Alliant Energy Corporation 2023 Form 10-K Summary
Business context and reporting period
Combined annual filing for Alliant Energy Corporation, Interstate Power and Light Company (IPL), and Wisconsin Power and Light Company (WPL) for the year ended December 31, 2023. Alliant Energy is a regulated Midwest utility holding company serving approximately 1.0 million electric and 425,000 natural gas customers in Iowa and Wisconsin. The filing also includes corporate services, ATC Holdings, Travero, a non-utility wind investment, and other non-utility holdings.
Financial performance and key metrics
| Alliant Energy consolidated | 2023 | 2022 | Change |
|---|---|---|---|
| Total revenue | $4,027 million | $4,205 million | (4.2%) |
| Operating income | $943 million | $928 million | +1.6% |
| Net income attributable to common shareholders | $703 million | $686 million | +2.5% |
| Diluted EPS | $2.78 | $2.73 | +1.8% |
| Operating margin | 23.4% | 22.1% | +1.3 pts |
| Net margin | 17.5% | 16.3% | +1.2 pts |
| Cash flow from operating activities | $867 million | $486 million | +$381 million |
| Utility construction and acquisition expenditures | $1,731 million | $1,392 million | +$339 million |
Revenue declined primarily because of lower natural gas costs, lower gas sales, temperature-related reductions in electric and gas volumes, and lower wholesale power prices. Retail electric sales declined 2% and retail gas sales declined 16%. Lower fuel and purchased-power costs, higher rate requirements, lower operating and maintenance expenses, and increased allowance for funds used during construction more than offset the revenue decline.
IPL reported $2,110 million of revenue and $366 million of net income available for common stock, compared with $2,256 million and $360 million, respectively, in 2022. WPL reported $1,827 million of revenue and $345 million of net income, compared with $1,856 million and $315 million, respectively.
At December 31, 2023, Alliant Energy had total assets of $21.2 billion, property, plant and equipment of $17.2 billion, total common equity of $6.8 billion, commercial paper outstanding of $475 million, and long-term debt net of current maturities of $8.2 billion. Total debt-to-capital ratios were 59% for Alliant Energy, 50% for IPL, and 48% for WPL, below the 65% credit-facility covenant.
Alliant Energy ended the year with $62 million of cash and cash equivalents, $525 million of available revolving-credit capacity, and $4 million of available capacity under IPL’s receivables program. The $1 billion revolving credit facility was extended in January 2024 to December 2028. Operating cash flow exceeded capital expenditures, but financing remained important because of the company’s large investment program.
Material changes versus the prior comparable period
- Net income attributable to common shareholders increased $17 million, while consolidated EPS increased from $2.73 to $2.78.
- Operating cash flow increased $381 million, driven principally by the timing of WPL fuel-cost recoveries, changes in gas stored underground, income taxes, receivables sales, and pension contributions.
- Utility construction spending increased to $1.7 billion, primarily reflecting higher IPL solar-generation expenditures.
- Natural gas and coal costs declined, and purchased-power expense fell, partly because of lower market prices and greater dispatch of owned natural-gas generation.
- IPL retired the 275 MW coal-fired Lansing Generating Station in May 2023. WPL continued its transition from coal, with Edgewater Unit 5 expected to retire by June 1, 2025, and Columbia Units 1 and 2 by June 1, 2026.
- WPL placed 639 MW of solar generation in service in 2023. Alliant Energy expects approximately 1,500 MW of additional solar resources across Iowa and Wisconsin by the end of 2024.
- Alliant Energy issued $575 million of 3.875% convertible senior notes, IPL issued $300 million of 5.7% senior debentures, WPL issued $300 million of 4.95% green debentures, and AEF issued $300 million of 5.95% senior notes during 2023.
- Alliant Energy issued approximately $223 million of common stock through its at-the-market offering program. The program expired at year-end.
- Renewable tax credit transfers generated $98 million of proceeds in 2023, including $76 million attributable to IPL and $22 million to WPL.
Guidance, outlook, commentary, risks, and unusual items
Management expects 2024 earnings to benefit from higher revenue requirements associated with growing utility rate bases, particularly at WPL. Management also expects higher depreciation and amortization and higher interest expense because of projects placed in service and debt financings. Alliant Energy and WPL expect AFUDC to decline in 2024, while IPL expects AFUDC to increase.
Expected 2024-2027 construction and acquisition expenditures total approximately $9.1 billion for Alliant Energy, including renewable and battery-storage projects, gas generation, electric and gas distribution, and technology investments. Management expects to issue up to $25 million of common stock and up to $700 million, $300 million, and $700 million of long-term debt for IPL, WPL, and AEF, respectively, in 2024. IPL and AEF have $500 million and $300 million of long-term debt maturing in 2024.
In December 2023, the PSCW authorized WPL annual base-rate increases of $49 million for electric customers and $13 million for gas customers effective January 1, 2024, plus an additional $60 million electric increase effective January 1, 2025. IPL requested annual electric and gas increases of $160 million and $14 million beginning October 1, 2024, plus an additional $124 million electric increase in 2025; an IUB decision was expected in the third quarter of 2024.
WPL’s solar projects are expected to exceed previously approved costs by approximately $180 million. IPL expects its 400 MW solar program to exceed the approved $1,650 per kilowatt cost target by approximately 10%. Management concluded that a probable disallowance had not occurred at December 31, 2023; however, recovery depends on future regulatory proceedings.
Key risks include adverse rate decisions or delayed recovery of regulatory assets, higher interest rates and capital costs, construction delays or cost overruns, supply-chain constraints, MISO seasonal resource-adequacy requirements, severe weather, commodity and counterparty risks, cybersecurity incidents, environmental regulation, coal retirements, tax-credit utilization or transfer risks, pension funding, labor negotiations, and limitations on dividends from regulated subsidiaries. IPL’s collective bargaining agreement with IBEW Local 204 expires in August 2024.
The company reported no material cybersecurity incidents, no material legal proceedings requiring disclosure under Item 3, and effective disclosure controls and internal control over financial reporting for Alliant Energy. Deloitte issued unqualified audit opinions. The principal critical audit matter was regulatory accounting and the assessment of future recovery of regulatory assets and liabilities.
Important facts investors should verify
- Progress, final costs, regulatory recovery, and rate-base treatment for WPL’s approximately 1,100 MW solar program and IPL’s 400 MW solar program.
- Outcomes of IPL’s pending rate case and the effect of WPL’s authorized 2024 and 2025 rate increases and earnings-sharing mechanism.
- Funding and refinancing plans for 2024 maturities and the effect of higher interest rates on earnings and credit metrics.
- Execution of the approximately $9.1 billion 2024-2027 capital program and compliance with MISO seasonal capacity requirements.
- Timing and economic effects of WPL’s Edgewater and Columbia retirements and IPL’s planned Prairie Creek fuel switch or retirement.
- Future proceeds, regulatory treatment, and indemnification exposure related to renewable tax-credit transfers.
- Recoverability of regulatory assets, including $216 million related to Lansing, and the potential impact of future regulatory decisions.
- Environmental compliance costs, including greenhouse-gas, CCR, CSAPR, wastewater, and manufactured-gas-plant obligations.
- Exposure under guarantees, including the estimated $49 million of known Whiting Petroleum affiliate abandonment obligations and non-utility wind-farm guarantees.
- Dividend sustainability, including the targeted 2024 annual dividend of $1.92 per share and the stated long-term payout-ratio goal of approximately 60% to 70% of consolidated earnings.