Q3 2021 Alliant Energy Corp Earnings Call

November 5, 2021

Good morning, and welcome to Alliant Energy's conference call for third quarter 2021 results. This 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 Zach sealed lead Investor Relations analyst at Alliant energy.

Good morning.

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

Joining me on this call are John Larsen, Chairman, President and Chief Executive Officer, 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 third quarter financial results updated our consolidated 2021 guidance range.

And announced our 2022 earnings guidance and common stock dividend target.

This release as well as supplemental slides that will be referenced during today's call are available on the investors page of our website at www Dot Alliant energy Dot com.

Before we begin I need to remind you that the remarks, we make on this call and our answers to your 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 in 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.

Thanks, Zack good morning, everyone and thank you for joining us today as we highlight our solid results for the third quarter of 2021.

To start us off I'm pleased to share our narrowed and increased 2021 earnings guidance range of $2.61.

To $2 67.

Which represents a forecasted 12th consecutive year, a 5% or greater earnings growth.

We are also announcing our 2022 earnings guidance range of $2 65.

To $2 79 per share, marking yet another year of forecasted 5% to 7% growth.

We understand the importance of delivering consistent returns for our investors and solid operations for our customers.

And in keeping with our plan to grow dividends commensurate with earnings growth I'm pleased to share that our board of directors has approved a 6% increase in our targeted annual common stock dividend to $1 71 per share.

In a few moments I will turn the call over to Robert to share more details of our excellent third quarter financial results, but before I do I'll highlight some of our many accomplishments from the quarter.

Over the past several weeks I've been pleased to meet with many investors and continue to share our ESG story.

It's been a natural journey for us and a direct outcome of how we deliver on our purpose to serve customers and build stronger communities.

We know that a clear vision and solid execution are very important factors when making investment decisions were.

We are proud that our progress and results have been recognized by several key ESG rating organizations, who rate us near the top of the utility industry. Our top performing results can be seen on supplemental slide number two.

Our recent corporate responsibility report highlights many of our achievements, we continue to make steady progress such as our commitment to plant more than 1 million trees across our service territory over the next decade.

Not only will this support our care for the environment value and our carbon reduction efforts it.

It is also responsive to the impact from the 2020 derecho windstorm that devastated our service territory.

In Wisconsin, we celebrated our first community solar project with a public open house and tours and the tone of fond of lack.

But one megawatt solar gardens will supply clean energy to up to 1000 homes and is expected to be operational by the end of 2020 one.

Celebrating this solar garden reflects the communities innovative spirit and passion for clean energy.

In Iowa, we are excited to have received <unk> approval for our first solar gardens.

It is expected to be constructed in 2022 at a site near Cedar Rapids.

In the third quarter. We also assumed ownership of the Bear Creek, North Rock Wood County, and Grant County Solar projects in Wisconsin. Construction is either started or will be started shortly on these projects that totaled 450 megawatts.

And here in the fourth quarter, we acquired the Crawfish River project and expect to acquire the Onion River project before the end of the year.

With those acquisitions, we would have assumed ownership of all 675 megawatts of solar that was approved as part of our first see a filing in Wisconsin.

Two final highlights I'll share are tied to the social side of ESG.

In September we committed $4 million to the hometown care Energy fund.

Customers, who need financial assistance to help pay their energy bills during the upcoming home heating season.

The U S energy information administration estimates that Midwest natural gas expenditures will rise by nearly 50% compared with last winter.

And while we expect the proactive planning by our energy markets team will keep us in line or below those forecasted increases we know customers will welcome. The additional support from this donation to help them stay on track with their energy bills. During this time of increased natural gas demand.

And finally, I'm excited to share that with the support of our suppliers and partners our 15th annual drive out hunger event raised over $400000, bringing our 15 year fund raising total to more than $5 million.

This event has provided over 17 million meals to families in need across our service territory.

Combating hunger is one of the focus areas of our charitable foundation and we are proud to partner with our feeding America food Bank partners in Iowa, and Wisconsin to help thousands of our customers access nutritious food to strengthen their families.

With all the great results from the quarter I would be remiss in not mentioning that our economic development and customer growth efforts have resulted in our third year in a row of being named the top utility and economic development by site selection magazine.

Our economic development team in collaboration with local regional and state partners in Island, Wisconsin created more than $900 million in new capital investments and more than 2200, new jobs across Iowa and Wisconsin.

I look forward to meeting with many of you next week at the EI financial conference to share even more about our company, including our clean energy vision flexible and well executed capital investment plan.

Our long track record of consistent financial and operational results and our focus on the wellbeing of our employees customers and communities.

Thank you for your confidence and Alliant energy.

I'll now turn the call over to Robert.

Thanks, John Good morning, everyone.

Yesterday, we announced third quarter 2021, GAAP earnings of $1 <unk> per share.

Third to <unk> 98 per share in the third quarter last year.

Our higher earnings year over year were driven by higher revenue requirements due to increasing rate base.

As well as higher temperature normalized sales compared to the third quarter of 2020.

These higher earnings were partially offset by higher depreciation expense and timing of income tax expense.

Additionally, in the third quarter of 2020, we recorded a non-GAAP adjustment of four cents per share related to a legacy guarantee at our non utility operations.

Through the first nine months of this year temperatures in our service territory have increased retail electric and gas margins by approximately <unk> <unk> per share by.

By comparison in 2020.

The year to date temperature impacts through the first three quarters increased retail electric and gas margins by approximately one cents per share.

Turning to temperature normalized sales a.

Our retail electric sales in the third quarter of 2021 were up four 1% versus last year.

The two key drivers for this increase are contingent pandemic recovery and year over year sales, particularly in the commercial and industrial classes.

And minimal storm activity this year compared to the third quarter of 2020, when our Iowa territory experienced a derecho windstorm.

Through the first nine months of 2021 temperature normalized electric sales have been better than forecasted largely due to higher than expected demand for residential and industrial customer classes.

As John mentioned last night, we issued our consolidated 2022 earnings guidance range of $2 65.

Two $2 79 per share.

The key driver of the 6% growth in temperature normalized EPS as higher earnings on increasing capital investments, primarily driven by our solar program.

The details of our refreshed capital expenditure plans are shown on slides five and six.

Our capital expenditures net of expected tax equity contributions over the five year period from 2021 through 2025 will total approximately $7 billion.

Or an average of $1 $4 billion per year.

Our capital expenditure plans continue to be focused on the transition to cleaner energy and strengthening the reliability and resiliency of our electric grid.

We continue to make progress on our plans to add 500 megawatts of solar energy for both our Wisconsin, and Iowa customers and have adjusted our flexible capital expenditure plans to address the current market conditions for solar panels and related project materials.

Our plan includes expectations for increasing costs for these solar projects as supply constraints and commodity inflation continue to be prevalent in the solar market.

Despite increasing cost these solar projects remain key elements of our clean energy blueprint and will bring long term environmental and cost benefits to our customers.

In addition to the one one gigawatts of solar previously announced for Wisconsin customers. Our plan includes additional renewables and energy storage in Wisconsin and part to replace the capacity from a portion of the West Riverside Energy Center that we anticipate will be purchased by our neighboring utilities over the next few years.

In Iowa, We recently completed an advanced ratemaking filing for our announced 400 megawatts of solar and 75 megawatts of battery storage.

We plan for 200 megawatts of that solar plus the battery storage to be located at the site of the recently retired Duane Arnold Energy center, leveraging the existing transmission interconnection from the former nuclear plant.

This will be our first utility scale battery storage installation and it will be an important complement to our solar generation.

Finally, we have also included capital expenditures of latter part of our five year plan for additional energy storage and renewables, including wind repowering opportunities to increase our portfolio of cost effective clean energy sources for our utility customers.

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

We estimate a consolidated effective tax rate of negative 13% for 2021.

And positive 6% for 2022.

At our Wisconsin utility, we will have returned essentially all of the available excess deferred income tax benefits to our customers by the end of 2021, leading to a higher effective tax rate going forward.

At our Iowa utility are large wind portfolio and the resulting production tax credits, we will maintain our lower effective tax rate for several more years.

The production tax credits and excess deferred tax benefits flow back to customers, resulting in lower electric margins.

Thus the changes in the effective tax rate related to the ptc's and excess deferred tax benefits are largely earnings neutral.

Next I'd highlight our continued focus on controlling costs for our customers.

We have met virtually with many of you throughout this year and shared our strategy to reduce O&M over the next few years.

This strategy is important as we head into the upcoming winter heating season with much higher anticipated fuel prices.

Finding us that our customers need our continued focus on controlling costs to keep rates affordable.

Additionally, while we are not immune to rising commodity prices, we are able to leverage our risk management programs to mitigate the impact of rising natural gas and coal costs on customer bills.

Let's move next to our financing plans.

In September we issued a $300 million Green bond the WP Hill to finance renewable projects in Wisconsin.

The coupon rate of 195% represents the lowest interest rate for a 10 year debenture issued by W. P L helping to support our customer affordability objectives.

Our financing plan over the next 14 months includes issuing up to $1 4 billion of long term debt at our utilities and Alliant energy finance.

Appropriate proceeds from the new debt issuances will be used to refinance existing debts and the redemption of preferred stock.

And to finance the utility's capital expenditure plans.

Our 2022 financing plans also include $25 million of new common equity through our drip plan.

Lastly, we've included our regulatory initiatives of note on slide seven.

As mentioned earlier this week, we filed the advanced Ratemaking principles for 400 megawatts of solar and 75 megawatts of storage for Iowa utility.

The key details of this filing are outlined on slide eight.

We plan to receive a decision on this filing in the second half of 2022.

Looking ahead this quarter, we expect to receive the written decision regarding our WTO rate review, including the decision on the innovative cost recovery mechanism for the Edgewater unit five coal plant expected to retire by the end of 2022.

And in the first half of next year, we plan to receive a decision on our second solar see a filing in Wisconsin.

We very much appreciate your continued support of our company and look forward to meeting with many of you during the <unk> Finance Conference next week.

Later today, we expect to post on our website the investor presentation and the November 2021, fact book, which details the separate IPL and <unk> updated capital expenditures rate base and construction work in progress forecast through 2025.

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

Thank you Mr. Jeremy at this time the company will open the call.

Questions from members at the investment community.

If you would like to ask a question.

By pressing star one on your telephone keypad.

Using a speaker phone please make sure your mute function is turned off.

Right.

Again that is star one if you would like to ask.

Great question.

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

Hello, Good morning, Thanks for the time and the opportunity and look forward to see many of you.

Perhaps just.

Hey, good morning.

So perhaps just to kick things off can we go back to the solar Capex and some of the shifts here I, obviously, you've kind of alluded to it but I want to make this a little bit more explicit this shift.

In Capex year to 24 is that just about you know inflation and supply chain uncertainties here in the near term or are there other factors, especially in the later years, whether that's you know 22 or 23, guys that are driving it out.

Yeah, Hey, good morning, Julien John Here I think you have that just a little bit of an adjustment for inflation and then of course. This time of year, we bring in our new refresh Capex and as Robert noted we've added a bit there with some repower and some additional resources, but I think you've got the headline on that one.

Yeah, I, that's a you're not alone is what I'll say.

But.

If I could actually ask that a little bit in reverse here. How are you thinking about financing. It today I mean, certainly the conversation or a direct pay for several of your peers has has taken note. How are you thinking about this impacting your financing structure and more importantly, your your cash flow outlook.

Robert.

Yeah sure Julien so you'll see in the information that we shared in the earnings release with the Capex table, we continue to model out a tax equity structure.

And that will finance roughly 25% to 45% of these solar projects with the tax equity financing partner, but to your point, we are watching the new legislation that's being proposed in the budget reconciliation Bill and.

If we do see some type of a direct pay plus production tax credits for solar we'll reevaluate that financing mechanism.

Right now we've got about $1 billion of financing planned over the next five years with the tax equity structures. So.

So that could be an opportunity for us for future rate base growth, if if those provisions come to fruition through the new legislation.

Got it but you're not ready to talk about what the.

Shall we say nearer term.

Benefit to your cash flow metrics looks like thus far.

I think there is.

Yes, I think there's still some moving targets on that Julien John here, but I think the net result from what we're seeing it's very much in line with where we're going with our plan and as Robert noted.

If anything it appears to have some favorability for both customers and investors. So I think as we see that play out we'll certainly talk more about any impacts to our plan.

Got it and last quick one there just on the shift in distribution Capex, obviously stepping up in the later years, but is there any underground and there I know we've talked about that at various points with respect to the ratio.

Follow up.

Yes, we continue to have a lot of focus on advancing underground what were.

Working on is making sure we continue to get more and more efficient. So so we look at not only advancing the underground beginning efficient with each.

Unit of capital if you will Julien so that's very much in there.

Got it okay. So yeah on the underground isn't there alright excellent I'll leave it there. Thank you guys.

Very good thanks Julien.

Once again that is star one.

He would like to ask a question.

Well pause for just a moment.

Okay.

Dr. Wang.

Great question.

We will now take a follow up.

Julian.

Thank you.

Hey, sorry, guys, if no one's going to ask this question I might as well jump into confirm it just.

Just on Duane Arnold.

In the <unk> told me that in the updated Capex I'm, sorry, I'm not sure if I heard that right in the commentary and then on the reconciliation Bill just clarifying this.

You're not really concerned about minimum cash tax considerations here either right.

Yeah affirmative on both Julian.

Solar and in Iowa, We recently announced as it is in our Capex and we don't see them minimum tax is impacting align energy.

Yes, I might add Julien so right now.

What we're saying is the minimum threshold for the book income to qualify for the 15% minimum tax would be $1 billion and right now we're probably in that six to grow into a $700 million over over the next few years. So we think will be exempt from that assuming that the provision comes out with the same minimum threshold of $1 billion.

Got it alright, thanks, guys I'll get back in queue you bet.

Thank you Pedro reminder, that is star one.

Great question.

Well now take a question from.

Andrew Lee.

Thanks.

Now fast because your guide.

What do you want to ask a question.

Yeah.

Doing well Andrew.

Yeah.

Moving a little bit.

Right.

Yeah.

No Okay Julien.

Lastly on the financing attached to that.

You guys obviously.

Taking a look at that right now what's going on.

Got it.

Hi.

It's Harley.

Uh huh.

Looking forward.

No because you always kind of.

Your Capex plans are somewhat front end loaded and then you can kind of fill in.

If you look at second part of the decade, they get out to 'twenty five and beyond.

What's kind of not included.

That you envision to whether it's in 'twenty four 'twenty five or more importantly, Mike Savage.

Could you kind of added or.

Capex.

And going forward.

Yes, Andrew this is Robert I guess, when we look beyond 25, which we've announced to date, we have provided some guidance through some of our materials that show, we're thinking about roughly $7 billion to $9 billion of Capex over the following five year plan.

And as you think about that I think it's going to be a continuation of what we're focused on now a lot of it is going to be focused on cleaner energy sources.

So think of that as more solar.

More wins, including Repowering opportunities more storage. So all of those line up well with what our intention of ours to translate our transfer our generation fleet to cleaner sources.

This new legislation that's being proposed under.

Under the budget reconciliation bill would be very supportive of that and help us be able to provide some good cost benefits for our customers through that program.

It also had a continuation of our electric grid spend so we've obviously talked a lot until you guys about the fact that we feel it's very important to focus on reliability and resiliency of that system and so we'll see a continuation of underground in a spend on 25 kv standardization. So that's going to drive a lot of that capex in the latter half.

So those are the two primary categories will have other things that we'll obviously watch and as John indicated before we let our capital compete.

We're always looking for the best opportunities for our customers, but those seem to be bubbling up to the top right now as far as cleaner sources of energy in the grid.

Okay, that's great and then just on the transmission side.

Well again, I think a smaller opportunity than that.

I think you kind of looking at their customers and all the other money that you're spending.

And then at the same time saving by which he feels.

And given today.

But one area that kind of I think always been.

Something that you guys are focused on lowering the cost of transmission.

For your customers.

I think I can see the big part of it.

That cost.

Could you guys maybe talk about it.

What efforts if any.

You're trying to do as far as to reduce your transmission costs as far as returns.

And what may be hearing from FERC, what direction, we're going as far as.

At her.

And also a potential reduction of the base Roe.

Or that or you just kind of an odd market.

Yes, maybe I'll just start out.

Important Andrew from overall cost and we know it's important for transmission.

Needed to connect renewable so we certainly have.

A forecast for that and certainly we'd like to see Tran.

Transmission commensurate with the renewable ads.

We do continue to focus on making sure those investments remain affordable for our customers. So you'll see us weighing in on occasion on those.

To handicap, what's going to come out with a FERC I guess I'd say its going to be.

I was just going to assume that it's going to be reasonable what's going to continue to be helpful for transmission to get built and.

Other than trying to predict numbers.

I think we've got a lot of that baked into our forecast and we will continue to monitor.

Thank you guys.

Yes, you bet Andrew Thank you.

Okay.

Yeah.

This concludes alliant Energy's third quarter.

Earnings call a replay will be available through November 12, 2021 at 8882031112 for U S and Canada or 700 94570820 for international.

Callers should reference conference I'd, 4175543, and 10 $95 seven eight.

In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the investors section of the company's website later today.

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

Once again that does conclude today's conference and we thank you all for your participation you may now disconnect.

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Good morning, and welcome to the Hawaiian.

<unk> conference call for third quarter 2021 results.

This call is being recorded for rebroadcast.

At this time all lines are I can I'll listen.

Only mode.

I would now like to turn the call over to your host Zack.

Zack silver.

Sure.

Energy.

Good morning.

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

Joining me on this call are John Larsen Chair, President and Chief Executive Officer, 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 third quarter financial results updated our consolidated 2021 guidance range.

And announced our 2022 earnings guidance and common stock dividend target.

This release as well as supplemental slides that will be referenced during today's call are available on the investors page of our website at www Dot Alliant energy Dot com.

Before we begin I need to remind you that the remarks, we make on this call and our answers to your 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 in our filings with the Securities and Exchange Commission.

We disclaim any obligation to update these forward looking statements.

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

Thanks, Zack good morning, everyone and thank you for joining us today as we highlight our solid results for the third quarter of 2021 to.

To start us off I am pleased to share our narrowed and increased 2021 earnings guidance range of $2 61.

To $2 67.

Which represents a forecasted 12th consecutive year, a 5% or greater earnings growth.

We are also announcing our 2022 earnings guidance range of $2 65 to.

To $2 79 per share, marking yet another year of forecasted 5% to 7% growth.

We understand the importance of delivering consistent returns for our investors and solid operations for our customers.

And in keeping with our plan to grow dividends commensurate with earnings growth.

I'm pleased to share that our board of directors has approved a 6% increase in our targeted annual common stock dividend to $1 71 per share.

Over the past several weeks I've been pleased to meet with many investors and continue to share our ESG story.

Its been a natural journey for us and a direct outcome of how we deliver on our purpose to serve customers and build stronger communities.

We know that a clear vision and solid execution are very important factors when making investment decisions.

We are proud that our progress and results have been recognized by several key ESG rating organizations, who rate us near the top of the utility industry.

Our top performing results can be seen on supplemental slide number two.

Not only will this support our care for the environment value and our carbon reduction efforts.

It is also responsive to the impact from the 2020 derecho windstorm that devastated our service territory.

In Wisconsin, we celebrated our first community solar project with a public open house and tours and the town of fond of lack.

The one megawatt solar gardens will supply clean energy to up to 1000 homes and is expected to be operational by the end of 2021.

Celebrating this solar garden reflects the communities innovative spirit and passion for clean energy.

In Iowa, we are excited to have received <unk> approval for our first solar garden.

It is expected to be constructed in 2022 at a site near Cedar Rapids.

And here in the fourth quarter, we acquired the Crawfish River project and expect to acquire the Onion River project before the end of the year.

With those acquisitions, we would have assumed ownership of all 675 megawatts of solar that was approved as part of our first <unk> filing in Wisconsin.

Two final highlights I'll share are tied to the social side of ESG.

In September we committed $4 million to the hometown care energy fund to help customers, who need financial assistance to help pay their energy bills during the upcoming home heating season.

The U S energy information administration estimates that Midwest natural gas expenditures will rise by nearly 50% compared with last winter.

And finally, I am excited to share that with the support of our suppliers and partners our 15th annual drive out Hungary event raised over $400000, bringing our 15 year fund raising total to more than $5 million.

This event has provided over 17 million meals to families in need across our service territory.

Our economic development team in collaboration with local regional and state partners in Iowa, and Wisconsin created more than $900 million in new capital investments and more than 2200, new jobs across Iowa and Wisconsin.

Our long track record of consistent financial and operational results and our focus on the wellbeing of our employees customers and communities.

Thank you for your confidence and Alliant energy.

I'll now turn the call over to Robert.

Thanks, John Good morning, everyone.

Yesterday, we announced third quarter 2021, GAAP earnings of $1 <unk> per share.

Third to <unk> 98 per share in the third quarter last year.

Our higher earnings year over year were driven by higher revenue requirements due to increasing rate base.

As well as higher temperature normalized sales compared to the third quarter of 2020.

These higher earnings were partially offset by higher depreciation expense and timing of income tax expense.

Additionally, in the third quarter of 2020, we recorded a non-GAAP adjustment of <unk> <unk> per share related to a legacy guarantee in our non utility operations.

Through the first nine months of this year temperatures in our service territory have increased retail electric and gas margins by approximately eight <unk> per share by.

By comparison in 2020.

The year to date temperature impacts through the first three quarters increased retail electric and gas margins by approximately one cents per share.

Turning to temperature normalized sales.

Our retail electric sales in the third quarter of 2021 were up four 1% versus last year.

The two key drivers for this increase are continuing pandemic recovery and year over year sales, particularly in the commercial and industrial classes.

And minimal storm activity this year compared to the third quarter of 2020, when our Iowa territory experienced a duration windstorm.

As John mentioned last night, we issued our consolidated 2022 earnings guidance range of $2 65.

Two $2 79 per share.

A key driver of the 6% growth in temperature normalized EPS as higher earnings on increasing capital investments, primarily driven by our solar program.

The details of our refreshed capital expenditure plans are shown on slides five and six.

Our capital expenditures net of expected tax equity contributions over the five year period from 2021 through 2025 will total approximately $7 billion.

Or an average of $1 $4 billion per year.

Our capital expenditure plans continue to be focused on the transition to cleaner energy and strengthening the reliability and resiliency of our electric grid.

Our plan includes expectations for increasing costs for these solar projects as supply constraints and commodity inflation continue to be prevalent in the solar market.

Despite increasing cost these solar projects remain key elements of our clean energy blueprint and will bring long term environmental and cost benefits to our customers.

In addition to the one one gigawatts of solar previously announced for our Wisconsin customers. Our plan includes additional renewables and energy storage in Wisconsin and part to replace the capacity from a portion of the West Riverside Energy Center that we anticipate will be purchased by our neighboring utilities over the next few years.

In Iowa, We recently completed an advanced ratemaking filing for our announced 400 megawatts of solar and 75 megawatts of battery storage.

We plan for 200 megawatts of that solar plus battery storage to be located at the site of the recently retired Duane Arnold Energy center, leveraging the existing transmission interconnection from the former nuclear plant.

This will be our first utility scale battery storage installation and it will be an important complement to our solar generation.

Finally, we have also included capital expenditures the latter part of our five year plan for additional energy storage and renewables, including wind repowering opportunities to increase our portfolio of cost effective clean energy sources for our utility customers.

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

We estimate a consolidated effective tax rate of negative 13% for 2021.

And positive 6% for 2022.

At our Iowa utility are large wind portfolio and the resulting production tax credits, we'll maintain our lower effective tax rate for several more years.

The production tax credits and excess deferred tax benefits flow back to customers, resulting in lower electric margins.

Thus the changes in the effective tax rate related to the ptc's and excess deferred tax benefits are largely earnings neutral.

Next I'd highlight our continued focus on controlling cost for our customers we.

We have met virtually with many of you throughout this year and shared our strategy to reduce O&M over the next few years.

This strategy is important as we head into the upcoming winter heating season with much higher anticipated fuel prices reamer.

Reminding us that our customers need our continued focus on controlling costs to keep rates affordable.

Additionally, while we are not immune to rising commodity prices, we are able to leverage our risk management programs to mitigate the impact of rising natural gas and coal costs on customer bills.

Let's move next to our financing plans.

In September we issued a $300 million green bond the WTO to finance renewable projects in Wisconsin.

The coupon rate of 195% represents the lowest interest rate for a 10 year debenture issued by W. P L helping to support our customer affordability objectives.

Our financing plan over the next 14 months includes issuing up to $1 4 billion of long term debt at our utilities and Alliant energy finance.

The proceeds from the new debt issuances will be used to refinance existing debts and the redemption of preferred stock.

And to finance the utility's capital expenditure plans.

Our 2022 financing plans also include $25 million of new common equity through our drip plan.

Lastly, we've included our regulatory initiatives of note on slide seven.

As mentioned earlier this week, we filed the advanced Ratemaking principles for 400 megawatts of solar and 75 megawatts of storage for our utility.

The key details of this filing are outlined on slide eight.

We plan to receive a decision on this filing in the second half of 2022.

And in the first half of next year, we plan to receive a decision on our second solar see a filing in Wisconsin.

We very much appreciate your continued support of our company and look forward to meeting with many of you during the <unk> Finance Conference next week.

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

Thank you Mr. Jerry Yang.

This time the company will open the call for questions from members.

Okay.

If you would like to ask a question. Please signal by pressing star one on your telephone keypad.

We are using a speaker phone. Please make sure your mute function is turned off.

Oh, sorry, sorry.

Hi, Dan.

I would like to ask a question.

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

Hello, Good morning, Thanks for the time and the opportunity we look forward to seeing many of you.

Perhaps just hey, good morning.

So perhaps just to kick things off can we go back to the solar Capex and some of the shifts here, obviously, you've kind of alluded to it but I wanted to make this a little bit more explicit this shift.

In Capex year to 24 is that just about you know inflation and supply chain uncertainties here in the near term or are there other factors, especially in the later years, whether Thats you know 'twenty two 'twenty three guys that are driving it out.

Yeah, Hey, good morning, Julien John Here I think you have that just a little bit of an adjustment for inflation in and of course. This time of year, we bring in our new refresh Capex and as Robert noted we've added a bit there with some repower and some additional resources, but I think you've got the headline on that one.

Sure.

Yes.

You're not alone is what I'll say.

But.

If I could actually ask that a little bit in reverse here. How are you think about financing. It today I mean, certainly the conversation around direct pay for several of your peers has taken note. How would you think about this impacting your financing structure and or more importantly, your cash flow outlook.

Robert you want to take that one yes sure Julien so you'll see in the information that we shared in the earnings release with the Capex table, we continue to model out a tax equity structure and that will finance roughly 25% to 45% of these solar projects with the tax equity financing.

Partner, but to your point, we are watching the new legislation that's being proposed in the budget reconciliation Bill and if we do see some type of a direct pay plus production tax credits for solar we'll reevaluate that financing mechanism.

Right now we've got about $1 billion of financing planned over the next five years with the tax equity structures.

That could be an opportunity for us for future rate base growth, if if those provisions come to fruition through the new legislation.

But youre not ready to talk about what the.

Shall we say nearer term.

Benefit to your cash flow metrics looks like thus far.

Okay.

Thanks.

Anything it appears to have some favorability for both customers and investors. So I think as we see that play out we'll certainly talk more about any impacts to our plan.

Follow up.

Yes, we continue to have a lot of focus on advancing underground what we're working on is making sure we continue.

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