Q2 2024 Earnings Summary
- Alliant Energy has executed multiple agreements with data centers, indicating significant future load growth; the company plans to share details on the load, timing, resources needed, and capital expenditures in the third quarter, potentially boosting future earnings.
- The recent Iowa rate review settlement positions Alliant Energy to benefit from economic development by retaining tax benefits, energy margins, and capacity revenues from new generation projects, which could drive earnings growth and enhance shareholder value.
- Management is confident in offsetting temporary headwinds, such as the $0.10 reduction in earnings due to weather impacts in the first half of 2024, and has reaffirmed their 2024 earnings guidance of $2.99 to $3.13 per share, demonstrating strong operational resilience.
- Weather-related headwinds led to a $0.10 reduction in earnings in the first half of 2024, and management has only line of sight to about half of the offsets needed to mitigate these impacts. This suggests potential challenges in meeting earnings guidance if adverse weather continues.
- The company's future earnings are heavily reliant on securing new large customers, such as data centers, and on economic development efforts. If these initiatives do not materialize as expected, there is a risk of under-earning during the five-year rate stay-out period agreed upon in the Iowa settlement.
- In the event of a deep recession, the company’s Return on Equity (ROE) could fall below the allowed rate, which may necessitate returning for a rate case despite the stay-out provision. This indicates potential earnings instability and uncertainty over the next several years.
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Data Center Contracts
Q: When will you announce data center contracts?
A: We've executed multiple confidential agreements with data centers. Once we have certainty on load amount and timing, we'll announce the projects. We'll share load, timing, resources, and CapEx details at our third quarter earnings call, preparing for EEI. -
Iowa Settlement ROE Risks
Q: What are the ROE risks in the Iowa settlement?
A: The Iowa rate review settlement is driven by economic development. If successful, it will enhance affordability and help us operate within stay-out provisions. There's a provision allowing a rate case if ROEs fall below a certain level. We're optimistic about upside from new data center growth and innovative models retaining tax benefits and energy margins from new generation. -
Weather Impact on Earnings
Q: How have weather headwinds affected earnings?
A: We experienced about a $0.10 reduction in earnings through the first half due to temperatures, mostly in Q1. We have line of sight to offset about half of these impacts and are confident in reaffirming our guidance of $2.99 to $3.13. -
Advanced Ratemaking Opportunities
Q: How does new legislation affect advanced ratemaking?
A: Iowa's recent legislation expands advanced ratemaking eligibility to include energy storage and nuclear, not just renewables. This opens opportunities for larger gas projects, renewables, and battery projects in the coming years. -
Equity Needs Quantified
Q: Can you quantify your modest equity needs?
A: We currently issue approximately $25 million per year via our shareowner direct plan, expected to continue into the foreseeable future. This is our only material equity need planned at this stage, but we'll revisit when we refresh our capital expenditure plans in November. -
Capital Needs and Generation
Q: Can you frame your capital needs and generation?
A: While we don't have specifics now, we're well-positioned with land, transmission access, and flexible rate mechanisms in supportive states. Our clean energy blueprint offers flexibility to align resources with load growth. We'll provide more details once we have information on load and timing. -
Steam Contracts Impact
Q: Is there earnings impact from ending steam contracts?
A: The ending steam customer contracts are a modest part of earnings. Agreements end in 2025 along with depreciation expense, so ongoing impact should not be material. -
Load Growth Forecast
Q: How should we think about your load growth?
A: It's a matter of timing. Once we have the information, we'll share it.
Research analysts covering ALLIANT ENERGY.