL
Electric
 
Gas
 
Other
 
Total
 
(in millions)
Three Months Ended September 30, 2020
 
 
 
 
 
 
 
Revenues

$519

 

$24

 

$10

 

$553

Operating income
159

 
1

 
2

 
162

Net income available for common stock
 
 
 
 
 
 
148

Three Months Ended September 30, 2019
 
 
 
 
 
 
 
Revenues

$561

 

$25

 

$11

 

$597

Operating income (loss)
175

 
(4
)
 
3

 
174

Net income available for common stock
 
 
 
 
 
 
141

Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
Revenues

$1,332

 

$141

 

$31

 

$1,504

Operating income
308

 
34

 
5

 
347

Net income available for common stock
 
 
 
 
 
 
290

Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
Revenues

$1,373

 

$188

 

$32

 

$1,593

Operating income
291

 
26

 
5

 
322

Net income available for common stock
 
 
 
 
 
 
239



 
25
 

WPL
Electric
 
Gas
 
Other
 
Total
 
(in millions)
Three Months Ended September 30, 2020
 
 
 
 
 
 
 
Revenues

$333

 

$18

 

$—

 

$351

Operating income (loss)
92

 
(2
)
 
(1
)
 
89

Net income
 
 
 
 
 
 
73

Three Months Ended September 30, 2019
 
 
 
 
 
 
 
Revenues

$355

 

$17

 

$—

 

$372

Operating income (loss)
109

 
(1
)
 
—

 
108

Net income
 
 
 
 
 
 
76

Nine Months Ended September 30, 2020
 
 
 
 
 
 
 
Revenues

$925

 

$112

 

$1

 

$1,038

Operating income
241

 
14

 
—

 
255

Net income
 
 
 
 
 
 
220

Nine Months Ended September 30, 2019
 
 
 
 
 
 
 
Revenues

$977

 

$135

 

$1

 

$1,113

Operating income
252

 
21

 
—

 
273

Net income
 
 
 
 
 
 
183



NOTE 15. RELATED PARTIES
Service Agreements - Pursuant to service agreements, IPL and WPL receive various administrative and general services from an affiliate, Corporate Services. These services are billed to IPL and WPL at cost based on expenses incurred by Corporate Services for the benefit of IPL and WPL, respectively. These costs consisted primarily of employee compensation and benefits, fees associated with various professional services, depreciation and amortization of property, plant and equipment, and a return on net assets. Corporate Services also acts as agent on behalf of IPL and WPL pursuant to the service agreements. As agent, Corporate Services enters into energy, capacity, ancillary services, and transmission sale and purchase transactions within MISO. Corporate Services assigns such sales and purchases among IPL and WPL based on statements received from MISO. The amounts billed for services provided, sales credited and purchases for the three and nine months ended September 30 were as follows (in millions):
 
IPL
 
WPL
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Corporate Services billings

$53

 

$47

 

$134

 

$137

 

$41

 

$36

 

$108

 

$104

Sales credited
10

 
23

 
35

 
50

 
—

 
2

 
4

 
6

Purchases billed
110

 
93

 
248

 
251

 
39

 
32

 
79

 
91



Net intercompany payables to Corporate Services were as follows (in millions):
 
IPL
 
WPL
 
September 30, 2020
 
December 31, 2019
 
September 30, 2020
 
December 31, 2019
Net payables to Corporate Services
$119
 
$112
 
$77
 
$85


ATC - Pursuant to various agreements, WPL receives a range of transmission services from ATC. WPL provides operation, maintenance, and construction services to ATC. WPL and ATC also bill each other for use of shared facilities owned by each party. The related amounts billed between the parties for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2020
 
2019
 
2020
 
2019
ATC billings to WPL

$27

 

$28

 

$80

 

$82

WPL billings to ATC
2

 
3

 
8

 
10



WPL owed ATC net amounts of $9 million as of September 30, 2020 and $9 million as of December 31, 2019. In the second quarter of 2020, WPL received $46 million from ATC related to construction deposits WPL previously provided ATC for transmission network upgrades for West Riverside, which is substantially recorded in “Other” in Alliant Energy’s and WPL’s cash flows from investing activities.


 
26
 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 2019 Form 10-K. Unless otherwise noted, all “per share” references in MDA refer to earnings per diluted share.

2020 HIGHLIGHTS

Key highlights since the filing of the 2019 Form 10-K include the following:

COVID-19:
The outbreak of COVID-19 has become a global pandemic and Alliant Energy’s service territories are not immune to the challenges presented by COVID-19. Despite these challenges, Alliant Energy, IPL and WPL continue to focus on providing the critical, reliable service their customers depend on, while emphasizing the health and welfare of their employees, customers and communities. Alliant Energy, IPL and WPL have not experienced significant impacts on their overall business operations, financial condition, results of operations or cash flows for the three and nine months ended September 30, 2020; however, the degree to which the COVID-19 pandemic may impact such items in the future is currently unknown and will depend on future developments of the pandemic as well as possible additional actions by government and regulatory authorities. Alliant Energy has mitigated the impact of sales declines from COVID-19 by accelerating planned cost transformation activities. Actual and potential impacts from COVID-19 include, but are not limited to, the following:

Operational and Supply Chain Impacts - Alliant Energy has modified certain business practices to help ensure the health and safety of its employees, contractors, customers and vendors consistent with orders and best practices issued by government and regulatory authorities. For example, Alliant Energy implemented its business continuity and pandemic plans for critical items and services, including travel restrictions, physical distancing, working-from-home protocols, and rescheduling of planned EGU outages. Alliant Energy also temporarily suspended service disconnects, waived late payment fees for its customers, and modified reconnect service procedures to ensure continuity of service for customers unable to pay their bills and consistency with regulatory orders.

While Alliant Energy has not experienced any significant issues to-date, it continues to monitor potential disruptions or constraints in materials and supplies from key suppliers. In addition, Alliant Energy’s construction projects are currently progressing as planned with added safety protocols, and while it continues to monitor its supply chain, there have been no immediate disruptions. Alliant Energy’s wind farms under construction during the pandemic were placed in service as previously planned to meet the timing requirements to qualify for the maximum renewable tax credits. In addition, Alliant Energy does not currently expect any material changes to its construction and acquisition expenditures plans disclosed in “Liquidity and Capital Resources” resulting from COVID-19.

Alliant Energy has not experienced, and currently does not expect, an interruption in its ability to provide electric and natural gas services to its customers. Alliant Energy currently expects to incur incremental direct expenses related to certain of these operational changes and does not expect them to have a material impact on its results of operations.

Customer Impacts - COVID-19 has resulted in various travel restrictions and closures of commercial spaces and industrial facilities in Alliant Energy’s service territories. While the total expected impact of COVID-19 on future sales is currently unknown, Alliant Energy has experienced higher electric residential sales and lower electric commercial and industrial sales since the outset of the pandemic. For the nine months ended September 30, 2020 compared to the same period in 2019, Alliant Energy’s retail electric residential temperature-normalized sales increased 3%, and its retail electric commercial and industrial temperature-normalized sales decreased 4% in aggregate. While sales to retail electric commercial and industrial customers have largely recovered to pre-COVID-19 levels in the third quarter of 2020, given the continued uncertainty of COVID-19 impacts on sales, Alliant Energy currently expects a slight reduction in temperature-normalized retail sales in 2020 compared to 2019. From a sensitivity perspective, Alliant Energy currently estimates that an annual 1% increase/decrease in sales for each customer type would result in corresponding annual impacts of $0.02 EPS for its retail electric residential customers, $0.01 EPS for its retail electric commercial customers and $0.01 EPS for its retail electric industrial customers.

Liquidity and Capital Resources Impacts - In response to the uncertainty of the impacts of COVID-19, Alliant Energy enhanced its liquidity position in the first quarter of 2020 by settling $222 million under the equity forward sale agreements and AEF accelerating the refinancing of its $300 million term-loan credit agreement that would have been due in April 2020. In March 2020 and April 2020, Alliant Energy and WPL borrowed under the single credit facility for a portion of their cash needs to obtain more favorable interest rates than available in the commercial paper market. This single credit facility also allows borrowing capacity to shift among Alliant Energy (at the parent company level), IPL and WPL as needed. In April 2020, WPL issued $350 million of debentures due 2050, and in June 2020, IPL issued $400 million of senior debentures due 2030. In June 2020, IPL and WPL retired $200 million and $150 million of long-term debt, respectively, and there are no other material long-term debt maturities in 2020 and 2021. In addition, IPL maintains a sales of accounts receivable program as an alternative financing source; however, if customer arrears were to exceed certain levels, IPL’s access to the program may be restricted.

 
27
 


Alliant Energy, IPL and WPL currently expect to maintain compliance with the financial covenants of the credit facility agreement, and Alliant Energy currently expects to maintain compliance with the financial covenants in AEF’s term loan credit agreement. In addition, Alliant Energy currently expects to have adequate liquidity to fulfill its contractual obligations, access to capital markets and continue with its planned quarterly dividend payments.

Credit Risk Impacts - Alliant Energy’s temporary suspension of service disconnects and waivers of late payment fees for its customers, as well as broad economic factors, may negatively impact its customers’ willingness and ability to pay, which could increase customer arrears and bad debts, and negatively impact Alliant Energy’s cash flows from operations. Currently, Alliant Energy does not anticipate any material credit risk related to its commodity transactions.

Regulatory Impacts - In March 2020, WPL received authorization from the PSCW to defer certain incremental costs incurred resulting from COVID-19, including bad debt expenses and foregone revenues from late payment fees and deposits. In June 2020, IPL filed a proposal with the IUB for utilization of a regulatory asset account to track increased expenses and other financial impacts incurred after March 1, 2020 resulting from COVID-19. The recovery of any authorized deferrals will be addressed in future regulatory proceedings. For the three and nine months ended September 30, 2020, such recorded amounts were not material.

Legislative Impacts - In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted. The most significant provision of the CARES Act for Alliant Energy relates to an acceleration of refunds of existing alternative minimum tax credits to improve liquidity. In July 2020, Alliant Energy received $11 million of credits that otherwise would have been received in 2021 and 2022. In addition, Alliant Energy has deferred certain 2020 payroll taxes to 2021 and 2022. The CARES 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 financial support for certain of Alliant Energy’s residential, small business and non-profit customers.

August 2020 Derecho Windstorm:
In August 2020, a derecho windstorm caused considerable damage to IPL’s electric distribution system in its service territory, and over 250,000 of its customers lost power. IPL completed its initial restoration efforts in August 2020 and expects permanent repairs to the system to continue throughout 2020. Refer to Note 2 for further discussion, including IPL’s current estimate and requested regulatory treatment of certain incremental costs and benefits incurred resulting from the windstorm.

Rate Matters:
•
Final retail electric rates for IPL’s 2020 Forward-looking Test Period rate review were effective February 26, 2020. Effective with the implementation of final rates, IPL started to recover a return of and return on its new wind generation placed in service in 2019 and 2020 through the renewable energy rider. IPL currently expects to file a subsequent proceeding with the IUB in the first half of 2021 for its 2020 Forward-looking Test Period retail electric and gas rate reviews, which will compare actual revenues and costs to those initially forecasted by IPL. IPL currently does not expect any rate adjustments from the subsequent proceeding.
•
In August 2020, the PSCW issued an oral decision authorizing WPL to maintain its current retail electric and gas base rates, authorized return on common equity, regulatory capital structure and earnings sharing mechanism through the end of 2021. WPL will utilize anticipated fuel-related cost savings in 2021 to offset the revenue requirement impacts of the Kossuth wind farm, which was placed in service in October 2020. In addition, WPL will utilize excess deferred tax benefits to partially offset the revenue requirement of the expansion of its gas distribution system in Western Wisconsin, which is expected to be placed in service in late 2020. A written order from the PSCW is currently expected in the fourth quarter of 2020.
•
In the second quarter of 2020, pursuant to a June 2020 IUB order, IPL issued $42 million of credits to its retail electric customers through its transmission cost rider for amounts previously collected in rates.
•
In September 2020, pursuant to an August 2020 PSCW order, WPL refunded $12 million of 2019 fuel-related cost over-collections to its retail electric customers.
•
In September 2020, IPL made a buyout payment of $110 million in exchange for shortening the term of its DAEC PPA by 5 years. Pursuant to IUB and FERC orders, the buyout payment will be recovered from IPL’s retail and wholesale customers beginning in the fourth quarter of 2020 and through the end of 2025.
•
Beginning in the third quarter of 2020, IPL began providing retail electric billing credits that will continue through June 2021, which in aggregate include $27 million of excess deferred tax benefits and $8 million from a partial refund of interim rates implemented in 2019.
•
WPL currently expects to file a retail electric and gas rate review with the PSCW in the second quarter of 2021 for either a single or multiple year forward-looking test period.

Customer Investments:
•
In March 2020, IPL completed the construction of the Golden Plains wind farm in Iowa (200 MW).
•
In April 2020, WPL received authorization from the PSCW to expand its gas distribution system in Western Wisconsin, which is currently expected to be completed in 2020.
•
In May 2020, WPL completed the construction of the natural gas-fired West Riverside Energy Center (730 MW).

 
28
 

•
In May 2020, WPL filed a Certificate of Authority with the PSCW for approval to acquire, construct, own, and operate up to 675 MW of new solar generation in the following Wisconsin counties: Grant (200 MW in 2023), Sheboygan (150 MW in 2022), Wood (150 MW in 2022), Jefferson (75 MW in 2022), Richland (50 MW in 2022) and Rock (50 MW in 2023). The 675 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, which is subject to change depending on operational, regulatory, market and other factors. In addition, WPL currently expects to file a second Certificate of Authority with the PSCW in the first half of 2021 for approximately 325 MW of new solar generation. Estimated capital expenditures for these planned projects for 2020 through 2024 are included in the “Renewable projects” line in the construction and acquisition table in “Liquidity and Capital Resources.” WPL currently assumes that a portion of the construction costs will be financed by a tax equity partner, which is discussed in “IPL and WPL Solar Project Tax Equity Credits” in “Liquidity and Capital Resources.”
•
In July 2020, Alliant Energy announced updated voluntary environmental-related goals based on its clean energy strategy. By 2030, Alliant Energy expects to reduce carbon dioxide emissions by 50% and water supply by 75% from 2005 levels from its owned fossil-fueled generation. By 2040, Alliant Energy expects to eliminate all coal-fired EGUs from its generating fleet, and by 2050, seeks to achieve an aspirational goal of net-zero carbon dioxide emissions from the electricity it generates. Future updates to sustainable energy plans and attaining these goals will depend on future economic developments, evolving energy technologies and emerging trends in Alliant Energy’s service territories.
•
In September 2020, IPL completed the construction of the Richland wind farm in Iowa (130 MW).
•
In October 2020, WPL completed the construction of the Kossuth wind farm in Iowa (150 MW).
•
Alliant Energy’s cleaner energy strategy includes IPL’s planned development and acquisition of up to 400 MW of solar generation by the end of 2023 and up to 100 MW of distributed energy resources, including community solar and energy storage systems beginning in 2022. IPL currently plans to file for advance rate-making principles for the up to 400 MW of solar generation in the first half of 2021. Estimated capital expenditures for these planned projects for 2020 through 2024 are included in the “Renewable projects” line in the construction and acquisition table in “Liquidity and Capital Resources.” IPL currently assumes that a portion of the construction costs for the new solar generation will be financed by a tax equity partner, which is discussed in “IPL and WPL Solar Project Tax Equity Credits” in “Liquidity and Capital Resources.” The 400 MW of new solar generation would help replace a portion of the energy and capacity expected to be eliminated with the planned retirement of the coal-fired Lansing Generating Station (275 MW) by the end of 2022 and the expected reduction of energy and capacity resulting from the planned fuel switch of the Burlington Generating Station (212 MW) from coal to natural gas by the end of 2021. Both the Lansing Generating Station planned retirement and the planned fuel switch of the Burlington Generating Station are subject to change depending on operational, regulatory, market and other factors.

Financings and Common Stock Dividends:
•
In March 2020, Alliant Energy settled $222 million under the equity forward sale agreements by delivering 4,275,127 shares of newly issued Alliant Energy common stock at a weighted average forward sale price of $51.98 per share.
•
In March 2020, AEF entered into a $300 million variable rate (1% as of September 30, 2020) term loan credit agreement (with Alliant Energy as guarantor), which expires in March 2022, and used the borrowings under this agreement to retire its $300 million variable rate term loan credit agreement that would have expired in April 2020.
•
In April 2020, WPL issued $350 million of 3.65% debentures due 2050. The net proceeds from the issuance were used by WPL to reduce borrowings under the single credit facility, which currently expires in August 2023, and for general corporate purposes. In June 2020, WPL retired its $150 million 4.6% debentures.
•
In June 2020, IPL issued $400 million of 2.3% senior debentures due 2030. The net proceeds from the issuance were used by IPL to retire its $200 million 3.65% senior debentures that would have matured in September 2020 and for general corporate purposes.
•
Refer to “Results of Operations” for discussion of expected issuances of common stock dividends and long-term debt in 2021.

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.


 
29
 

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 September 30 were as follows (dollars in millions, except per share amounts):
 
2020
 
2019
 
Income
 
EPS
 
Income (Loss)
 
EPS
Utilities and Corporate Services

$224

 

$0.89

 

$220

 

$0.92

ATC Holdings
8

 
0.03

 
8

 
0.03

Non-utility and Parent
14

 
0.06

 
(2
)
 
(0.01
)
Alliant Energy Consolidated

$246

 

$0.98

 

$226

 

$0.94


Alliant Energy’s Utilities and Corporate Services net income increased by $4 million for the three-month period, primarily due to higher earnings resulting from IPL’s and WPL’s increasing rate base and timing of income taxes. These items were partially offset by higher depreciation expense and lower sales due to the derecho windstorm in Iowa.

Alliant Energy’s Non-utility and Parent net income increased by $16 million for the three-month period primarily due to an adjustment to the credit loss liability related to legacy guarantees associated with an affiliate of Whiting Petroleum and timing of income taxes.

For the three and nine months ended September 30, 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
Three Months
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Operating income

$272

 

$290

 

$162

 

$174

 

$89

 

$108

Electric utility revenues

$852

 

$916

 

$519

 

$561

 

$333

 

$355

Electric production fuel and purchased power expenses
(179
)
 
(219
)
 
(102
)
 
(127
)
 
(78
)
 
(92
)
Electric transmission service expense
(132
)
 
(127
)
 
(93
)
 
(92
)
 
(39
)
 
(36
)
Utility Electric Margin (non-GAAP)
541

 
570

 
324

 
342

 
216

 
227

Gas utility revenues
42

 
42

 
24

 
25

 
18

 
17

Cost of gas sold
(11
)
 
(9
)
 
(6
)
 
(6
)
 
(4
)
 
(3
)
Utility Gas Margin (non-GAAP)
31

 
33

 
18

 
19

 
14

 
14

Other utility revenues
10

 
11

 
10

 
11

 
—

 
—

Non-utility revenues
16

 
21

 
—

 
—

 
—

 
—

Other operation and maintenance expenses
(143
)
 
(174
)
 
(85
)
 
(100
)
 
(65
)
 
(62
)
Depreciation and amortization expenses
(156
)
 
(144
)
 
(89
)
 
(84
)
 
(65
)
 
(59
)
Taxes other than income tax expense
(27
)
 
(27
)
 
(16
)
 
(14
)
 
(11
)
 
(12
)
Operating income

$272

 

$290

 

$162

 

$174

 

$89

 

$108

 
Alliant Energy
 
IPL
 
WPL
Nine Months
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Operating income

$628

 

$617

 

$347

 

$322

 

$255

 

$273

Electric utility revenues

$2,257

 

$2,350

 

$1,332

 

$1,373

 

$925

 

$977

Electric production fuel and purchased power expenses
(527
)
 
(602
)
 
(304
)
 
(339
)
 
(223
)
 
(263
)
Electric transmission service expense
(326
)
 
(363
)
 
(212
)
 
(257
)
 
(114
)
 
(106
)
Utility Electric Margin (non-GAAP)
1,404

 
1,385

 
816

 
777

 
588

 
608

Gas utility revenues
253

 
323

 
141

 
188

 
112

 
135

Cost of gas sold
(117
)
 
(151
)
 
(63
)
 
(80
)
 
(53
)
 
(71
)
Utility Gas Margin (non-GAAP)
136

 
172

 
78

 
108

 
59

 
64

Other utility revenues
32

 
33

 
31

 
32

 
1

 
1

Non-utility revenues
57

 
62

 
—

 
—

 
—

 
—

Other operation and maintenance expenses
(465
)
 
(527
)
 
(269
)
 
(306
)
 
(172
)
 
(188
)
Depreciation and amortization expenses
(454
)
 
(424
)
 
(264
)
 
(243
)
 
(186
)
 
(177
)
Taxes other than income tax expense
(82
)
 
(84
)
 
(45
)
 
(46
)
 
(35
)
 
(35
)
Operating income

$628

 

$617

 

$347

 

$322

 

$255

 

$273



 
30
 

Operating Income Variances - Variances between periods in operating income for the three and nine months ended September 30, 2020 compared to the same periods in 2019 were as follows (in millions):
 
Three Months
 
Nine Months
 
Alliant Energy
 
IPL
 
WPL
 
Alliant Energy
 
IPL
 
WPL
Total higher (lower) utility electric margin variance (Refer to details below)

($29
)
 

($18
)
 

($11
)
 

$19

 

$39

 

($20
)
Total lower utility gas margin variance (Refer to details below)
(2
)
 
(1
)
 
—

 
(36
)
 
(30
)
 
(5
)
Total lower (higher) other operation and maintenance expenses variance (Refer to details below)
31

 
15

 
(3
)
 
62

 
37

 
16

Higher depreciation and amortization expense primarily due to additional plant in service in 2019 and 2020, including IPL’s new wind generation and WPL’s West Riverside Energy Center
(12
)
 
(5
)
 
(6
)
 
(30
)
 
(21
)
 
(9
)
Other
(6
)
 
(3
)
 
1

 
(4
)
 
—

 
—

 

($18
)
 

($12
)
 

($19
)
 

$11

 

$25

 

($18
)

Electric and Gas Revenues and Sales Summary - Electric and gas revenues (in millions), and MWh and Dth sales (in thousands), for the three and nine months ended September 30 were as follows:
Alliant Energy
Electric
 
Gas
 
Revenues
 
MWhs Sold
 
Revenues
 
Dths Sold
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Three Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail

$779

 

$827

 
6,762

 
6,868

 

$34

 

$33

 
3,500

 
3,144

Sales for resale
54

 
72

 
1,453

 
2,003

 
N/A

 
N/A

 
N/A

 
N/A

Transportation/Other
19

 
17

 
17

 
23

 
8

 
9

 
24,842

 
25,021

 

$852

 

$916

 
8,232

 
8,894

 

$42

 

$42

 
28,342

 
28,165

Nine Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail

$2,049

 

$2,109

 
18,496

 
19,035

 

$224

 

$287

 
32,545

 
36,560

Sales for resale
162

 
190

 
4,962

 
4,835

 
N/A

 
N/A

 
N/A

 
N/A

Transportation/Other
46

 
51

 
53

 
71

 
29

 
36

 
79,546

 
71,814

 

$2,257

 

$2,350

 
23,511

 
23,941

 

$253

 

$323

 
112,091

 
108,374

IPL
Electric
 
Gas
 
Revenues
 
MWhs Sold
 
Revenues
 
Dths Sold
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Three Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail

$480

 

$512

 
3,743

 
3,827

 

$19

 

$20

 
1,873

 
1,644

Sales for resale
25

 
38

 
765

 
1,414

 
N/A

 
N/A

 
N/A

 
N/A

Transportation/Other
14

 
11

 
9

 
9

 
5

 
5

 
9,020

 
8,701

 

$519

 

$561

 
4,517

 
5,250

 

$24

 

$25

 
10,893

 
10,345

Nine Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail

$1,227

 

$1,248

 
10,414

 
10,706

 

$122

 

$166

 
16,950

 
19,010

Sales for resale
75

 
95

 
3,090

 
3,241

 
N/A

 
N/A

 
N/A

 
N/A

Transportation/Other
30

 
30

 
27

 
27

 
19

 
22

 
29,127

 
28,528

 

$1,332

 

$1,373

 
13,531

 
13,974

 

$141

 

$188

 
46,077

 
47,538


 
31
 

WPL
Electric
 
Gas
 
Revenues
 
MWhs Sold
 
Revenues
 
Dths Sold
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Three Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail

$299

 

$315

 
3,019

 
3,041

 

$15

 

$13

 
1,627

 
1,500

Sales for resale
29

 
34

 
688

 
589

 
N/A

 
N/A

 
N/A

 
N/A

Transportation/Other
5

 
6

 
8

 
14

 
3

 
4

 
15,822

 
16,320

 

$333

 

$355

 
3,715

 
3,644

 

$18

 

$17

 
17,449

 
17,820

Nine Months
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail

$822

 

$861

 
8,082

 
8,329

 

$102

 

$121

 
15,595

 
17,550

Sales for resale
87

 
95

 
1,872

 
1,594

 
N/A

 
N/A

 
N/A

 
N/A

Transportation/Other
16

 
21

 
26

 
44

 
10

 
14

 
50,419

 
43,286

 

$925

 

$977

 
9,980

 
9,967

 

$112

 

$135

 
66,014

 
60,836


Sales Trends and Temperatures - Alliant Energy’s retail electric sales volumes decreased 2% for the three months ended September 30, 2020 compared to the same period in 2019 primarily due to the impacts from the derecho windstorm in IPL’s service territory. Alliant Energy’s retail electric and gas sales volumes decreased 3% and 11% for the nine months ended September 30, 2020 compared to the same period in 2019, respectively, primarily due to the impacts from COVID-19, the derecho windstorm, and changes in temperatures in Alliant Energy’s service territories. The nine-month decrease in sales was partially offset by an extra day of sales during the first quarter of 2020 due to leap year. For the nine months ended September 30, 2020, COVID-19 impacts on sales volumes resulted in increases for retail electric residential sales volumes and decreases for retail electric commercial and industrial sales.

Estimated increases (decreases) to electric and gas margins from the impacts of temperatures for the three and nine months ended September 30 were as follows (in millions):
 
Electric Margins
 
Gas Margins
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
2020
 
2019
 
Change
 
2020
 
2019
 
Change
 
2020
 
2019
 
Change
 
2020
 
2019
 
Change
IPL

$3

 

$4

 

($1
)
 

$2

 

$7

 

($5
)
 

$—

 

$—

 

$—

 

$—

 

$4

 

($4
)
WPL
3

 
2

 
1

 
3

 
2

 
1

 
—

 
—

 
—

 
(1
)
 
2

 
(3
)
Total Alliant Energy

$6

 

$6

 

$—

 

$5

 

$9

 

($4
)
 

$—

 

$—

 

$—

 

($1
)
 

$6

 

($7
)

Utility Electric Margin Variances - The following items contributed to increased (decreased) utility electric margins for the three and nine months ended September 30, 2020 compared to the same periods in 2019 as follows (in millions):
 
Three Months
 
Nine Months
 
Alliant Energy
 
IPL
 
WPL
 
Alliant Energy
 
IPL
 
WPL
Impact of IPL’s retail electric final and interim rate increases effective February 2020 and April 2019, respectively (a)

$7

 

$7

 

$—

 

$54

 

$54

 

$—

Higher revenues at IPL due to credits on customers’ bills in 2019 related to production tax credits through the fuel-related cost recovery mechanism (offset by changes in income tax)
3

 
3

 
—

 
13

 
13

 
—

Higher revenues at IPL due to changes in electric tax benefit rider credits on customers’ bills (offset by changes in income tax)
—

 
—

 
—

 
6

 
6

 
—

Higher WPL electric fuel-related costs, net of recoveries
(12
)
 
—

 
(12
)
 
(12
)
 
—

 
(12
)
Changes in timing of collection of electric transmission service costs at WPL
(3
)
 
—

 
(3
)
 
(8
)
 
—

 
(8
)
Lower revenues at IPL due to credits on customers’ bills in 2020 related to excess deferred amortization through the tax benefit rider (offset by changes in income tax)
(8
)
 
(8
)
 
—

 
(8
)
 
(8
)
 
—

Lower revenues at IPL related to changes in recovery amounts for energy efficiency costs through the energy efficiency rider (mostly offset by changes in energy efficiency expense)
(5
)
 
(5
)
 
—

 
(4
)
 
(4
)
 
—

Estimated changes in sales volumes caused by temperatures
—

 
(1
)
 
1

 
(4
)
 
(5
)
 
1

Other (includes lower temperature-normalized sales primarily due to the derecho windstorm and COVID-19 impacts)
(11
)
 
(14
)
 
3

 
(18
)
 
(17
)
 
(1
)
 

($29
)
 

($18
)
 

($11
)
 

$19

 

$39

 

($20
)


 
32
 

(a)
IPL’s interim retail electric base rate increase was effective April 1, 2019 and final retail electric base rate increase was effective February 26, 2020. Effective with final rates, the recovery of, and return on, IPL’s new wind generation placed in service in 2019 and 2020 is provided through the renewable energy rider. Both interim and final rate increases include a reduction for anticipated production tax credits for IPL’s new wind generation. This reduction is expected to be offset by a reduction in income tax expense resulting from production tax credits recognized from this new wind generation.

Utility Gas Margin Variances - The following items contributed to increased (decreased) utility gas margins for the three and nine months ended September 30, 2020 compared to the same periods in 2019 as follows (in millions):
 
Three Months
 
Nine Months
 
Alliant Energy
 
IPL
 
WPL
 
Alliant Energy
 
IPL
 
WPL
Lower revenues at IPL related to changes in recovery amounts for energy efficiency costs through the energy efficiency rider (mostly offset by changes in energy efficiency expense)

($2
)
 

($2
)
 

$—

 

($29
)
 

($29
)
 

$—

Estimated changes in sales volumes caused by temperatures
—

 
—

 
—

 
(7
)
 
(4
)
 
(3
)
Impact of IPL’s retail gas rate increase effective January 2020
1

 
1

 
—

 
8

 
8

 
—

Other (includes lower temperature-normalized sales primarily due to COVID-19 impacts)
(1
)
 
—

 
—

 
(8
)
 
(5
)
 
(2
)
 

($2
)
 

($1
)
 

$—

 

($36
)
 

($30
)
 

($5
)

Other Operation and Maintenance Expenses Variances - The following items contributed to (increased) decreased other operation and maintenance expenses for the three and nine months ended September 30, 2020 compared to the same periods in 2019 as follows (in millions):
 
Three Months
 
Nine Months
 
Alliant Energy
 
IPL
 
WPL
 
Alliant Energy
 
IPL
 
WPL
Lower energy efficiency expense at IPL (primarily offset by lower gas revenues)

$6

 

$6

 

$—

 

$32

 

$32

 

$—

Lower generation operation and maintenance expenses
3

 
3

 
—

 
12

 
5

 
7

Credit loss adjustments related to guarantees for an affiliate of Whiting Petroleum (Refer to Note 13(c))
15

 
—

 
—

 
7

 
—

 
—

Other
7

 
6

 
(3
)
 
11

 
—

 
9

 

$31

 

$15

 

($3
)
 

$62

 

$37

 

$16


Other Income and Deductions Variances - The following items contributed to (increased) decreased other income and deductions for the three and nine months ended September 30, 2020 compared to the same periods in 2019 as follows (in millions):
 
Three Months
 
Nine Months
 
Alliant Energy
 
IPL
 
WPL
 
Alliant Energy
 
IPL
 
WPL
Higher interest expense primarily due to higher average outstanding long-term debt balances

$—

 

($3
)
 

($1
)
 

($3
)
 

($11
)
 

($1
)
Lower allowance for funds used during construction primarily due to changes in construction work in progress balances related to IPL’s new wind generation and WPL’s West Riverside Energy Center and new wind generation
(9
)
 
(5
)
 
(5
)
 
(15
)
 
(13
)
 
(2
)
Other (Refer to Note 4 for details of increased income from unconsolidated equity investments)
4

 
1

 
—

 
15

 
2

 
1

 

($5
)
 

($7
)
 

($6
)
 

($3
)
 

($22
)
 

($2
)

Income Taxes - Alliant Energy’s overall effective income tax rates were (9)% and 9% for the three months ended September 30, 2020 and 2019, and (9)% and 10% for the nine months ended September 30, 2020 and 2019, respectively. The decrease in effective income tax rates is primarily due to increases in production tax credits as a result of increased wind production in 2020 and increases of amortization of excess deferred taxes primarily at WPL. WPL’s 2020 increased revenue requirements are offset by returning to customers a portion of the excess deferred income tax credits from Federal Tax Reform. Excess deferred income taxes and production tax credits are recognized based on an estimated annual effective tax rate, which contributed to a positive earnings variance during the nine months ended September 30, 2020. This positive earnings variance is expected to reverse by the end of 2020.


 
33
 

Other Future Considerations - In addition to items discussed in MDA and the Notes in Item 1, the following key items could impact Alliant Energy’s, IPL’s and WPL’s future financial condition or results of operations:
•
Financing Plans - WPL and AEF each currently expect to issue up to $300 million of long-term debt by the end of 2021.
•
Common Stock Dividends - Alliant Energy announced a 6% increase in its targeted 2021 annual common stock dividend to $1.61 per share, which is equivalent to a quarterly rate of $0.4025 per share, beginning with the February 2021 dividend payment. The timing and amount of future dividends is subject to an approved dividend declaration from Alliant Energy’s Board of Directors, and is dependent upon earnings expectations, capital requirements, and general financial business conditions, among other factors.
•
Higher Earnings on Increasing Rate Base - Alliant Energy, IPL and WPL currently expect an increase in earnings in 2021 compared to 2020 due to impacts from increasing revenue requirements related to investments in the utility business, including IPL’s and WPL’s wind investments, WPL’s Western Wisconsin gas distribution system expansion, and the impacts of IPL’s DAEC PPA amendment buyout payment.
•
Depreciation and Amortization Expenses - Alliant Energy, IPL and WPL currently expect an increase in depreciation and amortization expenses in 2021 compared to 2020 due to property additions, including IPL’s and WPL’s expansion of wind generation and WPL’s natural gas-fired West Riverside Energy Center.
•
Allowance for Funds Used During Construction - Alliant Energy currently expects allowance for funds used during construction to decrease in 2021 compared to 2020 primarily due to decreased construction work in progress balances related to IPL’s and WPL’s wind generation and WPL’s West Riverside Energy Center, which were placed in service in 2020.

LIQUIDITY AND CAPITAL RESOURCES

The liquidity and capital resources summary included in the 2019 Form 10-K has not changed materially, except as described below.

COVID-19 and Derecho Windstorm Considerations - Refer to “2020 Highlights” for discussion of COVID-19 and the derecho windstorm and the current and expected impacts on Alliant Energy’s, IPL’s and WPL’s liquidity and capital resources.

Liquidity Position - At September 30, 2020, Alliant Energy had $189 million of cash and cash equivalents, $578 million ($167 million at the parent company, $250 million at IPL and $161 million at WPL) of available capacity under the single revolving credit facility and $109 million of available capacity at IPL under its sales of accounts receivable program.

Capital Structure - Capital structures at September 30, 2020 were as follows (Long-term Debt (including current maturities) (LD); Short-term Debt (SD); Common Equity (CE); IPL’s Preferred Stock (PS)):
chart-3ecaeafea1a858819cc.jpgchart-c0e79342b4245480a53.jpgchart-40da442d0e305ccbb8c.jpg
Cash Flows - Selected information from the cash flows statements was as follows (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
2020
 
2019
 
2020
 
2019
 
2020
 
2019
Cash, cash equivalents and restricted cash, January 1

$18

 

$26

 

$9

 

$12

 

$4

 

$9

Cash flows from (used for):
 
 
 
 
 
 
 
 
 
 
 
Operating activities
436

 
509

 
19

 
139

 
402

 
360

Investing activities
(679
)
 
(861
)
 
(202
)
 
(484
)
 
(465
)
 
(335
)
Financing activities
419

 
526

 
359

 
518

 
61

 
(24
)
Net increase (decrease)
176

 
174

 
176

 
173

 
(2
)
 
1

Cash, cash equivalents and restricted cash, September 30

$194

 

$200

 

$185

 

$185

 

$2

 

$10



 
34
 

Operating Activities - The following items contributed to increased (decreased) operating activity cash flows for the nine months ended September 30, 2020 compared to the same period in 2019 (in millions):
 
Alliant Energy
 
IPL
 
WPL
DAEC PPA amendment buyout payment in 2020 (Refer to Note 2)

($110
)
 

($110
)
 

$—

Amounts issued to IPL’s retail electric customers in 2020 through its transmission cost rider for amounts previously collected in rates (Refer to Note 2)
(42
)
 
(42
)
 
—

Decreased collections from IPL’s and WPL’s retail customers caused by temperature impacts on electric and gas sales
(11
)
 
(9
)
 
(2
)
Changes in interest payments
(2
)
 
(15
)
 
3

Higher collections from IPL’s retail electric and gas base rate increases
62

 
62

 
—

Changes in levels of production fuel
24

 
(3
)
 
27

Refunds received in 2020 related to the MISO transmission owner return on equity complaint FERC orders (Refer to Note 13(f))
20

 
15

 
5

Changes in income taxes paid/refunded
5

 
(20
)
 
12

Other (primarily due to other changes in working capital)
(19
)
 
2

 
(3
)
 

($73
)
 

($120
)
 

$42


Investing Activities - The following items contributed to increased (decreased) investing activity cash flows for the nine months ended September 30, 2020 compared to the same period in 2019 (in millions):
 
Alliant Energy
 
IPL
 
WPL
Changes in the amount of cash receipts on sold receivables

$62

 

$62

 

$—

Refund from ATC in 2020 for construction deposits WPL previously provided to ATC for transmission network upgrades for West Riverside
42

 
—

 
42

Lower (higher) utility construction and acquisition expenditures (a)
69

 
231

 
(162
)
Expenditures for new acquisitions at AEF in 2019
13

 
—

 
—

Other
(4
)
 
(11
)
 
(10
)
 

$182

 

$282

 

($130
)

(a)
Largely due to lower expenditures for IPL’s expansion of wind generation, IPL’s advanced metering infrastructure and WPL’s West Riverside Energy Center, partially offset by higher expenditures for IPL’s and WPL’s electric and gas distribution systems (which include the derecho windstorm) and WPL’s expansion of wind generation.

Construction and Acquisition Expenditures - Construction and acquisition expenditures for 2020 through 2024 are currently anticipated as follows (in millions). Cost estimates represent Alliant Energy’s, IPL’s and WPL’s portion of construction expenditures and exclude allowance for funds used during construction and capitalized interest, if applicable. Such estimates do not include IPL’s September 2020 $110 million buyout payment related to the DAEC PPA, do not reflect any potential proceeds if neighboring utilities exercise options for a partial ownership in West Riverside, and do not reflect the assumed portion of construction costs that are expected to be financed by tax equity partners, as discussed below in “IPL and WPL Solar Project Tax Equity Credits.” Refer to “2020 Highlights” for discussion of IPL’s and WPL’s planned new solar generation (such amounts are included in the “Renewable projects” line in the table below).
 
Alliant Energy
 
IPL
 
WPL
 
2020
2021
2022
2023
2024
 
2020
2021
2022
2023
2024
 
2020
2021
2022
2023
2024
Generation:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Renewable projects

$265


$485


$750


$635


$320

 

$120


$45


$270


$270


$50

 

$145


$440


$480


$365


$270

Other
150

90

180

175

90

 
50

45

135

135

55

 
100

45

45

40

35

Distribution:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Electric systems
675

470

435

535

695

 
420

240

225

290

375

 
255

230

210

245

320

Gas systems
170

70

75

70

70

 
50

35

40

30

30

 
120

35

35

40

40

Other
120

180

185

190

195

 
30

10

10

10

25

 
10

15

10

10

10

 

$1,380


$1,295


$1,625


$1,605


$1,370

 

$670


$375


$680


$735


$535

 

$630


$765


$780


$700


$675



 
35
 

Financing Activities - The following items contributed to increased (decreased) financing activity cash flows for the nine months ended September 30, 2020 compared to the same period in 2019 (in millions):
 
Alliant Energy
 
IPL
 
WPL
Lower (higher) payments to retire long-term debt

($401
)
 

($200
)
 

$100

Net changes in the amount of commercial paper outstanding
177

 
50

 
76

Higher (lower) net proceeds from issuance of long-term debt
100

 
(200
)
 
—

Higher net proceeds from common stock issuances
56

 
—

 
—

Higher (lower) capital contributions from IPL’s and WPL’s parent company, Alliant Energy
—

 
245

 
(75
)
Other (includes higher dividend payments in 2020)
(39
)
 
(54
)
 
(16
)
 

($107
)
 

($159
)
 

$85


IPL and WPL Solar Project Tax Equity Credits - IPL and WPL each propose to own and operate their planned solar 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. This would allow IPL’s and WPL’s customers to share the costs of the solar projects with an investment partner for 10 years or less, while ensuring their customers receive energy, capacity, and renewable energy credit benefits from the projects. IPL and WPL would expect to purchase the tax equity partner’s interest in the solar projects within 10 years of operation, and then convert to a traditional ownership structure for the remainder of the useful life of the projects. Assuming a portion of the construction costs are financed by the tax equity partner, IPL would receive approximately $205 million from the tax equity partner in 2023, and WPL would receive approximately $210 million in 2022 and $275 million in 2023. IPL and WPL would expect to include their portion of capital expenditures, less the amounts financed by the tax equity partner, in their respective rate base.

State Regulatory Financing Authorizations - In September 2020, WPL received authorization from the PSCW to issue up to $1 billion of long-term debt securities in aggregate through December 2023.

Common Stock Issuances and Common Stock Dividends - Refer to Note 5 for discussion of common stock issuances by Alliant Energy in 2020. Refer to “Results of Operations” for discussion of expected common stock dividends in 2021.

Long-term Debt - Refer to Note 6(b) for discussion of IPL’s, WPL’s and AEF’s issuances and retirements of long-term debt in 2020. Refer to “Results of Operations” for discussion of expected issuances of long-term debt in 2021.

Off-Balance Sheet Arrangements and Certain Financial Commitments - A summary of Alliant Energy’s and IPL’s off-balance sheet arrangements and Alliant Energy’s, IPL’s and WPL’s contractual obligations is included in the 2019 Form 10-K and has not changed materially from the items reported in the 2019 Form 10-K, except for the items described in Notes 3, 6 and 13.

OTHER MATTERS

Critical Accounting Policies and Estimates - The summary of critical accounting policies and estimates included in the 2019 Form 10-K has not changed materially, except as described below.

Contingencies - Effective January 1, 2020 upon the adoption of the new accounting standard for credit losses, certain contingencies, such as Alliant Energy Resources, LLC’s guarantees of the partnership obligations of an affiliate of Whiting Petroleum, require estimation each reporting period of the expected credit losses on those contingencies. These estimates require significant judgment and would result in recognition of a credit loss liability sooner than the previous accounting standards, which required recognition when the contingency became probable and could be reasonably estimated based on then currently available information. With respect to Alliant Energy’s guarantees of the partnership obligations of an affiliate of Whiting Petroleum, the most significant judgments in determining the credit loss liability were the estimate of the exposure under the guarantees and the methodology used for calculating the credit loss liability. As of September 30, 2020, Alliant Energy currently estimates the exposure to be a portion of the known partnership abandonment obligations. The methodology used to determine the credit loss liability considers both quantitative and qualitative information, which utilizes potential outcomes in a range of possible estimated amounts. Factors considered include market and external data points, the creditworthiness of the other partners, Whiting Petroleum’s emergence from bankruptcy in the third quarter of 2020, and a portion of forecasted cash flow expenditures associated with the abandonment obligations based on information made available to Alliant Energy. Note 1(c) provides discussion of the adoption of the new accounting standard for credit losses. Note 13(c) provides further discussion of contingencies assessed at January 1, 2020 and September 30, 2020, including impacts to Alliant Energy Resources, LLC’s guarantees in the partnership obligations of an affiliate of Whiting Petroleum and to the other partners, as well as adjustments to the credit loss liability recorded in the third quarter of 2020.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Quantitative and Qualitative Disclosures About Market Risk are reported in the 2019 Form 10-K and have not changed materially.

 
36
 


ITEM 4. CONTROLS AND PROCEDURES

Alliant Energy’s, IPL’s and WPL’s management evaluated, with the participation of each of Alliant Energy’s, IPL’s and WPL’s Chief Executive Officer, Chief Financial Officer and Disclosure Committee, the effectiveness of the design and operation of Alliant Energy’s, IPL’s and WPL’s disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934) as of September 30, 2020 pursuant to the requirements of the Securities Exchange Act of 1934, as amended. Based on their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that Alliant Energy’s, IPL’s and WPL’s disclosure controls and procedures were effective as of the quarter ended September 30, 2020.

There was no change in Alliant Energy’s, IPL’s and WPL’s internal control over financial reporting that occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, Alliant Energy’s, IPL’s or WPL’s internal control over financial reporting. Alliant Energy, IPL and WPL have not experienced any material impact to their internal control over financial reporting due to the COVID-19 pandemic, and continue to monitor and assess the impact COVID-19 has on their internal controls.

PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

The risk factors described in Item 1A in the 2019 Form 10-K have not changed materially, except as described below.

The recent outbreak of the novel coronavirus (COVID-19) pandemic could adversely affect our business functions, financial condition, results of operations and cash flows - The continued spread of the novel coronavirus (COVID-19) has resulted in widespread impacts on the economy and could lead to a prolonged reduction in economic activity, disruptions to supply chains and capital markets, and reduced labor availability and productivity. The COVID-19 pandemic has impacted and may continue to impact the economic conditions in our service territories, which may adversely impact our sales and our customers’ abilities to pay their bills. Travel and transportation restrictions and closures of commercial spaces and industrial facilities have been imposed in and across the U.S., including in the service territories in which we operate. Governmental and regulatory responses to COVID-19 include suspending service disconnects and waiving late fees, which may increase customer account arrears, possibly increasing our allowance for expected credit losses and decreasing our cash flows.

Although we expect an increase in residential sales due to these closures, our commercial and industrial sales may be significantly reduced. The negative impacts on the economy could adversely impact the market value of the assets that fund our pension plans, which could necessitate accelerated funding of the plans to meet minimum federal government requirements. The negative impacts on the economy could also adversely impact the ability of counterparties to meet contractual payment obligations, including guarantees, or deliver contracted commodities and other goods or services at the contracted price, which could increase company expenses. Our access to the capital markets could be adversely affected by COVID-19, which could cause us to need alternative sources of funding for our operations and for working capital, any of which could increase our cost of capital.

Travel bans and restrictions, quarantines, shelter in place orders and shutdowns may cause disruptions in supply chains or access to labor that may adversely impact our planned construction projects, our ability to satisfy compliance requirements, or our operations, including our ability to maintain reliable electric and gas service. This may cause us to miss milestones on construction projects and experience operational delays, which, in the case of renewable energy projects, could delay our completion of such projects past the in-service dates required to qualify for the maximum general renewable tax credits for investments in such renewable energy projects. We have already modified certain business practices consistent with government restrictions and best practices encouraged by government and regulatory authorities and are developing and implementing risk mitigation plans for critical items and services required to continue our operations. The effects of these government restrictions could adversely impact implementation of our regulatory plans and our operations. If our workforce contracts COVID-19, it could negatively impact our operations, including our ability to maintain reliable electric and gas service.

The degree to which COVID-19 may impact our business operations, financial condition and results of operations is unknown at this time and will depend on future developments, including the ultimate geographic spread of COVID-19, the severity of the disease, the duration of the outbreak, possible resurgence of the disease at a later date, and further actions that may be taken by governmental and regulatory authorities.


 
37
 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

A summary of Alliant Energy common stock repurchases for the quarter ended September 30, 2020 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)
July 1 through July 31
 
4,009

 

$49.07

 
—
 
N/A
August 1 through August 31
 
2,680

 
53.91

 
—
 
N/A
September 1 through September 30
 
64

 
52.11

 
—
 
N/A
 
 
6,753

 
51.02

 
—
 
 

(a)
All shares were purchased on the open market and held in a rabbi trust under the Alliant Energy Deferred Compensation Plan. There is no limit on the number of shares of Alliant Energy common stock that may be held under the Deferred Compensation Plan, which currently does not have an expiration date.

ITEM 6. EXHIBITS

The following Exhibits are filed herewith or incorporated herein by reference.
Exhibit Number
Description
3.1
Amended and Restated Bylaws of Alliant Energy, effective October 27, 2020 (incorporated by reference to Exhibit 3.1 to Alliant Energy’s Form 8-K, filed October 29, 2020 (File No. 1-9894))
3.2
Amended and Restated Bylaws of IPL, effective October 27, 2020 (incorporated by reference to Exhibit 3.2 to IPL’s Form 8-K, filed October 29, 2020 (File No. 1-4117))
3.3
Amended and Restated Bylaws of WPL, effective October 27, 2020 (incorporated by reference to Exhibit 3.3 to WPL’s Form 8-K, filed October 29, 2020 (File No. 0-337))
31.1
Certification of the Chief Executive Officer for Alliant Energy
31.2
Certification of the Chief Financial Officer for Alliant Energy
31.3
Certification of the Chief Executive Officer for IPL
31.4
Certification of the Chief Financial Officer for IPL
31.5
Certification of the Chief Executive Officer for WPL
31.6
Certification of the Chief Financial Officer for WPL
32.1
Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.§1350 for Alliant Energy
32.2
Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.§1350 for IPL
32.3
Written Statement of the Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C.§1350 for WPL
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)


 
38
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company have each duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on the 3rd day of November 2020.
ALLIANT ENERGY CORPORATION
 
Registrant
 
 
 
By: /s/ Benjamin M. Bilitz
Chief Accounting Officer and Controller
Benjamin M. Bilitz
(Principal Accounting Officer and Authorized Signatory)
INTERSTATE POWER AND LIGHT COMPANY
 
Registrant
 
 
 
By: /s/ Benjamin M. Bilitz
Chief Accounting Officer and Controller
Benjamin M. Bilitz
(Principal Accounting Officer and Authorized Signatory)
WISCONSIN POWER AND LIGHT COMPANY
 
Registrant
 
 
 
By: /s/ Benjamin M. Bilitz
Chief Accounting Officer and Controller
Benjamin M. Bilitz
(Principal Accounting Officer and Authorized Signatory)

 
39
 

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