Alliant Energy Corporation 2022 Form 10-K Summary
Business context and reporting period
Alliant Energy Corporation is a regulated Midwest utility holding company serving approximately 995,000 electric and 425,000 natural-gas customers through Interstate Power and Light Company (IPL) in Iowa and Wisconsin Power and Light Company (WPL) in Wisconsin. The filing is a combined Form 10-K for Alliant Energy, IPL and WPL for the fiscal year ended December 31, 2022; it is not a quarterly filing, although the request identifies 2022 Q4.
The business is primarily regulated electric and gas generation, transmission and distribution, with smaller non-utility operations including ATC Holdings, Travero, a wind farm investment and other holdings.
Financial performance and key metrics
| Metric | 2022 | 2021 | Change |
|---|---|---|---|
| Total revenues | $4,205 million | $3,669 million | +$536 million, 15% |
| Operating income | $928 million | $795 million | +$133 million, 17% |
| Net income attributable to common shareowners | $686 million | $659 million | +$27 million, 4% |
| Diluted EPS | $2.73 | $2.63 | +$0.10, 4% |
| Operating margin | 22.1% | 21.7% | +0.4 percentage points |
| Net margin | 16.3% | 18.0% | -1.7 percentage points |
| Operating cash flow | $486 million | $582 million | -$96 million, 16% |
| Capital expenditures | $1,392 million | $1,070 million | +$322 million, 30% |
- Electric utility revenue was $3,421 million, up from $3,081 million. Gas utility revenue was $642 million, up from $456 million.
- Utility electric margin, a non-GAAP measure, increased to $2,018 million from $1,902 million. Utility gas margin increased to $253 million from $198 million.
- Utilities and Corporate Services net income increased to $690 million from $632 million. ATC Holdings contributed $29 million, down from $31 million, while Non-utility and Parent recorded a $33 million loss versus a $4 million loss.
- Higher revenue requirements and AFUDC from WPL capital investments, higher electric and gas margins, and favorable temperature impacts supported earnings. Higher depreciation, interest expense and tax effects moderated the increase.
- Cash and cash equivalents were $20 million at year-end; cash, cash equivalents and restricted cash totaled $24 million. Available liquidity included $358 million under the revolving credit facility and $30 million under IPL’s receivables program.
- Long-term debt, net, was $7,668 million, compared with $6,735 million in 2021. Commercial paper outstanding was $642 million. Alliant Energy’s debt-to-capital ratio was 58%, below the 65% credit-facility covenant.
- Alliant Energy paid $428 million in common dividends, or $1.71 per share, and reported a year-end share price of $55.21.
Material changes versus the prior comparable period
- Revenue growth reflected higher approved rate requirements, higher gas and electric commodity costs largely subject to recovery mechanisms, stronger gas volumes and temperature effects. Retail electric sales volumes were essentially flat, while retail gas sales volumes increased 14%.
- WPL operating income increased by $144 million to $452 million, primarily from rate-base growth and approved 2022 rate increases. IPL operating income declined by $7 million to $453 million as higher gas margins and other benefits were more than offset by lower electric margin.
- Operating cash flow declined because of the timing of WPL fuel-cost recoveries, higher working-capital requirements, lower accounts-receivable financing activity and higher interest payments.
- Construction spending increased substantially, largely due to WPL solar generation. Property, plant and equipment, net, increased to $16.2 billion from $15.0 billion.
- WPL issued $600 million of 3.95% green bonds due 2032 and AEF issued $350 million of 3.6% senior notes due 2032. Alliant Energy also retired certain debt during the year.
- WPL completed 250 MW of solar projects in 2022. Following the Inflation Reduction Act, WPL terminated a $29 million tax-equity partnership and expects to retain full ownership of its planned solar portfolio.
- Alliant Energy recorded a $6 million reduction in equity income related to the expected impact of a court decision on the authorized return on equity for MISO transmission owners, including ATC.
- Iowa tax reform resulted in a $77 million reduction in tax-related regulatory assets and an $8 million income-tax charge at the Alliant Energy parent level.
Guidance, outlook, risks and unusual items
- Management expects 2023 earnings to increase compared with 2022, primarily from growing rate base and related revenue requirements, including WPL solar investments. Management expects lower operation and maintenance expense but higher interest expense because of additional financing and higher rates.
- Alliant Energy plans approximately $8 billion of capital expenditures over four years. Anticipated 2023–2026 expenditures total approximately $8.5 billion across Alliant Energy, IPL and WPL, including renewables, battery storage, electric distribution, gas systems and other projects.
- Planned financing for 2023 includes up to $250 million of common stock and up to $1.2 billion of long-term debt. AEF has $400 million of long-term debt maturing in 2023. The targeted 2023 common dividend is $1.81 per share, a 6% increase, subject to Board approval and financial conditions.
- The Clean Energy Blueprint includes approximately 1,100 MW of WPL solar, 275 MW of WPL battery storage, 400 MW of IPL solar and 75 MW of IPL battery storage. WPL expects to retire Edgewater Unit 5 by June 1, 2025, and Columbia Units 1 and 2 by June 1, 2026. IPL expects to retire Lansing in the first half of 2023.
- IPL’s proposed solar and battery projects face regulatory uncertainty. The IUB denied or deferred portions of IPL’s advance rate-making requests, and judicial review was pending as of the filing date.
- Key risks include regulatory disallowance or delayed rate relief, higher interest rates and inflation, supply-chain and labor constraints, construction cost overruns, MISO seasonal capacity requirements, fuel and commodity volatility, cyberattacks, severe weather, environmental regulation, tax-credit utilization and pension funding.
- Regulatory accounting is material: Alliant Energy reported $2.046 billion of regulatory assets and $1.324 billion of regulatory liabilities at December 31, 2022. Recovery depends on future regulatory decisions.
- WPL had a $117 million 2022 fuel-cost deferral expected to be addressed in its next retail electric rate review; a separate $37 million 2021 fuel-cost under-collection was authorized for recovery in 2023.
- Alliant Energy’s auditor issued unqualified opinions on the consolidated financial statements and Alliant Energy’s internal control over financial reporting. Regulatory assets and liabilities were identified as the critical audit matter.
Important facts investors should verify
- Whether WPL and IPL receive timely and sufficient rate recovery for fuel costs, renewable investments, retired generation and other regulatory assets.
- The final regulatory outcome and timing for IPL’s proposed solar and battery-storage projects.
- Actual 2023–2026 capital spending, project costs, in-service dates and the effect of supply-chain inflation.
- Funding sources for the planned capital program, including debt issuance, equity issuance, interest expense and leverage.
- Progress toward planned coal retirements and replacement capacity under MISO’s seasonal resource-adequacy requirements.
- The ability to monetize renewable tax credits and the effect of tax-law changes on cash flow and customer benefits.
- The status of WPL’s fuel-cost recovery and earnings-sharing mechanisms, including the $117 million deferral.
- Potential exposure from environmental obligations, the Whiting Petroleum guarantees, pension and OPEB plans, cyber incidents and pending regulatory proceedings.