Alliant Energy Corporation 2020 Form 10-K Summary
Business context and reporting period
Combined annual report for Alliant Energy Corporation, Interstate Power & Light Company (IPL), and Wisconsin Power & Light Company (WPL), covering the fiscal year ended December 31, 2020. Alliant Energy is a regulated Midwest utility holding company serving approximately 975,000 electric and 420,000 natural gas customers, primarily through IPL in Iowa and WPL in Wisconsin. The filing is an annual Form 10-K; the source text does not provide separate fourth-quarter financial results.
Key financial metrics
| Alliant Energy consolidated | 2020 | 2019 | Change |
|---|---|---|---|
| Total revenues | $3,416 million | $3,648 million | Down $232 million |
| Operating income | $740 million | $778 million | Down $38 million |
| Net income attributable to common shareowners | $614 million | $557 million | Up $57 million |
| Diluted EPS | $2.47 | $2.33 | Up $0.14 |
| Operating cash flow | $501 million | $660 million | Down $159 million |
| Capital expenditures and acquisitions | $1,366 million | $1,640 million | Down $274 million |
| Property, plant and equipment, net | $14,336 million | $13,527 million | Up $809 million |
| Long-term debt, net | $6,769 million | $5,533 million | Up $1,236 million |
2020 operating income included electric utility margin of $1,819 million, compared with $1,806 million in 2019, and gas utility margin of $191 million, compared with $233 million. The consolidated effective income tax rate was negative 10% in 2020 versus 11% in 2019, primarily reflecting production tax credits, excess deferred tax amortization, and other rate-making effects.
At December 31, 2020, Alliant Energy reported $54 million of cash and cash equivalents, $611 million of available capacity under its shared revolving credit facility, and $109 million of available capacity under IPL’s receivables program. Commercial paper outstanding was $389 million at the parent level and $257 million at WPL. Reported debt-to-capital ratios were 55% for Alliant Energy, 46% for IPL, and 50% for WPL, compared with a 65% covenant limit.
Material changes versus the prior comparable period
- Net income attributable to common shareowners increased 10% to $614 million, while diluted EPS increased 6% to $2.47. Utilities and Corporate Services income rose $57 million, primarily from higher earnings on expanding utility rate bases.
- Revenue declined mainly because of lower electric and gas sales, lower fuel-related revenue, customer credits, and COVID-19 effects. Retail electric sales declined 2% and retail gas sales declined 13% year over year.
- Operating income declined despite higher electric margin because gas margin decreased $42 million, depreciation and amortization increased $48 million, and AFUDC declined by $38 million.
- New assets placed in service included more than 500 MW of IPL wind generation, WPL’s 723 MW West Riverside natural gas facility, and WPL’s 152 MW Kossuth wind farm.
- IPL paid $110 million to shorten the Duane Arnold Energy Center power purchase agreement by five years. The amount was recorded as a regulatory asset and is expected to be recovered from customers from 2021 through 2025.
- An August 2020 derecho damaged IPL’s distribution system and interrupted service to more than 250,000 customers. IPL estimates total costs of approximately $140 million, with approximately $135 million recorded by year-end; permanent repairs continue into 2021.
- Alliant Energy issued approximately $247 million of common stock proceeds, including settlement of equity forward agreements, and issued $1.25 billion of long-term debt while retiring $657 million of long-term debt.
- Regulatory assets increased to $2.01 billion from $1.845 billion, while regulatory liabilities declined to $1.306 billion from $1.424 billion. Recovery of regulatory assets remains dependent on future regulatory decisions.
Guidance, outlook, commentary, and risks
- Management expects higher 2021 earnings from increasing rate base investments, including wind projects, WPL’s Western Wisconsin gas expansion, and the recovery of the IPL DAEC PPA amendment payment. It also expects higher depreciation and lower AFUDC in 2021.
- WPL expects to issue up to $300 million of long-term debt in 2021. Alliant Energy expects to issue up to $25 million of common stock through its Shareowner Direct Plan.
- Management targets a 2021 annual dividend of $1.61 per share, a 6% increase, and a long-term payout ratio of approximately 60% to 70% of consolidated earnings from continuing operations.
- Planned 2021–2024 construction and acquisition expenditures total approximately $5.895 billion: $1.295 billion in 2021, $1.625 billion in 2022, $1.605 billion in 2023, and $1.370 billion in 2024. The program emphasizes renewable generation and electric and gas distribution systems.
- Planned generation changes include approximately 1,000 MW of WPL solar by 2023, approximately 400 MW of IPL solar by 2023, and approximately 100 MW of IPL distributed energy resources. Planned coal retirements include IPL’s Lansing station by the end of 2022 and WPL’s Edgewater and Columbia units through 2024; IPL expects to fuel-switch Burlington by the end of 2021.
- Management reported no significant overall COVID-19 impact on 2020 financial condition or operations but expects residential sales to remain stronger and commercial and industrial sales weaker than pre-pandemic levels. Risks include customer arrears, supply-chain disruption, construction delays, labor constraints, and capital-market volatility.
- February 2021 extreme cold and winter storms caused significant commodity price volatility. Management expects higher 2021 fuel and gas costs, generally subject to recovery through utility mechanisms, and may seek extended recovery periods to mitigate customer bill impacts.
- Key ongoing risks include regulatory recovery and rate decisions, environmental and carbon regulation, cybersecurity, severe weather, fuel and purchased-power costs, pension funding, interest rates, credit ratings, tax-credit utilization, planned construction execution, and guarantees related to former Whiting Petroleum interests.
- Alliant Energy’s regulatory assets and liabilities, rate recovery assumptions, and environmental obligations were identified as areas requiring significant management judgment. The independent auditor issued unqualified opinions on the financial statements and Alliant Energy’s internal control over financial reporting.
Most important facts for investors to verify
- Confirm the timing and amount of recovery for the $110 million DAEC PPA amendment and the approximately $140 million derecho-related costs.
- Monitor regulatory treatment of the $2.01 billion regulatory asset balance and the $1.306 billion regulatory liability balance.
- Assess financing needs for the approximately $5.9 billion 2021–2024 capital program, planned debt issuance, tax-equity financing, and potential impacts on credit metrics.
- Evaluate execution, permitting, cost caps, tax-credit eligibility, and regulatory approval for planned solar, distributed-energy, distribution, retirement, and fuel-switching projects.
- Track COVID-19 customer payment trends, commercial and industrial demand, weather-normalized sales, and recovery of deferred pandemic-related costs.
- Review the Whiting Petroleum guarantee exposure, estimated at up to $68 million of currently known partnership abandonment obligations, and the $5 million recorded credit-loss liability.
- Verify the sustainability of the $1.61 per-share dividend target against utility subsidiary cash flows, regulatory restrictions, capital requirements, and debt levels.