Q1 2024 Earnings Summary
- Alliant Energy is benefiting from favorable regulatory policies in Iowa, which allow utilities to be flexible with respect to generation, including expansion into batteries and nuclear investments. This flexibility supports growth opportunities and enhances the company's ability to meet future energy demands.
- The company is proactively attracting new large-scale customers, such as biofuel companies and potential data centers, which could increase electricity demand and drive growth. Alliant's ability to quickly adapt to customer needs without a litigated IRP process provides a strategic advantage.
- Progress in regulatory proceedings, with the expectation of a total settlement in the Iowa rate review, could provide regulatory certainty and support Alliant Energy's growth and earnings objectives. The settlement window is mid-May to mid-June.
- Uncertainty around regulatory approvals and timing for new generation projects may impact Alliant Energy's capacity replacement plans, potentially leading to reliability issues or increased costs. The company expects to file for regulatory approval for their proposed energy dome in Wisconsin later this year, which could take up to a year to complete, with approvals expected by early 2025. With the Columbia plant slated to retire in mid-2026, there may be timing pressures to ensure new capacity is in place.
- Pending rate reviews in Iowa present uncertainty regarding future allowed returns and rate increases, which could negatively impact earnings if outcomes are unfavorable. The company has yet to settle their rate review proceeding in Iowa, with the settlement window open from mid-May to mid-June. The determination of whether they will receive a return of 10.25% or 10.75% from the last settlement would likely be part of any settlement they have.
- Reliance on tax credit transfers for cash flows and financing improvements exposes Alliant Energy to risks if tax policies change or if they are unable to continue transferring tax credits as planned. The company completed sales of all 2023 generating tax credits, roughly $120 million, and expects tax credits to increase to over $200 million in 2024 and between $300 million to $400 million in 2025. They are monitoring guidance from the Treasury and IRS, indicating potential uncertainty.
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Tax Credit Sales
Q: Are you fully committed for about $400 million this year and next?
A: We've completed the sales of all 2023 generating tax credits, roughly $120 million. For 2024, we expect tax credit transfers of over $200 million, growing to between $300 million to $400 million in 2025 as we continue building solar and battery projects with ITCs. This approach lowers customer costs, provides cash flow, reduces external financing needs, and improves our FFO to debt metrics. -
Rate Review Settlement in Iowa
Q: Would you expect a partial or unanimous settlement in Iowa?
A: If we settle the rate review in Iowa, we anticipate a total settlement rather than a partial one. The settlement window is from mid-May to mid-June. The decision on whether we'll be at a 10.25% or the 10.75% ROE from the last settlement will likely be part of any agreement. -
Economic Development Efforts
Q: What types of customers are you looking to attract?
A: We're open to all types of economic development opportunities, including biofuels companies, manufacturing, and data centers. A strategic advantage is that we don't have a litigated IRP process, so we can be very nimble in adapting to customer needs. -
Timing for Energy Dome Approvals
Q: Any update on timing for approvals for your proposed energy dome?
A: We expect to file for regulatory approval later this year, which normally takes up to a year through the PSCW. We hope to have approvals by early 2025. -
IRP Legislation in Iowa
Q: Was there a recommendation to implement an IRP process in Iowa?
A: Yes, legislation proposing an IRP process was circulated earlier this year but did not move forward. Iowa recognizes the need for utilities to be flexible with generation, and we've seen advanced ratemaking expand to batteries and nuclear investments.
Research analysts covering ALLIANT ENERGY.