Q1 2022 Alliant Energy Corp Earnings Call
Good morning, and welcome to the Alliant Energy's conference call for the first quarter 2022 result.
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 feels investor relations.
Alliant 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 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 2022 financial results.
This release as well as an earnings presentation will be referenced during today's call and 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 .
Thank you Zach Hello, everyone and thank you for joining us.
2022 is off to a solid start with over 25% of our annual earnings achieved year to date and.
And we are reaffirming our consolidated 2022 earnings guidance of $2 67.
To $2 81.
I'll share some of the key highlights and then turn the call over to Robert for more details relating to our financial performance renewable investments and regulatory matters.
First our temperature normalized sales were ahead of forecast continuing a trend we saw throughout most of last year and a key indicator of the strong and diverse customer base, we proudly serve.
We also had increased interest and activity on the economic development front, including the recent announcement that one of the largest Amazon facilities in the country will be built near Cottage Grove, Wisconsin.
The warehouse and distribution facility with totaled $3 4 million square feet and create approximately 1500 jobs and in Iowa, We're excited to partner with revile as they break ground on their bio refinery expansion near Ames, Iowa next month.
Another item to highlight was the strong performance from our wind portfolio.
We saw outstanding wind power production for the first quarter with total production more than 15% higher than our forecast.
And some of our newest wind sites, achieving net capacity factors in excess of 60% in the month of March.
Marking one of the strongest wind periods, we have seen since we began owning and operating wind nearly 15 years ago.
The strong wind energy performance helped us manage the impacts of rising fuel costs and demonstrates the customer benefits of having a diverse mix of energy resources in our portfolio.
Another example of our clean energy blueprint inaction.
These solid results help us continue our long track record of delivering value for our customers communities and investors.
And we're also continuing to monitor and adjust to the impacts of global sourcing and supply chain issues as well as the impacts of inflation Rob.
Robert will share more about this when I turn the call over to him in a few minutes, but let me know how important it has been to have a flexible plan talented and creative team and our ongoing efforts to manage costs for the benefit of our customers.
On the solar front earlier this week, we held a golden panel event for our local officials and community members as the first panels were installed at our North Rock Creek Solar farm near Edgerton, Wisconsin.
And we recently celebrated the installation of the final solar panel at our Bear Creek facility also in Wisconsin.
And yesterday, we received verbal approval from the public Service Commission of Wisconsin for our second certificate of authority filing for an additional 414 megawatts of solar generation in the state.
This result builds on our long history of achieving constructive regulatory outcomes.
Throughout the process of filing our team demonstrated transparency regarding the current environment of supply chain and tariff risks and we're committed to continuing that transparency as we continue our journey towards a clean energy future.
That journey as part of our broader corporate responsibility.
We've been sharing stories of our commitment to the environment throughout the month of April in honor of Earth day, including progress, we've been making on our commitment to plant 1 million trees by 2030.
We recently approved two agreements with the Wisconsin Department of natural resources, and Sock and Juno counties.
To begin tree plantings as a part of their reforestation efforts.
More than 80000 tree seedlings would be planted this year and these Wisconsin counties through this partnership.
And in Iowa, Burlington Marshall town in Grinnell are just a few of the 33 I will communities that will soon be greener. Thanks to grants from our community tree program in partnership with trees forever trees.
Trees forever will provide communities with tree planting support from selecting the best species for their area.
Two creating a care and maintenance plan to make sure the new trees have a long and healthy life.
Equally important to our environmental efforts are the social commitments to our employees customers and the communities we serve.
We know that when we embrace the diversity that our employees continue to build upon our strong culture, we create a sense of belonging inclusion that leads to wonderful things for our customers.
And we are being noticed for our efforts.
We recently were recognized by Forbes as a top midsized employer for the fourth year in a row and just last week, we were named to Newsweek's first ever most trusted companies list.
We will be sharing more of our progress and highlighting new initiatives with the release of our updated corporate responsibility report later this year.
In summary, 2022 is off to a solid start and we look forward to building on that momentum throughout the year as we focus on continuing our role as a leader in advancing renewable energy.
Delivering solid returns for our investors and delivering on our purpose of serving customers in building stronger communities.
Thank you for your continued interest in Alliant energy I'll now turn the call over to Robert.
Thanks, John Good morning, everyone.
Yesterday, we announced first quarter 2020 to GAAP earnings of 77 cents per share compared to 68 cents per share in 2021 .
First quarter earnings were 13% higher on a year over year basis led by increasing rate base at our Wisconsin utility.
If you do see earnings largely attributable to our 2022 solar portfolio construction and higher electric and gas sales for.
For the full year, we are reaffirming our earnings guidance of $2.67 to $2.81 per share.
The midpoint of that range is a 6% increase over 2021 adjusted earnings per share of $2.58.
Details on our quarter earnings drivers in 2022 full year guidance can be found on slide three.
Our temperature normalized sales for the first quarter of 2022 were better than expected.
Growing more than 1% compared to the first quarter of 2021, driven by stronger residential and commercial sales.
Residential sales were higher primarily due to new customer growth in both Wisconsin, and Iowa and.
In the commercial sales growth was supported by continued pandemic recovery and the education office and entertainment sectors of our customer base.
O&M at our utilities was flat versus the first quarter of 2021 after excluding changes in energy efficiency expenditures.
In the current environment of widespread inflationary pressures across the various areas of our business I'm proud of our team's efforts to control costs on behalf of our customers and maintain utility O&M expenses consistent with 2021 levels.
Moving to our new solar developments, we have made good progress on the construction of the initial 325 megawatts of utility scale solar in Wisconsin that is planned to go in service this year.
Slide four showcases some of these 2022 solar development activities.
The Department of Commerce investigation that was initiated in the first quarter as the potential impact of timing and costs of our 2023 planned solar projects. However, we feel confident that our 2022 play in solar projects will progress as anticipated that'd be placed in service later this year.
We are advocating both directly and indirectly through multiple trade organizations for an expedited and fair outcome of this investigation.
Well acknowledged this investigation could impact our 2023 planned projects, we are focused on mitigating such impacts and continuing our long track record of delivering on our 5% to 7% growth targets throughout the planning period.
We have included our key regulatory initiatives on slide five.
We were pleased to reach another key milestone with our clean energy blueprint yesterday with the receipt of the public Service Commission of Wisconsin Verbal approval of our second Certificate authority filing for 414 megawatts of additional solar projects in Wisconsin.
Looking forward in Wisconsin, we are preparing a third certificate authority filing to request approval to construct an estimated 300 megawatts of additional firm capacity.
At our customers' growing demand.
We're planning to make that filing in the upcoming months.
And in our Iowa jurisdiction, we recently requested to revise the procedural schedule for our advanced rate, making filing for 400 megawatts of solar and 75 megawatts of battery storage in the state.
This request was made to allow time for our team to ensure we are providing the most current cost estimates for the projects we are pursuing.
The updated procedural schedule can be seen on slide six.
We've requested a decision from Iowa regulators by the end of the third quarter.
We do not anticipate this modified procedural schedule to have a material impact on the timing of the in service dates of our projects or the timing of our overall Capex plan.
Yeah.
Turning to our financing plans, we have made great progress so far in 2022.
In the first quarter at our Alliant Energy Finance subsidiary, we refinanced our $300 million term loan and issued $350 million of new long term debt.
Our remaining 2022 financing plan includes issuing up to $600 million of long term debt, our Wisconsin utility.
And retired $325 million of remaining long term debt maturities in the second half of 2022.
Lastly.
I have a corporate tax reform was signed into law last month.
The new tax rules are expected to phased out of the corporate income tax rate from its current rate of nine 8%.
So as low as five 5% over time.
The amount of the tax rate will decline each year is dependent on annual state income tax collections from corporations and will be announced by the fourth quarter of each year.
We view this tax law change is positive for customers as it is expected to provide long term benefits to lower customer costs and serves as another driver for economic development activities in Iowa.
As a result of this tax change we also expect to recognize a modest earnings charge later this year related to revaluing deferred tax assets of our nonregulated businesses, which we plan to recognize as an adjustment to our earnings from normal operations.
Refer to slide seven in our presentation for more information on this tax change to assist you with your modeling.
We appreciate your continued support of our company and look forward to meeting with many of you virtually and in person in the coming months.
As always we will make our investor relations materials available on our website.
At this time I'll turn the call back over to the operator to facilitate the question and answer session.
Thank you.
This is Julian.
At this time the company will open the calls to questions from members of the investment community.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad.
We're using a speaker phone. Please make sure your mute button is turned off to allow your signal to reach our equipment.
Press Star one to ask a question.
Pause for just a moment to allow everyone an opportunity to signal for questions.
We will take our first question from Shar <unk> from Guggenheim Partners. Please go ahead.
Hey, good morning, guys.
Good morning Shar.
I just wanted to touch a little bit on sort of the circumvention tariffs you know because obviously, it's topical with investors and you know we could be in a situation. We get a proposed decision from the Commerce Department in August .
Just curious on you know sort of the language around potentially seeing a shifting out of projects.
The 23 projects I mean, there's certain peer and a couple of years actually talked about potentially having pricing uncertainty through 25. So I guess you know the question is is why only with the 23 projects could we see further slippage.
And then curious also what levers you have to sort of mitigate the shifting out of that sort of sort of solar capital.
You know two to reiterate the five to seven or could we maybe see a situation where the profile of the five to seven is slightly tweaked in the near term as we're thinking about capital being potentially pushed out.
Yeah, that's great Hey, Shar John here.
<unk>.
I appreciate the question.
Certainly as topical no doubt about that you know maybe I'll start with if you recall on the last call. We mentioned some of the planning work we did last fall.
You know when we faced a similar petition so.
The team took a look at that made some adjustments to our projects and we accelerated some material deliveries and kept the sites are.
Moving if you will that has helped us put us in a really good position for R. 22, and also those planned for the first part of 'twenty three so.
As you noted the focus is for those call. It in the tail end of 'twenty three.
So I think Robert maybe a little bit context around the megawatts and to your point about how we think about the capital impact of that.
Yeah, good morning Shar.
Noted we took a we took actions after the first petition in 2021 to mitigate the impacts of the potential tariffs and we've made really good progress in securing panels through the first quarter of this year. So.
As we pivoted also to source panels from some of our projects that would not be subject to the tariffs.
As a result, we do not expect significant impacts to the 325 megawatts of WPS solar projects that we expect to put into service later this year as.
As long as we don't expect any significant impacts to approximately 250 megawatts of the earlier projects in 2023.
So we're going to continue to monitor the department of Commerce investigation over the next couple of quarters here and continue to work with our developers and our solar panels to mitigate the impacts of the timing for what I would characterize as the remaining 500 megawatts of John indicated was in the kind of the law.
Latter half of 2023.
Got it so just.
To round that out even with the shifting of some capital in megawatts you have enough mitigation measures to to sort of have enough confidence that you know the profile of the five to seven where you are within that range shouldn't be impacted.
Yeah.
Sure. We certainly remain committed to that there's there's clearly some are I think it's a tale of some headwinds in tailwind here you know we've seen some nice load growth. It's that's there we've had some great O&M, but as you note the impact of that in adjustments, we'd have to make a we would have to certainly factor that in as well but.
<unk> off to a good start certainly a big part of our business planning is around contingencies for that back half of 'twenty three projects as you noted.
Perfect and then just one last one John if I may is it's it's terrific seeing sort of the.
The flat O&M profile. This year as you know, but I'm just kind of curious if youre seeing some of the pressures and inflation I guess, what's the level of confidence in maintaining that flat O&M profile. I mean, obviously, we saw the wage report. This morning from the employment cost index I guess, how are you offsetting some of the known.
Pressures here, that's coming from inflation.
Yeah. It's certainly there are impacts of inflation and cost of goods as you know Theres no question about it but as you know we we put in place our.
Cost reduction efforts and mitigation now we've been on this for a few years and we've had a lot of good momentum going into this year. So that's certainly helpful. It's a lot harder to beyond that negative trajectory. When you have some of those pressures we still have it.
Some of these cost reductions labor and others that are yet in front of us are they will be perhaps dampened a bit.
By some of these inflationary costs I don't know if you want it and anything to that Robert but it's it's certainly an area. We're going to have to just keep very very sharp focus sure got it.
Got it.
Perfect guys. Congrats on the results. It's a really good start appreciate it.
Yeah. Thank you.
We will take our next question from Julien Dumoulin Smith from Bank of America.
Thank you good morning team Robert sounds laser so I suppose just following up on <unk> question on a multi fault I'm just to be more explicit about the bad are the ability to backfill just can you talk through what exactly youre doing on that front. It sounds like you already were moving this but should we expect.
More distribution capex amongst other things here.
Move around on somebody that Julian this is.
Yes.
Just related to that if I can just also on 23 what percent of your panels have you guys procured and where do you guys stand with Counterparties to two to address it otherwise.
Yeah, maybe I'll take your second question here first as we indicated.
Julian we got about 250 megawatts of the roughly 800 megawatts that were played it out and putting it into service in 2023, where we either have sourced the pedals and receive them into the United States before the petition was filed or we actually source, though from our vendors or suppliers that weren't subject to the potential tariffs that were.
Talking about so so.
So just to put it into the contracts. It was about 500 megawatts still in the latter half of 2023, although we haven't identified the.
Sourcing yet still for sure if we're going to have any impacts from the tariffs.
And so to put that into perspective.
So those are a part of our CA two projects that we just received approval for and we've got cost targets there call. It roughly <unk> hundred dollars per kw.
So that's roughly call it maybe $800 million of Capex that we're talking about a couple of things to be aware of as part of that number will.
We'll be spending some of the project costs of that $800 million is to prepare those sites for the panels for when they do arrive. So we'll continue forward with a lot of the preparation work and just be ready to go once we have the sale of solar panel area.
<unk> identified as far as the source of that.
The set of panels. The other thing I'd note is as you guys recall, we've actually a petition with the commission and received approval to do tax equity partnership structures for these.
So that's another factor that limits really the impact on our earnings because about a third of these costs are going to be sourced or financed through the the tax equity partnership. So it limits the amount of rate base impacts and therefore earnings profile impacts when we think about that 500 megawatts in the latter half of 2023 so.
So, it's probably maybe not as big as maybe one might think when they first share some of the megawatt numbers and so when we think about how we're going to backfill that or or take care of that a lot of what John talked about we tend to be a little more conservative with our sales forecast, we tend to be a little bit more conservative of what we're doing with O&M cost.
We can probably make up and mitigates a good chunk of that through through those two different types of activities that may not really need to backfill a whole lot of capex as a result of that.
Excellent. Thank you in fact, you kind of preempted the next question.
In some respects here if you can.
Retail load growth of 2% in the first quarter as robust how does that track against your internal forecast you said specifically it exactly go load forecasts are pretty conservative and then separately on the O&M side. I think you guys talk about three to five per cent reduction you said, a second ago that there's some more of them to go on that.
I know that you're guiding flat this year, but more structurally 3% to 5% Theres more room to go on on that three to five vis vis you know offsetting this if if I hear you right.
Yeah, Hey, Julien John here I might start on the cost reduction.
We still have a long term declining O&M trajectory in certain years, it might be more than more than others. I think the some of the offsets with inflation. It doesn't mean that we can still achieve.
Declining O&M, because that's our focus and we tend to.
A little conservative on that as well as you noted, but on the sales forecast, we were probably in that zero to 1%, but we're seeing.
Our internal forecast and if you recall over the previous years, we were probably more in the zero to half, but we're starting to see that climb in towards that 1% or greater so it's it's a sign of some great rebound that we've seen from from Covid, There's always been some great strength in our AG businesses.
And we've seen some pickup in advanced manufacturing now, we're seeing that in sectors like education hospitality.
Transportation, others that had still lagged a bit during during COVID-19 have come back through the tail end of last year and into this year. So it's really a good story and I noted a lot of great interest on the economic development front. So we.
We tend to wait a bit before we start adjusting.
Our internal trend lines, if you will but it's off to a very it's been off to a solid start here for a number of quarters.
Excellent well done on the low trend even the AG. You mentioned here is that something we should expect to accelerate given the global dynamics here.
As best you see it.
Well it certainly I think part of that but you know these businesses find a way to be very efficient in what they do as well so.
I think the point is it looks like it could be even more sustainable as maybe I would put it that way, but smart businesses and they know how to run efficiently, but it's a net it's a net positive.
Clearly well best of luck. Thank you guys for the time.
Sure. Thanks Julien.
Okay.
We will take our next question from Michael Sullivan from Wolfe Research.
Hey, Ron good morning.
Good morning, Good morning, Michael.
Hey, guys.
Just wanted to clarify that all along the same line of questioning around the solar uncertainty.
ERC investigation.
Can you just play out the scenario.
This preliminary ruling and it's kind of a negative outcome with tariffs and kind of what does that do to the plan and are you still able to.
Move things around.
Your targets and the like.
Yes, Michael maybe I'll say it I can assure you we done a lot of scenario planning on that and maybe it's.
Not to get into.
Too specific here because there's there's a range of outcomes. We took some early action has some very quality panel pricing in contracts. So it's just.
A matter of maybe if if that clarity is there that's certainly a good outcome a pricing may have to be factored in but when you look at the range of alternatives. These projects are going to make sense. There's a strong need we've been talking about demand growth the need for renewables, so that path and what we do is likely not.
You know really in question, it's just a matter of probably getting the certainty of what that pricing if any change and maybe a little bit more on just the scheduling what we'll do on our end is be well prepared for the sites.
So when they arrive obviously, we can be.
Very very expeditious at getting them installed which is what we did back last fall when we thought about our 'twenty two projects. So hard to certainly handicap all of those outcomes, but maybe to give you a little color on how we're thinking about it.
Okay. That's helpful. Yeah, just on the cost maybe if you could give us the context, there I think Robert you said this this latest tranches looking like <unk>.
<unk> hundred kw.
How does that compare to what you were seeing on some of the initial tranches of solar.
How much higher could that go in and some of the scenario analysis, you run looking out into the future.
Maybe the best data point I can give you is compare it back to the the regulatory approvals and the updated information we've shared as part of the C. A one projects.
Those are the ones that we're gonna be putting into service here in 2022, so we.
We did updates back in July of last year, The commission and let them know that we did see some cost increases roughly in that call. It 10% increase range and that puts it likes.
Likely in the call. It 14 hundreds per kw for those projects.
Since then we've continued to see escalation in price, but we still think we're probably around that and the <unk> hundreds for those first see a projects.
And then with these second CA projects that we just received verbal approval for yesterday, that's in the call. It 60 to 100 per kw range. So.
With that said those prices are still very attractive for us when we think about alternatives for us to provide resources for our customers demand growth. So we still feel very committed to doing this.
And moving forward with them.
What I would characterize as.
Good projects with great pricing right now what we're just trying to figure out is the exact timing of when we might be able to get those in service based on this our department of Commerce investigation.
Okay, great. Thanks, and my last one just on.
On the O&M side of things are you seeing any potential pressure from from pension expense. There I think you're kind of covered in Wisconsin, but maybe in Iowa, there might be some exposure.
And how should we be thinking about that.
Yes, there is.
Interesting developments when it comes to the pension plan information. So we benefit from the fact that interest rates are rising because that lowers our obligation.
But the planned performance, obviously with the stock market. So.
Relatively flat this year doesn't meet our expectations as far as earnings on the other plant asset so, but when you combine those two together we could see some I would say modest increases in pension plan expenses for 2023.
As you indicated in our WPS rate case, we have a deferral mechanism such that if our pension costs exceed what was set in the 2023 rate case levels, we were able to defer those costs. So we won't see any P&L impact on the iOS side, because we haven't been in for a rate case for a while that would be.
Something that we left the offsets.
As far as any opex I'm trying to 'twenty three.
Okay.
Okay. Thanks, a lot.
We will take our next question from Andrew <unk> from Scotia Bank. Please go ahead.
Hi, good morning, guys.
Thank you for all the color on the renewable stuff I want to change gears, a little bit and that's about the earnings trajectory.
First quarter was very strong obviously, if I take 77 versus the midpoint of our full year guidance I calculate that about 28% of the full year, that's quite high the last several years, we're kind of in the low twenties.
My question is does this mean that youre tracking towards the high end of the range or is it more about an atypical seasonality.
Whatever things like <unk> for solar or any other consideration.
Yeah, Hey, Andrew John here.
I'd say this is.
First of all a large part of efforts we've been doing is we've been transitioning from spin.
Specific large projects as we've talked about having a little more kind of bite sized in service capital. So it's part of our planning to really have a earnings more stable throughout the quarters instead of having primarily it was Q3 with just with just weather. So rather then translate that into.
Uh huh.
Q1 times for in a different outcome, we really try to manage that so still feel very comfortable with the guidance range that we've had and this is a little bit more about how we planned our investments and our in our rate case planning.
Okay. So in other words this quarter wasn't necessarily stronger than you expected it says maybe.
From the outset didn't quite get that.
It's certainly a bit stronger and I think I'd point to the sales.
<unk> was the primary.
You know positive upside on that.
Andrew.
Okay I might add Andrew on the sales there is two factors to that one is the temperature impacts which was about <unk> <unk> per share and.
The other was the temperature normalized sales growth being better than expected. So when you combine those two we're probably about five more than we originally expected in our initial plan and so.
Youre right in noticing that that was an increase but keep in mind also on the temperature side.
We normally exclude that for purposes of what we're trying to target with the midpoint of our guidance.
Sure.
Okay. That's helpful. Thank you both and then second on the new Iowa tax change, how I assume over time, 100% of that savings will be passed onto customers.
What would be the mechanism it might be too early but would this be chewed up only after the next rate case whenever that is or would it be more of like a fuel clause annual adjustment.
Just a couple of different pieces to that puzzle so to speak when you look at our different mechanisms in Iowa right now.
Where we see probably some more near term impacts going directly back to customers as we've got a renewable energy rider as you'll recall with the 1000 megawatts of wind that we put in service in 2019 and 2020.
That tax rate change once we see that would actually translate into some lower costs that we would pass through through that rider.
We also expect.
Some positive benefits as a result of the transmission costs that we receive.
And the fact that those costs will be lower level pass through our transmission rider immediately to customers the remaining piece.
We're currently developing plans on how we would actually address that.
No definitive mechanisms at this point, but we'll be working with.
The regulators in Iowa to try and figure out a plan to be able to address that and figure out how we're going to give those back to customers by the time, we get back to the next rate case.
Okay.
A crew on the balance sheet in the meantime, while that's being decided.
What would you still to be determined.
No we will still be working on that.
We'll not have a sense really of how big this is until we get to the fourth quarter and actually see the rates. So so it's still a little early to really know if we're talking about a material amount here, yet or not and so in the meantime, we'll be working on some plans to share with the regulators on how to do that.
Very good thank you guys.
Yes, Thanks, Dan.
We will take our next question from Andrew Levi from Hi Tech.
Hey, guys can you hear me.
We can Andy good morning, good morning, Andy.
Yes.
Let me go one more time on.
I will start with Capex.
Questions around that.
So.
$800 million.
I guess, the headline Capex right right Darren.
Yeah.
Is that correct.
Yeah, roughly that's that's the correct number.
Right, Okay, and then 250 megawatt.
First how much capex is that.
Of the 800.
Or is that or is that not included.
It doesn't.
That's that's different from the $800 million are related to the 500 megawatts in the latter half.
Okay, Okay, and then out of the 800.
How much do you think.
We backed off.
I'm trying to figure out rate basis.
Yeah.
Yeah, you you usually say in probably somewhere in the neighborhood of 30% to 40% that's funded through a tax equity partnership structures.
Okay. So would we take 30% to 40% off of the 800 to get the kind of rate base Capex effect.
Exactly.
Yeah, the rate base impact Youre correct.
Okay, and that's 500 whatever million dollars.
We've got over 23, and 24 or was that all in.
By the end of 'twenty, three 'twenty four earnings impact.
Yeah.
Yeah that would be capex in 'twenty, two and 23 with rate base additions going into 'twenty three.
Okay.
Towards the end of 'twenty.
And as far as.
Could be delayed are correct.
Youre correct.
Okay.
So let me just cut to the Chase then.
I understand one of the things you said about valves and other mitigation aspect.
Yeah, maybe.
Or do you like it hasn't gone map on the right things map.
But kind of when this was occurring.
A couple of quarters ago.
Really this was you were going to push it out and then replace it with other banks and I don't know if.
Yeah, that's part of the plan because I think Julien.
But.
Should we expect for whatever reason doesn't matter, what the reason or what our views are that just can't be built till I don't know 25, because there's so much noise or the cost go up or whatever the case is that there is $500 million incremental capex in 'twenty, three let's say 24 to substitute.
For that so.
Yeah.
Yeah.
Yeah. So we would be looking at that as part of our call. It 24, 25 rate case planning activities and do so so there would likely be some capital expenditures that.
Leasing were delayed longer than expected that we would be replacing this solar capex with different capex to your reported.
It could be electric distribution spend it could be other resources that we think about our to meet the growing demand of our customers and so that would all factor into our rate case planning activities to ensure that our.
Uh huh.
Put together a plan that's in the best interest of our customers and ensure that we get a recovery of that is part of our next rate case process.
Okay. So it sounds like the way that you're supposed to recover the solar mistaken that if there is a material delay that there could be I don't know if it's already been rough rough math.
$15 million to $20 million.
Net income that needs to be made up.
In the interim right through that kind of bridge year.
In the first half of 'twenty four.
Hum.
To offset.
Any major delays.
Wait this out.
Yeah.
Yeah, I'm going through the math on the numbers exactly handy, but I think you're thinking about it correctly.
Okay, and so then back to maybe Starz original question like where you would fall within the range.
So you have this 5% to 7% growth rate you guys have done an amazing job.
Well the middle to the top end of that growth rate.
Right.
<unk>.
And the way that your stock trades relative to the other peers.
Within the sector.
I guess basically there would be very difficult to cut.
Towards the middle to the top end about one year, one reengineer or whatever that is with that.
Based on the timing.
Or am I looking at that wrong.
Well I think that's fair and then there would be a I'd characterize it as a short term.
Or he may be on the lower end of that range is how I'd characterize it.
But over the long term, we still feel good about the 5% to 7%.
Okay.
I mean, maybe that was the question I see that that one question instead of all of these other parcels.
That's just me so okay. Thank you that that let me clarify.
That's great.
We will take our next question from Ross Sandler from UBS.
Good morning, John morning, Robert how are you.
Good morning Ross.
Yeah.
So just.
To beat a dead horse after all these questions, but just going back to.
The 1600 kilowatt cost target the C H.
Two process and obviously, you've let us know that you're filing with the commission for an increase in cost cap.
When we get to the other side of this.
Circumvention case, and we actually determined.
Gotta be a tariff with that tariffs looks like you just remind us how the CA regulatory process works.
Your sourcing cost for those 500 megawatts of projects is going to go up.
And then maybe as a corollary of that question is there any tariff Assam came in at $6800 a kilowatt cost target.
Yeah. So first off there is no tariff assumed in the <unk> hundred per kw.
C. A two cost target and what we would do is if we did see some additional cost above and beyond what's in the CA to target we'd be sharing that with the commission and similar to what we did see a one N C. A too as we went through the process. We've been keeping them informed we've been very transparent about the economic conditions in inflow.
Asian impacts of these solar projects, so it'd be a communication they would see throughout.
The next several quarters as we see information change, we'll share that with them and.
The end of the day What'll happen is this information will be factored into our next rate case. If there are any cost increases and we'll be going through a review of that and getting approval of that with the next rate case.
Okay.
That's great Robert and then and then it probably.
By circumstance, hopefully not but if you actually ended up above the cost cap what does that require you to do with the regulator and then would you just say you know I'm a public cost caps they weren't really happened maybe.
Some of these projects to source the panels from somewhere else, that's not subject to these tariffs and make sure that increasing customer rates too much.
Yeah, Hey, Rob it's John here, maybe I'd say.
It's it's not a.
Certainly atypical to go back if there is a prudent cost increase on projects, we'd go back in and work that through the process with our regulators I think the real question is do the projects still makes sense for.
For customers, which I think Robert had noted compared to alternatives and the need that we have the capacity need that we have these are very strong projects.
Not necessarily something where you want the cost to increase but they still make sense for our customers and we feel.
That's that's still going to be a pretty strong story I think the point about which panels. You know we've got to kind of take a look if there is.
Different panels and different pricing out there, but we feel very good about the contracts we have in place and that's that's kind of a to be determined so I don't want to get too far ahead on that part of it.
Yes, no worries.
That's good color.
You bet. Thank you wintertime.
Okay. Thanks, so much.
That concludes today's question and answer session. Mr. <unk> at this time I will turn the conference back to you for any additional or closing remarks.
Thank you.
This concludes Alliant Energy's first quarter earnings call.
Replay will be available on our investor website.
Thank you for your continued support of Alliant energy and feel free to contact me with any follow up questions.
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