Alliant Energy Corporation 2022 Q2 Form 10-Q Summary
Business context and reporting period
Combined unaudited quarterly filing for Alliant Energy Corporation, Interstate Power and Light Company (IPL), and Wisconsin Power and Light Company (WPL), covering the three and six months ended June 30, 2022. Alliant Energy is primarily an electric and gas utility serving Iowa and Wisconsin, with additional investments and non-utility operations.
Financial performance and key metrics
| Metric | Three months ended June 30 | Six months ended June 30 |
|---|---|---|
| Total revenues | $943 million, versus $817 million | $2.012 billion, versus $1.718 billion |
| Operating income | $212 million, versus $176 million | $460 million, versus $374 million |
| Net income attributable to common shareholders | $159 million, versus $144 million | $351 million, versus $315 million |
| Diluted EPS | $0.63, versus $0.57 | $1.40, versus $1.26 |
| Cash flow from operating activities | Not separately presented in the filing for the quarter | $300 million, versus $207 million |
- Six-month revenue growth was driven by higher electric and gas utility revenues. Electric revenue increased to $1.586 billion from $1.418 billion, while gas revenue increased to $356 million from $239 million.
- Six-month operating income increased 23% year over year. Utility electric margin, a non-GAAP measure, rose to $956 million from $892 million; utility gas margin increased to $140 million from $108 million.
- Six-month operating cash flow was $300 million. Investing cash use was $370 million, including $550 million of utility construction and acquisition expenditures. Financing cash flow was $50 million.
- Cash, cash equivalents, and restricted cash totaled $20 million at June 30, 2022, compared with $40 million at year-end 2021.
- Alliant Energy had $7.714 billion of long-term debt, including current maturities, and $399 million of commercial paper outstanding. Available revolving credit capacity was $601 million, supplemented by $95 million of available capacity under IPL’s receivables program.
- Alliant Energy paid $215 million of common dividends during the first six months, compared with $203 million in the prior-year period.
Material changes versus the prior comparable period
- Second-quarter net income increased $15 million, primarily from higher utility margins, higher AFUDC, timing of income tax expense, and higher temperature-normalized sales, partly offset by higher interest expense.
- Six-month net income increased $36 million. Higher utility margins and AFUDC were partly offset by higher interest expense and changes in income taxes.
- Retail electric and gas sales volumes increased 3% and 15%, respectively, in the second quarter, and 2% and 12%, respectively, for the six-month period. Management attributed the changes primarily to weather, customer growth, and comparisons with COVID-19-affected 2021 results.
- WPL’s operating income increased to $227 million from $145 million for the six-month period, supported by higher revenue requirements and rate base growth. IPL’s operating income increased modestly to $218 million from $214 million.
- WPL’s fuel-related costs exceeded applicable monitoring ranges, resulting in a $40 million regulatory asset deferral at June 30, 2022.
- Alliant Energy issued $350 million of 3.6% senior notes due 2032 and entered into a $300 million variable-rate term loan due March 2024. Debt proceeds were used partly to reduce commercial paper and for general corporate purposes.
- WPL formed a solar-generation joint venture with a tax equity partner. WPL contributed $62 million and the partner contributed $29 million; the $29 million partner contribution is reported as noncontrolling interest.
Guidance, outlook, management commentary, risks, and unusual items
- The filing does not provide a new consolidated earnings or revenue guidance figure.
- WPL expects to retire Edgewater Generating Station by June 1, 2025, and Columbia Units 1 and 2 by June 1, 2026. IPL currently expects to retire Lansing Generating Station in the first half of 2023. Timing remains subject to operational, regulatory, market, and other factors.
- WPL received approval to acquire and construct up to 414 MW of additional solar generation. IPL filed for a revised $1,934 per kilowatt fixed-cost cap for up to 400 MW of solar generation and approximately 75 MW of battery storage; an Iowa Utilities Board decision was expected by year-end 2022.
- Solar and battery projects face potential cost increases and delays related to supply constraints, labor, shipping, tariffs, and the U.S. Department of Commerce investigation into solar equipment sourcing. A presidential order postponed additional tariffs through 2024 while the investigation proceeds.
- WPL requested an approximately $10 million annual increase in 2023 retail gas rates and an approximately $37 million decrease in annual retail electric rates effective January 1, 2023. Decisions were expected by year-end 2022.
- Key risks include regulatory recovery of fuel, transmission, environmental, retirement, and capital costs; inflation and higher interest rates; commodity prices; supply-chain disruption; MISO capacity requirements; weather; environmental compliance; tax-credit utilization; pension funding; cybersecurity; and access to capital markets.
- Standard & Poor’s changed WPL’s outlook from stable to negative in June 2022. Management stated that the change was not expected to materially affect liquidity or collateral obligations.
- Alliant Energy’s guarantees related to a former Whiting Petroleum affiliate had an estimated currently known exposure of $58 million, with a $5 million liability recorded for expected credit losses. The filing states that no material payment obligation was considered probable.
- Management reported effective disclosure controls and no material change in internal control over financial reporting. No reportable legal proceedings were disclosed.
Important facts for investors to verify
- Confirm the sustainability of higher utility margins after normalization for weather, fuel-cost recovery, rate riders, and regulatory deferrals.
- Monitor WPL and IPL rate proceedings, including WPL’s proposed 2023 gas increase and electric decrease.
- Assess the timing, cost, tax-equity structure, and regulatory recovery of planned solar, battery-storage, and distribution investments.
- Evaluate refinancing and interest-rate exposure given commercial paper balances, variable-rate debt, and significant 2022 capital expenditures.
- Track the effects of solar-equipment tariff investigations, supply-chain constraints, inflation, and labor costs on construction budgets.
- Review coal-plant retirement schedules, MISO resource-adequacy requirements, and potential environmental compliance costs.
- Consider liquidity relative to the company’s low cash balance, available credit capacity, dividend obligations, and construction commitments.