Q1 2021 Alliant Energy Corp Earnings Call

May 7, 2021

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Good morning, and welcome to the Alliant Energy's conference call for our first quarter of 2021 results. This call is being recorded for rebroadcast at this time all lines are in a listen only mode.

And I'd like to turn the call over to your host Susan and Gil Investor Relations manager at Alliant energy.

Good morning, and we'd like to thank all of you on the call and the webcast for joining US today. We appreciate your participation.

Joining me on this call are John Larsen Chair, President and CEO, and Robert Durian Executive Vice President and CFO following prepared remarks by John and Robert We will have time to take questions from the investment community.

We issued a news release last night announcing Alliant Energy's first quarter 2021 financial results. This release as well as supplemental slides that will be referenced during today's call are available on the investor page of our website at www Dot Alliant energy Dot com.

Before we begin I need to remind you the remarks, we make on this call and our answers to questions include forward looking statements. These forward looking statements are subject to risks that could cause actual results to be materially different. Those risks include among others matters discussed in Alliant Energy's press release issued last.

Night, and and our filings with the Securities and Exchange Commission, we disclaim any obligation to update these forward looking statements.

In addition, this presentation contains references to non-GAAP financial measures. The reconciliation between non-GAAP and GAAP measures are provided in the earnings release, and our 10-Q, which will be available on our website.

At this point I'll turn the call over to John.

Thank you Sue and Hello, everyone and thank you for joining us today.

Our solid first quarter results were as expected continuing our long track record of delivering value for our customers communities and investors.

We do this by innovating new approaches and delivering important energy solutions for our customers and the communities we proudly serve.

Our purpose driven strategy is thoughtful and flexible and well executed the results speak for themselves.

Later on the call Robert will share more details on our results, but let me jump to the headline.

We are reaffirming our consolidated 2021 earnings guidance of $2 50.

To $2.64.

We remain committed to delivering on our 5% to 7% growth target.

And our 60 to 70 per cent dividend payout ratio.

And of lie and energy, we take pride in our long track record of delivering consistent growth for our investors.

And what makes us even more meaningful is and how we have delivered that growth.

And by living our values to care for others and act for Tomorrow and.

We continuously raise the bar when it comes to our environmental social and governance commitments.

And we're proud to be recognized for our efforts.

We're of double a rated company by M. S C I.

Rank in the top quartile for global utilities by sustained political <unk>.

And achieved envision platinum certification on major generation projects.

With our customers in mind, we continue to accelerate our purpose driven clean energy transition.

We call it the clean energy blueprint.

And recently highlighted our progress towards our sustainability goals during Earth week.

We ended the year 2020, with 42% less carbon emissions, and our 2000 and and five levels near.

Nearly 70% reduction and water compared to our 2005 levels.

And nearly 70% of our coal generation is either retired or plan for retirement by 2020 four.

We'll be sharing more of our progress and highlighting new initiatives with the release of our updated corporate responsibility report this summer.

Equally important to our environmental efforts are the commitments to our employees customers and the communities we serve.

We know that when we embrace the diversity of our employees and continue to build upon the strong culture, we create a sense of belonging and inclusion that leads to great things for our customers I'm.

And I'm very proud of the recognition of our efforts in this space by organizations such as the human rights campaign and to be included and Bloomberg's gender equality index.

In 2020, we were named one of America's most responsible companies by Newsweek ranking 12 on the list for our social responsibility efforts.

Turning to our recent updates this week, we announced and intend to enter into a settlement agreement for our rate filing and Wisconsin.

We continued our open and transparent practices into our rate review process and are very pleased to have reached the settlement in principle with several stakeholder organizations.

Including the citizens utility board, the Wisconsin, Industrial Energy group and the Sierra Club.

The key terms with stakeholders continues to manage customer costs and enables our thoughtful transition to of clean energy future, adding certainty and flexibility for our business.

Just prior to this development, we reached another successful milestone announcing our plans to add 414 megawatts of solar and Wisconsin.

Rounding our previously announced plan to accelerate our clean energy transition by adding nearly 1100 megawatts of solar and the Badger state.

Upon completion of this planned expansion of Alliant energy will own and operate the most solar energy and the state of Wisconsin the.

These investments are another part of our clean energy blueprint developed through an extensive and transparent planning process and utilizing our industry of breast industry best project execution.

And our communities, we are partnering with businesses and community leaders to develop hometown solar projects.

These local projects benefit communities through lease payments supplying clean energy to the local energy grid empowering homes and businesses.

Some of our newest projects include a one megawatt community Solar project project located in Perry, Iowa.

The customer hosted project and Dodge Ville, Wisconsin, located on the rooftop of Iowa counties, New Law enforcement Center.

And solar generation near our West Riverside Energy Center near Beloit, Wisconsin.

Before I close I'd like to recognize our amazing employees.

They came together to serve customers during winter storm here as the result of their efforts coupled with smart investments, we've made to ensure reliability resiliency and the proactive planning borrower and by our energy markets team.

We not only weathered the storm our team's continued providing safe reliable and affordable energy. During this extreme weather event and our customers will not see the significant increase as experienced by others around the country.

In summary, 2021 is off to a solid start for our company and we look forward to building on that momentum throughout the year as we focus on continuing our role as the leader and advancing renewable energy complete.

Completing customer focused investments on time and on budget.

Delivering solid returns for our investors.

And living our values as we fulfill our purpose of serving customers and building stronger communities.

Thank you for your interest and Alliant energy I'll now turn the call over to Robert.

Thanks, John Good morning, everyone.

Yesterday, we announced first quarter of 2021 GAAP earnings of 68 cents per share compared to 70 per share and 2020.

Similar to last year. The first quarter's earnings are more than 25 per cent of our 2021 earnings target and represent a strong start to the year.

The earnings were slightly lower on a year over year basis, largely due to the timing of tax expense impacts, which will reverse later this year.

For the full year, we are reaffirming our earnings guidance of $2 of 50 cents per share to $2.64 per share.

And increase at the midpoint of more than 6% over 2020 and temperature normalized earnings per share of $2 42 zone.

The assist you in modeling our quarterly earnings of this year and wanted to provide some additional context and one of the larger variance as shown on our earnings release of.

A summary of recall and the first quarter of 2020, we recognized six cents of favorability from the timing of income taxes, which arose from the large amount of wind generation and placed in service and 2020.

We had additional tax favorability and the third quarter of 2020 before a full reversal and the fourth quarter of last year.

You can expect to see the inverse of that in 2021 with.

With the unfavorable variances related to the time and of income tax expense for the sum of the first three quarters.

Followed by a favorable reversal and the fourth quarter of this year.

We continue to see improving economic conditions, and our service territories with more businesses returning to normal operations. Following the lifting of many of the COVID-19 mitigation restrictions and increasing levels of economic development activities in both states.

Of note on <unk>.

But your normalized retail electric sales and the first quarter of 2021 were better than expected and represented and approximately 1% increase over the first quarter of 2020, which was largely pre pandemic for our service territories.

We're also very encouraged by the fact that the number of our customers and arrears or on payment players today is lower than it was before the pandemic began.

This is a testament of the great work of our employees.

Connecting customers have of difficulty, making payments with available federal and state of resources.

And I'm also very proud of donations by our company and our customers to the hometown care of Energy Fund, which provides confidential financial support for a lot of energy customers faced with financial challenges.

Due to the COVID-19, pandemic and 2020.

It was necessary for us to accelerate our cost transformation efforts to reduce to offset reduced sales of holding rates flat for our customers last year.

Thanks to our employees' continued focus on cost reductions, we achieved another quarter of solid operating expense reductions and the first quarter of 2021.

Over the longer term, we are targeting to reduce O&M by approximately 3% to 5% per year.

For the next several years of of 2019 levels.

We will achieve these savings through efforts that fall under the three pillars, all of which are enabled by our customer focused capital investments.

The first and most immediately impactful on our investments and generation transformation.

This includes our expansion of wind and solar energy and the sunsetting of coal generation and our portfolio.

The second pillar involves investments and electric distribution, particularly in the areas of underground day and convert a larger portions of our system to the 25, JV, which will enable lower maintenance expense.

The third and final pillar includes investments and technology across our company.

And which will enhance productivity and efficiency through automation and customer self service and Telework.

Slide four of our supplemental slides has been provided to assist you in modeling the effective tax rates for our two utilities and our consolidated group.

We estimate of consolidated effective tax rate of negative 19% for 2020 one.

The primary drivers of the lower tax rate or the additional tax credits from new wind projects placed into service.

And the return of excess deferred taxes for federal tax reform to our customers.

The production tax credits and excess deferred tax benefits.

Pull back to customers, resulting of lower electric margins.

Thus the decrease and the effective tax rate is largely earnings neutral.

Turning to our financing plans.

We continue to maintain strong balance sheets at our two utilities and the parent company with minimal financing needs of 2021.

As a reminder of.

The financing plans for 2021 include up to $300 million of long term debt to be issued by our Wisconsin utility and no material debt maturities this year.

In addition, the only new common equity forecast to be issued this year is approximately $25 million through the shareowner direct plan.

We've included our regulatory initiatives of note on slide five.

Starting on our Wisconsin jurisdiction.

As John mentioned earlier this week, we filed the notice of intent to settle with the intervening parties and Wisconsin Adobe feels next electric and gas rate review filing.

The agreement in principle resulted from collaboration and alignment with the settling parties on total revenue requirements for 2022 and 2023.

The agreement with enable key financial terms impacting such revenue requirements and <unk>.

The maintaining of 10% return on equity.

Achieving and effective regulatory equity layer of 54 per cent.

And utilize and and innovative recovery mechanism for WPS retiring edgewater coal plant.

There'll be a pill is working with the stakeholders to finalize the terms of the settlement, which will be subject to review and approval by the P of CW.

We anticipate a decision from the PSC W. On this filing later this year.

More details of the terms of the agreement in principle can be found on slide six.

Additionally, in Wisconsin, we received verbal approval from the P of CW and April for a certificate of authority filing for 675 megawatts of new solar generation.

This verbal approval is another example of our continued track record of constructive state regulatory decisions of proving renewable projects that support our transition to cleaner sources of energy for our customers.

And the discussion of this decision all three commissioners were complementary of the resource planning process and stakeholder engagement that we conducted as part of our Wisconsin clean energy blueprint.

The commission commended our modeling efforts and this process and the consideration paid to affordability and stability of rates the reliability of service and our path to sustainability for our customers.

We would expect a written decision in the coming weeks.

We also file of our second certificate of authority of application for an additional 414 megawatts of Wisconsin Solar and March.

And we anticipate a decision from the pieces of the on this filing and the first half of next year.

Moving to Iowa.

And we expect to file for advanced Ratemaking principles and the third quarter for our proposed of approximately 400 megawatts of solar and included in our Iowa clean energy blueprint.

The advanced Ratemaking principles process, and Iowa and includes approval of the return on equity from the life of the assets depreciation rates and across cap for the projects.

We anticipate a decision from the Iowa Utilities Board on this filing by the middle of next year.

We appreciate your continued interest and our company and look forward to connecting with many of you virtually over the coming months.

At this time I'll turn the call back over to the operator to facilitate the question and answer session.

Thank you Mr <unk>.

At this time of the company will open the call to questions from members of the investment community.

If you'd like to ask a question on the phones. Please do so at this time by pressing star one on your telephone keypad. Please make sure that you're on mute function is turned off to allow your signal to reach of our equipment.

Once again that is star one if you'd like to ask a question.

We'll take our first question from Julien Dumoulin Smith with Bank of America.

Hey, good morning, Craig and thanks for the time and the opportunity to connect.

Yeah, well yeah.

Yeah, good morning Julien.

Good morning to you.

So perhaps just the first high level question.

As you think about the transmission opportunities afforded here how would you characterize the.

The opportunity I'm looking at the the MISO futures that were recently released et cetera and.

And your words.

Yeah, Great Julian great to hear from you.

There is certainly a great deal of need for transmission and connect renewables, we know that and a lot of those are gonna be and the ATC area. So we see that as very solid.

I don't think it's anything.

The two notably different than how we've had it modeled transmission is going to be very important for renewables. So I.

I guess I would characterize it is.

The solid and pretty consistent with how we've seen it and how we've modeled it.

Okay, Alright fair enough.

And then as you think about.

Yeah.

The backdrop of the Wisconsin settlement I I appreciate the comments and your prepared remarks.

But how do you think about the rate base of associated with that settlement and where does that position you. If you can yet against your larger five to seven per cent range. If you can comment.

Yeah. Julian this is Robert I think that puts us right squarely, where we want to be with the growth of 5% to 7%.

We see good rate base growth based on the modeling that we've shared with all the other analysts to date and the.

This is consistent with that.

So just the whole process the.

The rate review of agreement in principle, we think is the very very supportive of all of the collaborative the processes that we do with our keys to the stakeholders and so.

It's also a really a good balance between the customers and the stakeholders interest the shares of interest and we say there is really a good avenue to provide debt raise stability of that we're looking for.

For both our customers and our shareowners. So all in all of I think it's very very constructive and the very consistent with what we've been sell and folks as far as our plan for the future.

Got it and I presume, you're confident and getting the approval of the the hire of 54 per cent of equity layer is part of that settlement.

That is correct.

Excellent.

Sorry, if I I know you guys are quick here, if I can just squeeze one more on here on I know of.

Do you see any any any initial thoughts of responses here I mean and folks are fixated on the arts you at or a little bit of of late and any context on how you think about and appeals process or otherwise if it should that materialize the summer.

Maybe Luke.

Every day.

I think one thing we've learned is the the process to get to the finish line on row whichever direction they are going.

And is one that you have to be quite patient.

And I'm confident we'll get to the there'll be a reasonable outcome there.

<unk> for transmission isn't going to change.

Do think there is going to be.

A bit of a process to make sure it settles out to the to the right final number if you will Julian but rather than handicap. The final result, I think like we've seen in the past you've got to be a little patient on these proceedings.

Alright, great. Thank you guys.

How much of your patients and have a great day.

Yep.

Thanks Julien.

Alright, and once again that is star one if you'd like to ask the question. We'll take our next question from Andrew Weisel with Scotiabank.

Yeah.

Hey, good morning, everybody.

The start maybe just if you could continue on the FERC ROE if the 50 basis point incentive adder work to be eliminated for you guys what would be the M. P. S EPS impact.

Yeah, Hey, great Andrew Great to hear from me and maybe I'll, let Robert Scott debt.

And I dialed in and Robert you want to share those numbers for us the Andrew it's a pretty modest and pegged for us I would characterize it is less and <unk>.

Per year.

So that's the direct result of the ATC earnings impact on our business and we would also see most likely is this played out of lower transmission of expense coming through both of our utilities and so think of that is probably in the maybe $10 million to $15 million of year. So that supports our customer affordability objectives provides us some additional.

And the headroom for further investments and really with the more and more than offset the the.

Impact on the earnings side on the ATC earnings.

Okay, great and certainly manageable there.

The next just a few questions on the W. P. L. A proposed settlement please.

The first you mentioned the effect of equity ratio of 54%, but I thought the press release showed 52 and a half and there's some accounting quirks there.

Yeah, It really the difference between those two of the.

The regulatory equity cap or equity ratio and the capital structure and think of that is what's used to calculate the revenue requirement.

When you impute and certain debt or off balance sheet items, and that's what lowers the down to the 52.

And 5% so we've got some our ppas and leases that is part of the regulatory process. It was good the imputed into the financial and capital structure consistent with what occurs with the other.

And the rating agencies, so but think of 54% is on you should calculate the revenue requirement.

Okay great.

And in terms of the 2020 to increase.

What would that mean for customer bills like as the percentage change for customers, either and rates or monthly bills.

Yes.

And on average if you think a high level of about 6%.

<unk>.

Okay.

And then does the settlement include usage of some of the regulatory and liabilities that you have available I think last time, we talked about a range of about 60 to 80 million and what does this settlement due to that.

The Andrew does utilize those of the biggest of which is a regulatory liability that we were able to record as a result of the liquidated damages regarding our west Riverside facilities, though it would utilize those regulatory liabilities as well as others that are and that $60 million to $80 million that you referenced.

Yeah.

We did utilize all of that I guess is what I'm asking are there will be still some remaining.

And it would use the vast majority of it.

Okay terrific.

And then one last one on the settlement here.

Could you explain a little more of the mechanics around the edge five level and they shouldn't mechanism and it.

How to bridge of the nine eight versus the nine 2% effective return.

Yeah, probably the best way I've heard of described Andrew is think of it like a mortgage so.

It's got a consistent recovery level over the kind of the remaining as the recovery period of roughly 23 years I think of it is once it hits retirement.

But just like a mortgage we would recover of lower principal balance and of higher interest rate earlier and those years and then the flip of a reverse of that with a higher principle recovery and the lower interest later in the years.

And so as part of that process and what it ends up doing is we recover less and the earlier years and that effectively the converts the 98 per cent that we agreed upon to calculate the revenue requirement.

Two of nine 2% effective Roe so.

Still think that's a very effective tool for us what it does help us to do is lower customer cost and the earlier, so what gives us that rates stability over the remaining life of that assets and so we felt like that was a good balance between shareholder interest and customer interest and the.

We're very pleased with the the outcome there.

Okay, Great. That's really helpful analogy congrats on on filing the settlement. Thank you very much of the time.

Yes. Thanks.

And your next question comes from the line of Michael Sullivan with Wolfe Research.

Hey, good morning.

Just just following on on the on the and.

And in Wisconsin, and worried subtle manner.

Two questions. There I guess, just first how much of the the one of one.

And one gigawatts of solar and now you're adding is comforting.

And the rate asking and on my second one was kind of back to Edgewater.

Guys, Thanks, and the way the recovery was treated here could be of pretty good blueprint for our Columbia ultimately is the street it out in 2020 four.

Yeah, Hey, Michael Thanks, maybe I'll start off let Robert add but.

Certainly, we see it going in and having a pretty transparent process about what we were doing from adding renewables and retiring to be a very good process to repeat and certainly not going to.

And get ahead of ourselves on how Columbia will be treated but I think the collaborative approach and making sure we're very transparent.

And I do think it struck a very solid balance between customers and investors. So we're very pleased with that I think it's a creative and and and brings US a lot of certainty. So we can continue to run the business.

On the renewable front I think the question was if that was all of the 1100 megawatts.

That would be correct.

Yeah.

Okay great.

That's helpful and and then my other question was just more on the the bite and tax plan and if maybe you could just give some thoughts there, particularly as it relates to.

And maybe the minimum book tax and I know you guys have the number of PTC carryforwards, and how youre thinking about how that could get treated.

And just some thoughts on on the right and tax planning.

Yeah, we certainly keeping a very close eye on that Michael No question about that it's a bit early and the process, but there's a number of tax matters there that will be.

You don't have some impact on our business and customers. So we're keeping a very close tabs on that maybe I'll, let Robert talk about a couple of those on the minimum and and Ptc's, but certainly what we look forward to on.

On PTC ITC uses any level of certainty there that certainly helps the industry and our business. If the outcome has a bit of certainty to it so Robert anything to add on the minimum tax yeah for the for the bite and plan two of the provisions were watching closely right. Now is obviously, the corporate tax rate going from 21% of something potentially higher.

And that we've modeled that out and I think with.

The top end of of a reasonable ranges of 28% and and we think that would equate to roughly about a 2% interest and our customer bills and some modest impacts on our EPS and then actually some positive cash flow is given our NOL position and tax credit carry forwards but.

But we think we can manage through that and some of the latest thinking of read about and things of that might be and the maybe 24, 25%. So that would even probably be less impact to our customers, which would be good from our perspective.

The minimum tax we actually have seen more recently, where they may set of threshold related to that and not really apply that are any companies that of less than I think $2 billion.

Of the annual income and that would exclude us are exempted from that so.

We would be comfortable of that and obviously supportive of that so we wouldn't be put into that position.

As John indicated we're actually more interested and the the widened plan right now because we see some opportunities for us to utilize some of those benefits to support a lot of the of the future of capital growth and we may be pursuing things.

Things like the direct pay and potentially of refundable tax credits and they will.

Give us.

A good set of cash flows and we can reinvest in the future of renewables going forward.

The Standalone credit for.

Storage.

Do you think that would really improve the economics of those opportunities for us on the future and could build out of some further couple of opportunities for us and the we're also watching the potential to be able to use P. T. CS instead of the ITC for solar projects that could make what we think are very favorable economic terms for our current solar even better so and so pretty excited about some.

Of those opportunities on the light and plan and what that might do two of our capital investment opportunities going forward here.

Awesome, that's great, Thanks, and and then.

And my last question just on this.

Corporate sustainability report you guys are doing I know, that's kind of an annual thing but.

And like incremental we should expect with that or is that more interest. The summary of what's been done on on the ESG front.

Yes.

And we get.

And we get very excited to tell our story each year and updates I wouldn't think of anything to two notably different but you will see a bit more focus on water resources, which has been a focus for us for a number of years, but I think we'll be putting some more stories and metrics. They are about water stress and how our COO.

Company is focused on the water resources.

Great. Okay. Thanks, so much from the time.

Yes, Thanks, Michael.

Alright, and once again that is star one if you'd like to ask the question. We'll take our next question from Andrew Levy with Hite edge hedge.

Hi, guys how are you.

A great day Andy.

Just a couple of questions.

Just on the higher equity ratio and Wisconsin.

Have you guys quantified.

The earnings power of them that have how.

All of that helps your earnings power and then I guess you of a slightly lower on ROE right.

Or was it maybe kind of 10% and the settlement.

Yeah, just to be clear and if so the ROE is at 10% for a vast majority of the business the only impact with the nine eight per cent would be.

On the remaining net book value of the Edgewater five facility so okay and.

As far as the higher equity layer think of it as each probably 100, a 100 basis points and the equity later, probably gives us a penny or two of additional earnings.

Okay got it and then that's very helpful and them on.

Because you guys had mentioned about the U S.

I asked about the Mark on.

Ro.

And so I understand that the impact of you know for you guys is the minimal maybe you know kind of asking your CEO of just kind of like a bigger picture question.

So as you think about ROE and general and obviously and you know for.

And as of 40 a day.

Whether it's.

Others or whatever it may be incentives.

The Aro <unk>.

The high relative to the cost of capital just kind of on the big picture basis.

Whether it's 50 basis points of 100 basis point of change in a row.

From the level.

And that the base ROE and that would net that would never change or not change I should say your the amount of investment that you would make right and I am I correct about that.

Yeah, we don't see that really changing our plan Andy we've we've been on a.

Pretty long runway here of transitioning from older coal resources and to renewables for quite some time now and and we would feel those to still be very reasonable and and not materially change our investment strategy.

Okay and then my last question is just around the rates and.

In general So I guess this is is this the first rate increase could you talked about of 6% rate increase.

And Wisconsin and quite a while is that correct.

Yeah. Thanks, you know, Andy and maybe clarify that 6% covers the next two years and if you. If you look from I believe it's around 2010 until now it's been over a decade I think in Wisconsin, and we would average it's less than 1%.

It's maybe.

Half a percent or so over those 11 or 12 years with this increase so are we.

We've done a very nice job of keeping our base rates flat and finding a way to continue to make substantial investments and the business.

And your average weighted in Wisconsin, and if I'm not mistaken is around 10 cents.

That's correct correct.

Okay.

Here on the East coast, it's about 18 or so.

And so you have done a good job.

And just one point that now okay and those answers all my questions. Thank you very much.

Yeah. Thank you Andy.

And it looks like and we have no further questions at this time, so I'd like to turn it back over to our speakers for any additional remarks.

This concludes Alliant Energy's first quarter earnings call.

Replay will be available through May 14, 2021 at 8882 out of 31112 for U S and Canada or seven 194 of five seven year of 8204 International callers should reference conference I'd 407 and 5543.

In addition, and archived on the conference call and the script of the prepared remarks made on the call will be available on the investors section of the company website later today.

We thank you for your continued support of Alliant energy and feel free to contact me with any follow up questions.

Okay.

And that does conclude today's call. We thank everyone again for their participation.

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Good morning, and welcome to the Alliant Energy's conference call for our first quarter of 2021 results.

The call is being recorded for rebroadcast at this time all lines are in a listen only mode. I would now like to turn the call over to your host Susan and Gil Investor Relations manager at Alliant energy.

Morning, and I'd like to thank all of you on the call and the webcast for joining US today. We appreciate your participation joining.

Joining me on this call are John Larsen, Chairman, President and CEO, and Robert Durian Executive Vice President and CFO following prepared remarks by John and Robert and you'll have time to take questions from the investment community.

We issued a news release last night announcing Alliant Energy's first quarter 2021 financial results. This release as well and supplemental slides that will be referenced during today's call are available on the investor page of our website at Www Dot line energy dotcom.

Before we begin I need to remind you the remarks, we make on this call and the answers to questions include forward looking statements. These forward looking statements are subject to risks that could cause actual results to be materially different.

The risks include among others matters discussed in Alliant Energy's press release issued last night, and and our filings with the Securities and Exchange Commission, we disclaim any obligation to update these forward looking statements.

In addition, this presentation contains references to non-GAAP financial measures a reconciliation between non-GAAP and GAAP measure at the are provided in the earnings release, and our 10-Q, which will be available on our website.

At this point I'll turn the call over to Ken.

Thank you Sue and Hello, everyone and thank you for joining us today.

Our solid first quarter results were as expected continuing our long track record of delivering value for our customers communities and investors.

We do this by innovating new approaches and delivering important energy solutions for our customers and the communities we proudly serve.

Our purpose driven strategy is thoughtful and flexible and well executed the results speak for themselves.

Later on the call Robert will share more details on our results, but let me jump to the headline.

We are reaffirming our consolidated 2021 earnings guidance of $2 50.

To $2 64.

We remain committed to delivering on our 5% to 7% growth target.

And our 60% to 70% dividend payout ratio.

And Alliant energy, we take pride in our long track record of delivering consistent growth for our investors.

And what makes us even more meaningful is and how we have delivered that growth by.

And by living our values to care for others and act for Tomorrow and we.

We continuously raise the bar when it comes to our environmental and social and governance commitments.

We're proud to be recognized for our efforts.

We're of double a rated company by M. S C I.

Frank and the top quartile for global utilities by sustained political <unk>.

And achieved envision platinum certification on major generation projects.

With our customers in mind, we continue to accelerate our purpose driven clean energy transition.

We call it the clean energy blueprint and.

And recently highlighted our progress towards our sustainability goals during Earth week.

We ended the year 2020, with 42% less carbon emissions and our 2005 levels near.

Nearly 70% reduction and water compared to our 2005 levels.

And nearly 70% of our coal generation is either retired or plan for retirement by 2020 four.

We'll be sharing more of our progress and highlighting new initiatives with the release of our updated corporate responsibility report this summer.

Equally important to our environmental efforts are the commitments to our employees customers and the communities we serve.

We know that when we embrace the diversity of our employees and continue to build upon the strong culture, we create a sense of belonging and inclusion that leads to great things for our customers.

And I'm very proud of the recognition of our efforts in this space by organizations such as the human rights campaign and to be included and Bloomberg's gender equality index.

In 2020, we were named one of America's most responsible companies by Newsweek ranking 12 on the list for our social responsibility efforts.

Turning to our recent updates this week, we announced and intend to enter into a settlement agreement for our rate filing and Wisconsin.

We continued our open and transparent practices into our rate review process and are very pleased to have reached the settlement in principle with several of stakeholder organizations.

Including the citizens utility board, the Wisconsin, Industrial Energy group and the Sierra Club.

The key terms with stakeholders continues to manage customer costs and enables our thoughtful transition to of clean energy future, adding certainty and flexibility for our business.

Just prior to this development, we reached another successful milestone announcing our plans to add 414 megawatts of solar and Wisconsin rounding.

Rounding our previously announced plan to accelerate our clean energy transition by adding nearly 1100 megawatts of solar and the Badger state.

Upon completion of this planned expansion Alliant energy will own and operate the most solar energy and the state of Wisconsin.

These investments are another part of our clean energy blueprint developed through an extensive and transparent planning process and utilizing our industry of breast industry best project execution.

And our communities, we are partnering with businesses and community leaders to develop hometown solar projects.

Local projects benefit communities through lease payments supplying clean energy to the local energy grid empowering homes and businesses.

Some of our newest projects include a one megawatt community Solar project project located in Perry, Iowa on.

Customer hosted project and Dodge Ville, Wisconsin, located on the rooftop of Iowa counties, New Law enforcement Center.

And solar generation near our West Riverside Energy Center near Beloit, Wisconsin.

Before I close I'd like to recognize our amazing employees.

In summary, 2021 is off to a solid start for our company and we look forward to building on that momentum throughout the year as we focus on continuing our role as a leader and advancing renewable energy complete.

Completing customer focused investments on time and on budget.

Delivering solid returns for our investors.

And living our values as we fulfill our purpose of serving customers and building stronger communities.

Thank you for your interest and Alliant energy I'll now turn the call over to Robert.

Thanks, John Good morning, everyone.

Yesterday, we announced first quarter of 2021 GAAP earnings of 68 cents per share compared to 70 cents per share and 2020.

Similar to last year. The first quarter's earnings are more than 25 per cent of our 2020 one earnings target and represent a strong start to the year.

The earnings were slightly lower on a year over year basis, largely due to the timing of tax expense impacts, which will reverse later this year.

For the full year, we are reaffirming our earnings guidance of $2 of 50 cents per share to $2.64 per share.

And increase at the midpoint of more than 6% over 2020 and temperature normalized earnings per share of $2 42.

The assist you in modeling our quarterly earnings of this year I wanted to provide some additional context and one of the larger variance as shown on our earnings release and.

A summary of recall and the first quarter of 2020, we recognized six cents of favorability due to the timing of income taxes, which arose from the large amount of wind generation and placed in service and 2020.

We had additional tax favorability and the third quarter of 2020 before a full reversal and the fourth quarter of last year.

You can expect to see the inverse of that in 2021 with unfavorable variances related to the timing of income tax expense for the sum of the first three quarters.

All of them by a favorable reversal and the fourth quarter of this year.

We continue to see improving economic conditions, and our service territories with more business is returning to normal operations. Following the lifting of many of the COVID-19 mitigation restrictions.

And increasing levels of economic development activities in both states.

Of note our temperature normalized retail electric sales and the first quarter of 2021 were better than expected and represented and approximately 1% increase over the first quarter of 2020, which was largely pre pandemic for our service territories.

We're also very encouraged by the fact that the number of our customers and arrears or on payment plans today is lower than it was before the pandemic began.

This is a testament of the great work of our employees connecting customers, having difficulty making payments with available federal and state resources.

I'm also very proud of donations by our company and our customers to the hometown care of Energy Fund, which provides confidential financial support for a lot of energy customers faced with financial challenges.

Due to the COVID-19, pandemic and 2020.

It was necessary for us to accelerate our cost transformation efforts to reduce to offset reduced sales of holding rates flat for our customers last year.

Thanks to our employees' continued focus on cost reductions, we achieved another quarter of solid operating expense reductions and the first quarter of 2021.

Over the longer term, we are targeting to reduce O&M by approximately three to five per cent per year.

For the next several years of of 2019 levels.

We will achieve these savings through efforts that fall under the three pillars, all of which are enabled by our customer focused capital investments.

The first and most immediately impactful our investments and generation transformation.

This includes our expansion of wind and solar energy and the sunsetting of coal generation and our portfolio.

The second pillar involves investments and electric distribution, particularly in the areas of underground ing and converting larger portions of our system, the twenty-five JV, which will enable lower maintenance expense.

The third and final pillar includes investments and technology across our company.

Which will enhance productivity and efficiency through automation and customer self service and Telework.

Slide four of our supplemental slides has been provided to assist you in modeling the effective tax rates for our two utilities and our consolidated group.

We estimate of consolidated effective tax rate of negative 19% for 2020 one.

The primary drivers of the lower tax rate or the additional tax credits from new wind projects placed into service.

And the return of excess deferred taxes from federal tax reform to our customers.

The production tax credits and excess deferred tax benefits will flow back to customers resulted in the lower electric margins.

Thus the decrease and the effective tax rate is largely earnings neutral.

Turning to our financing plans.

We continue to maintain strong balance sheets at our two utilities and the parent company with minimal financing needs in 2020 one.

As a reminder, our financing plans for 2021 include up to $300 million of long term debt to be issued by our Wisconsin utility and no material debt maturities this year.

In addition, the only new common equity forecast to be issued this year is approximately $25 million through the shareowner direct plan.

We've included our regulatory initiatives of note on slide five.

Starting on our Wisconsin jurisdiction.

As John mentioned earlier this week, we filed the notice of intent to settle with key intervening parties, and Wisconsin and Dolby feels next electric and gas rate review filing.

The agreement in principle resulted from collaboration and alignment with the settling parties on total revenue requirements for 2022 and 2023.

The agreement with enable key financial terms impacting such revenue requirements, including maintaining the 10% return on equity.

Achieving and effective regulatory equity layer of 54 per cent.

And utilizing and innovative recovery mechanism for WPS retiring edgewater coal plant.

There'll be feel is working with the stakeholders to finalize the terms of the settlement, which will be subject to review and approval by the P of CW.

We anticipate a decision from the PSC W. On this filing later this year.

More details on the terms of the agreement in principle can be found on slide six.

Additionally, in Wisconsin, we received verbal approval from the PUC W and April for a certificate of authority filing for 675 megawatts of new solar generation.

We'd expect a written decision in the coming weeks.

We also file of our second certificate of authority application for an additional 414 megawatts of Wisconsin Solar and March.

And we anticipate a decision from the pace of debate on.

On this filing and the first half of next year.

Moving to Iowa.

And we expect to file for advanced Ratemaking principles and the third quarter for our proposed of approximately 400 megawatts of solar included in our Iowa clean energy blueprint.

The advanced Ratemaking principles process in Iowa and income.

The approval of the return on equity from the life of the asset depreciation rates and of course caf for the projects.

We anticipate a decision from the Iowa Utilities Board on this filing by the middle of next year.

We appreciate your continued interest and our company and look forward to connecting with many of you virtually over the coming months.

At this time I'll turn the call back over to the operator to facilitate the question and answer session.

Yeah.

Thank you Mr Jerry and.

At this time of the company will open the call to questions from members of the investment community. If you will.

Like to ask a question over the phones. Please do so at this time by pressing star one on your telephone keypad. Please make sure that you're on mute function is turned off to allow your signal to reach of our equipment.

Once again that is star one if you'd like to ask a question.

We'll take our first question from Julien Dumoulin Smith with Bank of America.

Hey, good morning, Craig and thanks for the time and the opportunity to connect and yeah as well yeah.

Good morning Julien.

Good morning to you so perhaps just the first high level question.

As you think about the transmission opportunities afforded here, how would you characterize the H D D.

And the opportunity I'm looking at the the MISO futures that were recently released et cetera and.

And your words.

Yeah, Great Julian Great to hear from you and you know, there's certainly a great deal of need for transmission and connect renewables, we know that and and a lot of those are gonna be and the ATC area. So we see that as very solid.

Don't think it's anything.

The two notably different than how we've had it modeled transmission is going to be very important for renewables. So I.

I guess I would characterize it is.

Solid and pretty consistent with how we've seen it and how we've modeled it.

Okay, Alright fair enough.

And then as you think about.

The backdrop of this Wisconsin settlement I I appreciate the comments and your prepared remarks.

How do you think about the rate base associated with debt settlement and where does that position you if.

If you can yet against your larger five to seven per cent range. If you can comment.

Yeah. Julian this is Robert I think that puts us right squarely, where we want to be with the growth of 5% to 7%.

And we see good rate base growth based on the modeling that we've shared with all the other analysts to date and the.

This is consistent with that.

So just the whole process the with the rate review of agreement in principle. We think is the very very supportive of all of the collaborative the processes that we do with our key stakeholders and so.

It's also a really a good balance between the customers and the stakeholders interest the shares interest and.

And there's really a good afternoon to provide that raised stability of that we're looking for.

For both our customers and our shareowners, so all and all I think it's very very constructive and the very consistent with what we've been telling folks as far as our plan for the future.

Got it and I presume, you're confident and getting the approval of the the hire of 54 per cent of equity layer is part of that settlement.

That is correct.

Excellent.

Sorry, if I I know you guys are quick here, if I can just squeeze one more in here on on a.

Do you see any any any initial thoughts of responses here I mean folks are fixated on this and it's hard to you at or a little bit of of late and any context on how you think about and appeals process or otherwise if we should that materialize in the summer.

Maybe a little.

Every day.

I think one thing we've learned is the the process to get to the finish line on row whichever direction they are going.

And is one that you have to be quite patient.

And I'm confident we'll get two of the there'll be a reasonable outcome. There you know the knee.

Need for transmission isn't going to change.

Do think there is going to be.

Alright, great. Thank you guys.

How much of your patients and have a great day.

Yep.

Thanks Julien.

Alright, and once again that is star one if you'd like to ask a question. We'll take our next question from Andrew Weisel with Scotiabank.

Yeah.

Hey, good morning, everybody.

The start maybe just if you could continue on the FERC ROE if the 50 basis point incentive adder works it'd be eliminated for you guys what would be the M. P. S EPS impact.

Yeah, Hey, great Andrew Great to hear from me and maybe I'll, let Robert Scott debt dialed and Robert you want to share those numbers for us the Andrew it's a pretty modest and begged for us I would characterize it is less and <unk>.

Per year.

So that's the direct result of the ATC earnings impact on our business and we would also see most likely is this played out of lower transmission of expense coming through both of our utilities and so think of that is probably in the maybe $10 million to $15 million of year, So and that supports our customer affordability objectives provides us some additional.

The headroom for further investments and really with the more and more than offset the the impact on the earnings side on the ATC earnings.

Okay, great and certainly manageable there.

And next just a few questions on the W. P. L. A proposed settlement please.

The first you mentioned the effective equity ratio of 54%, but I thought the press release showed 52 and a half of the some accounting quirks there.

Yeah really the the difference between those two are the.

And the regulatory equity cap or equity ratio and the capital structure and think of that is what's used to calculate the revenue requirement.

And when you impute and certain debt or off balance sheet items, that's what lowers the down to the 52 and.

And 5% so we've got some ppas and leases that is part of the regulatory process those get imputed into the financial and capital structure consistent with what occurs with the the rating agencies. So but think of 54% is how you should calculate the revenue requirement.

Okay, Great and next in terms of the 2020 to increase what would that mean for customer bills like as a percentage change for customers, either and rates or monthly bills.

Yeah.

On average if you think a high level of about 6%.

And.

Okay.

And then does the settlement include usage of some of the regulatory liabilities that you have available I think last time, we talked about a range of about $60 million to $80 million. What does this settlement due to that.

Yeah, Andrew does utilize those of the biggest of which is a regulatory liability that we were able to record as a result of the liquidated damages regarding our west Riverside facilities, though it would utilize those regulatory liabilities as well as others that are in that $60 million to $80 million that you referenced.

We did utilize all of that I guess is what I'm asking are there will be still some remaining.

It would you is the vast majority of it.

Okay terrific and.

And then one last one on the settlement here.

You explain a little more of the mechanics around the edge five level of they shouldn't mechanism and and how to bridge the nine eight versus the nine 2% effective return.

Yeah, probably the best way to I've heard of described Andrew is think of it like a mortgage so.

It's got a consistent recovery level over the kind of the remaining as the recovery period of roughly 23 years I think of it is once it hits retirement.

But just like a mortgage we would recover of lower principal balance and of higher interest rate earlier and those years and then the flip of a reversal of the with a higher principle recovery and the lower interest later in the years and.

And so as part of that process and what it ends up doing is we recover less and the earlier years and that effectively the converts the nine eight per cent that we agreed upon to calculate the revenue requirement down to a nine 2% effective ROA. So.

And still think that's a very effective tool for us what it does help us to do is lower customer costs and the earlier, so what gives us that rate stability over the remaining life of that asset and so.

And we felt like the what's a good balance between shareowner interest and customer interest and the we're very pleased with the the outcome there.

Okay, Great. That's really helpful analogy congrats on on filing of the settlement. Thank you very much of the time.

Yes. Thanks.

And your next question comes from the line of Michael Sullivan with Wolfe Research.

Hang on we're on good morning.

Just just following on on the on the and.

The Wisconsin rate settlement.

The questions. There I guess, just first how much of the the one of one.

And one gigawatts of solar and now you're adding is comforting.

And the rate asking and on my second one was kind of back to Edgewater.

And I think that's the way the recovery was treated here could be of pretty good blueprint for our Columbia ultimately is the street it out and in 2020 four.

Yeah, Hey, Michael Thanks, and maybe I'll start off let Robert add but.

Certainly, we see it going in and having a pretty transparent process about what we were doing from adding renewables and retiring to be a very good process to repeat and certainly not going to.

And get ahead of ourselves on how Columbia will be treated but I think the collaborative approach and making sure we're very transparent.

On the renewable front I think the question was if that was all of the 1100 megawatts.

And that would be correct.

Yeah.

Okay great.

That's helpful and and then my other question was just more on the on the bite and tax plan and if maybe you could just give some thoughts there, particularly as it relates to.

And the minimum book tax.

Guys have a number of PTC carryforwards, and how youre thinking about how that could get treated.

Yes, just some thoughts on on the bite and tax planning.

Yeah, we certainly keeping a very close eye on that Michael No question about that it's a bit early and the process, but there's a number of tax matters, there that will be and have some impact on our business and customers. So we're keeping a very close tabs on that and maybe I'll, let Robert to talk about a couple of those on the minimum.

And and Ptc's, but certainly what we look forward to on PTC I T seizes at any level of certainty there and it certainly helps the industry and our business. If the outcome has a bit of certainty to it so Robert anything to add on the minimum tax yeah for the for the bite and plan two of the provisions were watching closely right now is obvious.

On the corporate tax rates, and then going from 21% of something potentially higher.

We've modeled that out at the I think with.

The top end of a reasonable ranges of 28% and and we think that would equate to roughly about a 2% interest and our customer bills and some modest impacts on our EPS and then actually some positive cash flow is given our NOL position and tax credit carry forwards but.

The minimum tax we actually have seen more recently, where they may set of threshold related to that and not really apply that are any companies that have less than I think $2 billion of annual income and that would exclude us sort of exempted from that so we would be comfortable with that and obviously supportive of that so we wouldn't be put into that position.

As John indicated we're actually more interested and the the widened plan right now because we see some opportunities for us to utilize some of those benefits to support a lot of the other future of capital growth and we may be pursuing.

Things like the direct pay and potentially of refundable tax credits and they will give us.

A good set of cash flows and we can reinvest in the future of renewables going forward.

The Standalone credit for.

Storage.

And we think that would really improve the economics of those opportunities for us on the future and could build out of some further couple of opportunities for us and the we're also watching the potential to be able to use P. T. CS instead of the ITC for solar projects that could make what we think are very favorable economic returns for our current solar even better so I'm pretty excited about some.

Of those opportunities on the white and plan and what that might do two of our capital investment opportunities going forward here.

Awesome, that's great, Thanks, and and then.

And my last question just on this.

Corporate sustainability report you guys are doing I know, that's kind of an annual thing but.

And like incremental we should expect with that or is that March the summary of what's been done on on the ESG from.

Yeah.

We get.

Company is focused on the water resources.

Great. Okay. Thanks, so much of the time.

Yes, Thanks, Michael.

Alright, and once again that is star one if you'd like to ask the question. We'll take our next question from Andrew Levy with Hite edge hedge.

Hi, guys how are you.

A great Andy.

Just a couple of questions.

Just on the higher equity ratio and Wisconsin.

Have you guys quantified.

The earnings power on that and.

How that helps your earnings power and then I guess you of a slightly lower ROE right.

Or was it made a lot of the 10% and the settlement.

Yeah, just to be clear and if so the ROE is at 10% for a vast majority of the business the only impact with the of nine eight per cent would be on.

On the remaining net book value of the Edgewater five facilities, so okay and.

As far as the a higher equity layer think of it as each probably 100, a 100 basis points and the equity later, probably gives us a penny or two of additional earnings.

Okay got it and then.

That's very helpful and.

Then on you know.

Because you guys had mentioned about the you had been asked about the FERC Roe.

And so I understand that the impact of.

For you guys is the minimal maybe you know kind of asking your CEO just kind of like a bigger picture question.

So as you think about ROE and general and obviously, you know first and.

And as afforded day, whether it's.

Matters or whatever it may be incentives the.

The Aro <unk>.

The high relative to the cost of capital just kind of on the big picture basis.

Whether it's 50 basis points of 100 basis point change and all are we.

You know from the level.

And that the base ROE that would net that would never change or not change I should say you are right.

Out of the investment that you would make right am I correct about that.

Yeah, we don't see that really changing our plan Andy we've we've been on a per.

Okay and then my last question is just around the rates.

In general.

So I guess this is this the first rate increase because.

You talked about of 6% rate increase or.

And Wisconsin, and quite a while and is that correct.

It may be.

A half a percent or so over those 11 or 12 years with this increase so are we.

We've done a very nice job of keeping our base rates flat and finding a way to continue to make substantial investments and the business.

And your average range in Wisconsin, and if I'm not mistaken it's around 10 cents.

Is that correct correct.

Okay.

Here on the East coast, it's about 18 or so.

So you have to up and good job.

And just one point that out okay and those answers all my questions. Thank you very much.

Yeah. Thank you Andy.

And it looks like and we have no further questions at this time, so I'd like to turn it back over to our speakers for any additional remarks.

This concludes Alliant Energy's first quarter earnings call.

Replay will be available through May 14, 2021 at 8882 out of 31112 per U S and Canada or 794 of five seven year on 8204 International callers should reference conference I'd 417 and 553.

In addition, and archived on the conference call and the script of the prepared remarks made on the call will be available on the investors section of the company website later today.

We thank you for your continued support of Alliant energy and feel free to contact me with any follow up questions.

Okay.

And that does conclude today's call. We thank everyone again for their participation.

Q1 2021 Alliant Energy Corp Earnings Call

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