Q2 2024 Alliant Energy Corp Earnings Call
Operator: Please stand by; your program is about to begin. Thank you for holding, and welcome to Alliant Energy's second quarter 2024 earnings conference call. At this time, all lines are in a listen-only mode. Today's conference call is being recorded. I would now like to turn the call over to your host, Susan Gille, Investor Relations Manager at Alliant Energy. Please go ahead.
Your program is about to begin.
[music].
Speaker Change: Thank you for holding and welcome to Alliant Energy's second quarter 2024 earnings Conference call.
Speaker Change: At this time all lines are in a listen only mode.
This conference call is being recorded I would now like to turn the call over to your host Suzanne Gil Investor Relations manager at Alliant Energy. Please go ahead morning.
Susan Gille: Good morning. I would like to thank all of you on the call and the webcast for joining us today. We appreciate your participation.
Speaker Change: Morning, I would like to thank all of you on the call and webcast for joining US today. We appreciate your participation.
Susan Gille: With me here today are John Larson, Executive Chairman; Lisa Barton, President and CEO; and Robert Durian, Executive Vice President and CFO. Following prepared remarks by John, Lisa, and Robert, we'll have time to take questions from the investment community. We issued a news release last night announcing Alliant Energy's second quarter financial results. This release, as well as the earnings presentation, which will be referenced during today's call, is available on the investor page of our website at www. AlliantEnergy.com
Speaker Change: With me here today are John Larsen Executive Chairman, Lisa Barton, President and CEO, and Robert Durian Executive Vice President and CFO following prepared remarks by John Lisa and Robert We will have time to take questions from the investment community.
Speaker Change: We issued a news release last night announcing Alliant Energy's second quarter financial results. This release as well as the earnings presentation, which will be referenced during today's call are available on the investor page of our website at www dot align energy dotcom.
Susan Gille: 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 news release issued last night and in our filings with the Securities and Exchange Commission.
Speaker Change: Before we begin I need to remind you the remarks, we make on this call in 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 news release issued last night and in our filings with the Securities and Exchange Commission, we disclaim any obligation to update these forward looking statements.
Susan Gille: We disclaim any obligation to update these forward-looking statements. In addition, this presentation contains references to ongoing earnings per share, which is a non-GAAP financial measure. The reconciliation between non-GAAP and GAAP measures is provided in the earnings release, which is available on our website. References to ongoing earnings exclude material charges or income that are not normally associated with ongoing operations.
Speaker Change: In addition, this presentation contains references to ongoing earnings per share, which is a non-GAAP financial measure a reconciliation between non-GAAP and GAAP measures is provided in the earnings release, which is available on our website.
Speaker Change: References to ongoing earnings exclude material charges or income and are not normally associated with ongoing operations.
Susan Gille: At this point, I'll turn the call over to John.
Speaker Change: At this point I'll turn the call over to John.
John Larson: Thank you, Sue. Good morning, everyone, and thank you for joining us. As we pass the midpoint of 2024, I am pleased to report that we are on track to achieve our strategic objectives and maintain our long track record of solid operational and financial execution. We remain fully committed to our purpose, serving customers and building stronger communities. Before I highlight some recent achievements, I want to briefly address the recent announcement of my retirement.
John: Thank you Sue good morning, everyone and thank you for joining us.
John: As we pass the midpoint of 'twenty 'twenty four I'm pleased to report that we are on track to achieve our strategic objectives and maintain our long track record of solid operational and financial execution.
Speaker Change: We remain fully committed to our purpose.
Speaker Change: Serving customers and building stronger communities.
Speaker Change: I'll highlight some of the recent achievements I want to briefly address the recent announcement of my retirement plans.
John Larson: Over the past 36 years, I've witnessed significant changes within our industry, positive changes that have led to improved service quality for our customers, along with an incredible transformation of how we produce and deliver energy. One thing, however, that has not changed is the incredible talent and dedicated service from our employees. It has been an honor to be part of this company and to work alongside the Alliant Energy team. From my early days as an engineer in Iowa, through the merger that created Alliant Energy more than 25 years ago and all the experiences in between, including our expansive and industry-leading investments for the benefit of our customers.
Speaker Change: Over the past 36 years I've witnessed significant changes within our industry positive changes that have led to improved service quality for our customers along with an incredible transformation transformation of how we produce and deliver energy.
Speaker Change: One thing however that has not changed is the incredible talent and dedicated service from our employees. It has been an honor to be part of this company and to work alongside the Alliant energy team.
Speaker Change: From my early days as an engineer and I went through the merger that created Alliant energy more than 25 years ago, and all the experiences in between including our expansive and industry, leading investments for the benefit of our customers.
John Larson: Serving customers across Iowa and Wisconsin and working alongside my colleagues has been a privilege. With that, I want to say thank you to everyone I've worked with during my tenure at Alliant Energy. Additionally, I'd like to reiterate my previous comments about Lisa. She's an exceptional leader with a well-established track record of success. With her leadership and the talented team at Alliant Energy, we are well positioned to deliver long-term value to our customers, our communities, and our shareholders.
Speaker Change: Serving customers across Iowa, and Wisconsin, and working alongside my colleagues has been a privilege with that I want to say thank you to everyone. I've worked with during my tenure at Alliant energy.
Speaker Change: Additionally, I'd like to reiterate my previous comments about Lisa She is an exceptional leader with a well established track record of success.
Speaker Change: With her leadership and the talented team at Alliant energy, we are well positioned to deliver long term value to our customers our communities and our shareowners.
John Larson: With customer value in mind, I'm pleased with our efforts in reaching partial settlement in our Iowa rate review. In collaboration with several intervening groups, we remain focused on what's best for our customers, shareowners, and the communities we proudly serve, providing stability and opportunities for continued economic development and growth. I'll now turn the call over to Lisa.
Speaker Change: With customer value in mind, I'm pleased with our efforts in reaching partial settlement in our Iowa rate review.
Speaker Change: In collaboration with several intervening groups, we remain focused on what's best for our customers shareowners and the communities, we proudly serve providing stability and opportunities for continued economic development and growth.
Speaker Change: I'll now turn the call over to Lisa.
Lisa Barton: Thank you, John. I'd like to take a moment to recognize John's outstanding leadership. John's vision, dedication, and passion for our customers and the communities we serve has laid a strong foundation for our continued success, a focus which will continue to guide us into the future. John's foresight and commitment to advancing clean energy solutions, coupled with an acute focus on our customers, have left an indelible mark on our organization and communities. Congratulations, Sean, on your upcoming retirement.
Lisa: Thank you John I'd like to take a moment to recognize jobs outstanding leadership, Jon's vision dedication and passion for our customers and the communities. We serve has laid a strong foundation for our continued success a focus which will continue to guide us into the future.
Lisa: John's foresight and commitment to advancing clean energy solutions, coupled with an acute focus on our customers has left an indelible mark on our organization and communities. Congratulations John on your upcoming retirement I look forward to working with you and your continued role as board chair.
Lisa Barton: I look forward to working with you in your continued role as board chair. Building on John's remarks, and before we get into additional updates, we are committed to our long-term 5-7% earnings growth target, and we are reaffirming our 2024 ongoing EPS guidance range of $2.99 to $3.13. Our confidence in reaffirming the range assumes the following: normal weather for the remainder of the year, execution of cost controls, and receipt of a timely order from the Iowa Utilities Commission with rates effective on October 1.
Speaker Change: Building on John's remarks, and before we get into additional updates we are committed to our long term, 5% to 7% earnings growth target and we are reaffirming our 2020 for ongoing EPS guidance range of $2.99 to $3 and 13 since our.
Speaker Change: And reaffirming the range assumes the following normal weather for the remainder of the year execution of cost controls and receipt of the timely order from the Iowa Utilities Commission with rates effective October one.
Lisa Barton: I want to highlight the extraordinary focus the organization has on maintaining the financial discipline needed to deliver on investor and customer expectations. We continue to focus on making capital investments to serve the needs of our customers and communities, while also focusing on operational excellence to drive efficiencies within the business. Our team is focused on prioritizing reliability, supporting economic growth in our communities, and driving affordability, which gives me confidence in our ability to execute on our plan. Moving now to our strategic priorities of driving consistent growth and building stronger communities.
Speaker Change: I wanted to highlight the extraordinary focus the organization has on maintaining the financial discipline needed to deliver on investor and customer expectations. We continue to focus on making capital investments to serve the needs of our customers and communities while also focusing on operational.
Speaker Change: Excellence to drive efficiencies within the business.
Speaker Change: Our team is focused on prioritizing reliability supporting economic growth in our communities and driving affordability, which gives me confidence in our ability to execute on our plan.
Speaker Change: Pivoting now to our strategic priorities of driving consistent growth in building stronger communities. Our Iowa rate review settlement provides continued regulatory progress it strikes the right balance between shareholders and customers and uniquely positions IPO to attract economic does.
Lisa Barton: Our Iowa Rate Review Settlement provides continued regulatory progress. It strikes the right balance between shareholders and customers and uniquely positions IPL to attract economic development growth to our service territory, benefiting customers, share owners, and the state of Iowa. Our settlement in Iowa is a testament to the benefits of parties rolling up their sleeves and coming together to engage in constructive settlement discussions and outcomes. With this settlement, customers will see base rate stability through the end of the decade.
Speaker Change: And growth to our service territory benefiting customers share owners and the state of Iowa.
Speaker Change: Our settlement in Iowa is a testament to the benefits of parties rolling up their sleeves and coming together to engage in constructive settlement discussions and outcomes with this settlement customers will see base rates stability through the end of the decade.
Lisa Barton: Through the individual customer rate construct, IPO will have the ability to move quicker and more nimbly to attract new commercial and industrial customers to the region. Shareowners will retain tax and energy benefits from new generation with the ability to earn a consistent and fair return.
Speaker Change: Through the individual customer rate construct.
Speaker Change: You will have the ability to move quicker and more nimbly to attract new commercial and industrial customers to the region.
Speaker Change: Shareowners will retain tax and energy benefits from new generation with the ability to earn a consistent and fair return.
Lisa Barton: Most importantly, Iowa will benefit from economic growth, rate stability, and be recognized as a state that is open for business with utilities well positioned to support the evolving needs of its customers and communities. As noted in our news release, the settlement also provides greater flexibility to attract economic development, which is expected to have a positive and meaningful impact on promoting load growth. We have been proactively working to attract new customers in both Iowa and Wisconsin, and we are pleased to announce that we have executed multiple agreements with data centers in both states.
Speaker Change: Most importantly, I, a little benefit from economic growth rate stability and be recognized as a state that is open for business with utilities, well positioned to support the evolving needs of its customers and communities.
Speaker Change: As noted in our news release. The settlement also provides greater flexibility to attract economic development, which is expected to have a positive and meaningful impact on promoting low growth.
Speaker Change: We have been proactively working to attract new customers in both Iowa, and Wisconsin, and we are pleased to announce that we have executed multiple agreements with data centers in both states appear.
Lisa Barton: Approval by the IUC of the settlement, which includes the individual customer rate construct, is necessary for these projects to move forward in Iowa. In our third quarter call, we'll provide details on the expected customer load commitments and the timing of the energy demands associated with this growth. Locking in both is necessary to drive our resource and CapEx forecast.
Speaker Change: Approval by the RUC of the settlement, which includes the individual customer rate construct is necessary for these projects to move forward in Iowa.
Speaker Change: In our third quarter call, we will provide details on the expected customer load commitments and the timing of the energy demands associated with this growth locking in both its necessary to drive our resource and Capex forecast.
Lisa Barton: The interest we have seen is a testament to the value of our incentive rate design structures in Iowa and Wisconsin and the commitment and hard work of our economic development teams. These rate design structures will fuel our ability to deliver on earnings growth and affordability. To support our economic development aspirations, we have built a strong partnership with both ATC and ITC Midwest to ensure timely interconnection of new loads in our service area.
Speaker Change: The interest we have seen is a testament to the value of our incentive rate design structures in Iowa, and Wisconsin, and the commitment and hard work of our economic development teams.
Speaker Change: These rate design structures will fuel our ability to deliver on earnings growth and affordability.
Speaker Change: To support our economic development aspirations, we have built a strong partnership with both a T C and ITC Midwest to ensure timely interconnection of new loads in our service area.
Lisa Barton: We have prioritized economic development and will continue to focus on partnering with existing customers looking to grow and attracting new industries to our service territory. The recently passed mega-site legislation in Iowa is already yielding interest from large businesses. As a reminder, the legislation is designed to attract projects that span at least 250 acres with investments of at least $1 billion in capital.
Speaker Change: We have prioritized economic development and will continue to focus on partnering with existing customers looking to grow and attracting new industries to our service territory.
Speaker Change: The recently passed Mega site legislation in Iowa is already yielding interest from large businesses.
Speaker Change: As a reminder, the legislation is designed to attract projects that span at least 250 acres with investments of at least 1 billion in capital.
Lisa Barton: The incentives are geared towards advanced manufacturing, biosciences, and research-based companies locating at a certified site. Moving on to our Clean Energy Blueprint, our resource planning process, we continuously plan ahead for new generation development, identifying sites and strategic transmission interconnections that enable us to be flexible as we respond to load growth and changes in MISO's capacity accreditation. We understand the importance of our investors having transparency in our future plans. As such, we will provide updated load forecasts, resource needs, and CAFX requirements in our third quarter capital expenditure update and in future regulatory filings.
Speaker Change: Incentives are geared towards advanced manufacturing Biosciences, and research based companies locating out of certified site.
Speaker Change: Moving on to our clean energy blueprint, our resource planning process. We continuously plan ahead for new generation development identifying sites and strategic transmission interconnections that enable us to be flexible as we respond to load growth and changes in MISO capacity accreditation.
Speaker Change: We understand the importance for our investors to have transparency in our future plans.
Speaker Change: As such we will provide updated load forecast resource needs and capex requirements in our third quarter capital expenditure update and in future regulatory filings.
Lisa Barton: Before I turn the call over to Robert, I would like to express my appreciation to our employees, especially our field and operation team members. Thank you for your tireless efforts to ensure our customers have the reliability they expect. A special note of appreciation for those who answered the call for mutual assistance and stepped up to aid our neighboring utilities. This program serves as the cornerstone of the industry, offering a unique framework for rapid coordinated support during emergencies, ensuring reliable service is restored as quickly and safely as possible. I will now turn the call over to Robert.
Speaker Change: Before I turn the call over to Robert I would like to express my appreciation to our employees, especially our field and operation team members.
Robert: Thank you for your tireless efforts to ensure our customers have the reliability they expect.
Speaker Change: A special note of appreciation for those who answered the call for mutual assistance and stuffed up to aid our neighboring utilities.
Robert: This program serves as the cornerstone of the industry offering a unique framework for rapid coordinated support during emergencies, ensuring reliable service is restored as quickly and safely as possible.
Speaker Change: I'll now turn the call over to Robert.
Robert Durian: Thanks, Lisa. Good morning, everyone.
Robert: Thanks, Lisa good morning, everyone.
Robert Durian: Yesterday, we announced second quarter 2024 gap earnings of $0.34 per share and ongoing earnings of $0.57. The difference between these two amounts relates to non-reoccurring charges from legacy assets that were recorded in the second quarter of 2024, which are excluded from our ongoing earnings. First, based on the terms of IPL's rate review settlement agreement executed in the second quarter, we currently expect to recover a return of the remaining net book value of the Lansing Generating Station but not earn a return on that asset in the future.
Robert: Yesterday, we announced second quarter 2024, GAAP earnings of <unk> 34 per share and ongoing earnings of 57 cents per share the.
Robert: The difference between these two amounts related to non reoccurring charges from legacy assets that were recorded in the second quarter of 2024, which are excluded from our ongoing earnings.
Speaker Change: First based on the terms of Ipl's rate review settlement agreement executed in the second quarter. We currently expect to recover a return of the remaining net book value of the Lansing generating station, but not earn a return on that asset in the future.
Robert Durian: Because we no longer expect to receive a full return on the asset, we were required to write down the asset in the second quarter, resulting in an after-tax charge of $0.17 per share that we disclosed in an 8K filed in June. Additionally, due to the EPA's recent enactment of the revised coal combustion residual rule, we remeasured our asset retirement obligations related to ash ponds and landfills in the sector.
Speaker Change: Because we no longer expect to receive a full return on the asset.
Speaker Change: Were required to write down the asset in the second quarter, resulting in an after tax charge of <unk> 17 per share that we disclosed in an 8-K filed in June.
Speaker Change: Second due to the Epa's recent enactment of the revised coal combustion residual rule.
Speaker Change: We re measured our asset retirement obligations related to ash ponds and landfills in the second quarter.
Robert Durian: A majority of the increase in asset retirement obligations was offset by regulatory assets and property in our balance sheet. The remaining amount, related to a portion of two generating stations utilized to serve our steam customers, resulted in an after-tax charge of $0.06 per share. IPL has two high-pressure steam customers under contract through 2025, after which time IPL expects to end its steam operation. The Coal Combustion Residual Rule is expected to be challenged.
Speaker Change: A majority of the increase in asset retirement obligations was offset our regulatory assets and property and our balance sheet.
Speaker Change: The remaining amount related to a portion of two generating stations utilize to serve our steam customers.
Speaker Change: Resulted in an after tax charge of six cents per share.
Speaker Change: The appeal is too high pressure steam customers under contract through 2025.
Speaker Change: After which time IPL expects to end its steam operations.
Speaker Change: The coal combustion residual rule is expected to be challenged we believe we are very well positioned for compliance whether the rule was stands a challenge or not.
Robert Durian: We believe we are very well positioned for compliance, whether the rule withstands a challenge or not. The quarter-over-quarter variances in our ongoing earnings per share were mainly driven by the successful execution of WPL's customer-focused capital investment program, which supported new electric and gas rates that took effect on January 1st and resulted in higher financing and depreciation. In addition, the second quarter 2024 results were impacted by the temporary effects of the timing of income tax.
Speaker Change: The quarter over quarter variances in our ongoing earnings per share were mainly driven by the successful execution of W. Pills customer focused capital investment program, which supported new electric and gas rates that took effect on January 1st and resulted in higher financing and depreciation expenses.
Speaker Change: In addition, the second quarter 2024 results were impacted by the temporary effects of the timing of income tax expense.
Robert Durian: This issue In modeling our quarterly earnings this year, I wanted to provide some additional context to the timing of income tax. Income tax expenses are recorded each quarter based on an estimated annual effective tax rate and the proportion of full-year earnings generated.
Speaker Change: This issue in modeling our quarterly earnings this year I wanted to provide some additional context to the timing of income tax expense.
Speaker Change: Income tax expenses recorded each quarter based on an estimated annual effective tax rate and the proportion of full year earnings generated each quarter.
Robert Durian: As shown and quantified on slide 7 of our supplemental slides, this causes fluctuations in the amount of tax expenses quarter over quarter, but it will not have an impact on our full-year earnings. To reiterate, the level of our annual tax benefits expected to be generated in 2024 is in line with our expectations. However, the percentage recognized each quarter is a function of the amount of earnings generated each quarter.
Speaker Change: As shown in quantified on slide seven of our supplemental slides. This causes fluctuations in the amount of tax expenses quarter over quarter, but it will not have an impact on our full year earnings.
Speaker Change: To reiterate the level of our annual tax benefits expected to be generated in 2024 are in line with our expectations. However, the percentage recognized each quarter is a function of the amount of earnings generated each quarter.
Robert Durian: Through the first half of this year, approximately 40% of our annual tax benefits have been accrued, setting us up for a larger benefit in the second half of the year, which drives the timing difference for the quarter. Temperature normalized electric sales to residential customers were higher in the first half of 2024 when compared to last year as we continue to experience solid growth in the number of new residential customers in both. However, these positive residential sales were offset by decreased electric sales in 2024 to a limited number of low-margin industrial customers with their own generation capabilities in Iowa.
Speaker Change: Through the first half of this year approximately 40% of our annual tax benefits have been accrued setting.
Speaker Change: Setting us up for a larger benefit in the second half of the year, which drives the timing difference for the quarter.
Speaker Change: Temperature normalized electric sales to residential customers were higher than the first half of 'twenty 'twenty four when compared to last year as we continue to experience solid growth in the number of new residential customers in both states. However.
Speaker Change: However, these positive residential sales were offset by decreased electric sales in 2024 to a limited number of low margin industrial customers with their own generation capabilities in Ireland.
Robert Durian: We continue to make progress with lowering operating expenses at our two utilities to achieve our financial objectives and support customer affordability. In fact, our adjusted operations and maintenance expenses for the first half of 2024 were approximately $20 million less than the first half of 2020. These positive results are due to the ongoing efforts by our employees to identify and execute initiatives that have resulted in meaningful reductions in operating costs. For the full year, we are reaffirming our ongoing earnings guidance of $2.99 to $3.13 per share, which excludes the two non-reoccurring charges I discussed earlier.
Speaker Change: We continue to make progress with lowering operating expenses at our two utilities to achieve our financial objectives and support customer affordability.
Speaker Change: In fact, our adjusted operations and maintenance expenses for the first half of 'twenty 'twenty four we're approximately $20 million less than the first half of 2023.
Speaker Change: These positive results are due to the ongoing efforts by our employees to identify and execute initiatives that have resulted in meaningful reductions in operating expenses.
Speaker Change: For the full year, we are reaffirming our ongoing earnings guidance of $2.99 to $3 13 per share, which excludes the two nonrecurring charges I discussed earlier.
Robert Durian: Details on our second quarter earnings drivers and 2024 full earnings guidance can be found on slides five and six. Turning to cash flows, during the first half of 2024, cash flows from operations increased by approximately $250 million when compared to last year. These strong cash flows demonstrate the strength of our ongoing business.
Speaker Change: Details on our second quarter earnings drivers and 'twenty 'twenty four full earnings guidance can be found on slides five and six.
Speaker Change: Turning to cash flows during the first half of 2020 for cash flows from operations increased by approximately $250 million when compared to last year.
Speaker Change: These strong cash flows demonstrate the strength of our ongoing business.
Robert Durian: The increased cash flows were primarily due to WPIL's electric gas rate increases, which were effective January 1st of this year, the successful execution of our tax credit modernization program, and improvements in working capital. Looking forward, we expect continued improvements in our cash flow metrics as a result of the aforementioned drivers. Through the first seven months of this year, we have monetized over $130 million in taxes. The strength of a renewable fleet in both Iowa and Wisconsin positions us well for generating significant tax credits and ensuring our customers and investors realize the value of these investments.
Speaker Change: The increased cash flows were primarily due to W. Pills electric and gas rate increases, which were effective January 1st of this year.
Speaker Change: The successful execution of our tax credit monetization program and improvements in working capital.
Speaker Change: Looking forward, we expect continued improvements in our cash flow metrics as a result of the aforementioned drivers.
Speaker Change: Through the first seven months of this year, we have monetized over $130 million in tax credits.
Speaker Change: The strength of our renewable fleet in both Iowa, and Wisconsin and positions us well for generating significant tax credits and ensuring our customers and investors realize the value of these investments.
Robert Durian: We have executed a substantial portion of our 2024 financing plan to fund our investments in renewable and battery projects and to support refinancing $800 million in debt maturities. In addition to successful debt issuances in the first quarter, we issued $375 million of long-term debt at Alliant Energy Finances.
Speaker Change: We've executed a substantial portion of our 2024 financing plan to fund our investments in renewable and battery projects and to support refinancing $800 million in debt maturities. This year.
Speaker Change: In addition to the successful debt issuances in the first quarter, we issued $375 million of long term debt at Alliant energy Finance in June.
Robert Durian: Our overall financing plan for 2024 remains unchanged, including one remaining plan for financing for up to $700 million of long-term debt at IPL, in part to refinance $500 million in debt that matures in December. In the second quarter of 2024, we also closed on the sale of 125 megawatts of our West Riverside natural gas facility, providing proceeds which will help reduce our external financing. The sales of these partial interests in West Riverside were anticipated in our plans and provided combined proceeds of $123 million.
Speaker Change: Our overall financing plan for 'twenty 'twenty four remains unchanged, including one remaining planned financing for up to $700 million of long term debt at IPL and parts of refinanced $500 million in debt that matures in December.
Speaker Change: Yeah.
Speaker Change: In the second quarter of 2024, we also closed on the sales of 125 megawatts of our west Riverside natural gas facility, providing proceeds which will help reduce our external financing requirements.
Speaker Change: The sales of these partial interest in west Riverside were anticipated in our plans and providing combined proceeds of $123 million.
Robert Durian: Moving to our regulatory initiatives. We continue to make good progress on our notable regulatory initiatives for 2024, as shown on slide 8. Lisa provided the highlights of IPL's Rate Review Settlement Agreement executed in the second quarter.
Speaker Change: Shifting to our regulatory initiatives, we continue to make good progress on our notable regulatory initiatives for 2024 as shown on slide eight.
Speaker Change: So provided the highlights of Ipl's rate review settlement agreement executed in the second quarter.
Robert Durian: The hearing for the rate review was completed in July, and the final order is currently expected from the Iowa Utilities Commission in August or September. We are also making progress with several key regulatory proceedings in Wisconsin. Last month, the Public Service Commission of Wisconsin approved a reconciliation of actual fuel costs to the authorized fuel recoveries in WPL's 2023 fuel costs. Per the order, WPL will refund $34 million to its Wisconsin Electric customers in the fourth quarter of this year, helping lower customer bills.
Speaker Change: The hearing for the rate review was completed in July and the final order is currently expected from the IV Utilities Commission in August or September.
Robert Durian: Continuing with our Wisconsin jurisdiction, we have two filings requesting authority for additional investments in existing generation stations that are pending decisions from the PSUW. Enhancements to the Riverside Generation Station and the proposed repowering of the Venturi Wind Facility.
Speaker Change: We are also making progress with several key regulatory proceedings in Wisconsin.
Speaker Change: Last month, the public service Commission of Wisconsin approved a reconciliation of actual fuel costs to the authorized fuel recoveries and W. Pills once twenty-three fuel cost plant.
Speaker Change: For the order WP over refund $34 million with Wisconsin electric customers in the fourth quarter of this year, helping lower customer bills.
John Larson: We expect decisions on these two filings in 2025. We appreciate your continued support of our company and look forward to meeting with many of you in the coming months. As always, our investor-related materials are available on our website. At this time, I'll turn the call back over to John for his closing remarks.
Speaker Change: Continuing with our Wisconsin jurisdiction, we have two filings requesting authority for additional investments in existing generation stations that are pending decisions from the PSU W.
Speaker Change: Enhancements to the Riverside generation station and the proposed Repowering, a debenture wind facility.
Speaker Change: We expect decisions from the PSC W. On these two filings in 2025.
Speaker Change: We appreciate your continued support of our company and look forward to meeting with many of you in the coming months as always our investor relation materials are available on our website.
Speaker Change: At this time I'll turn the call back over to John for his closing remarks.
John: Thank you Robert.
John Larson: As you heard today, Alliant Energy is well positioned for the future. Before I turn the call back to the operator, let me take a minute and summarize the key takeaways.
John: As you heard today align energy is well positioned for the future.
John: Before I turn the call back to the operator, let me take a minute and summarize the key takeaways.
Operator: We are reaffirming our 2024 Ongoing Earnings Guidance Range. We've made great progress with regulatory and economic developments positioning us for long-term growth. And we're looking forward to sharing progress updates on our clean energy blueprint and economic development efforts as we lead up to the fall EEI conference. I want to thank my colleagues for their collaboration and customer focus, which have strengthened the communities we proudly serve. I also want to thank investors and analysts for their support of Alliant Energy.
Speaker Change: We are reaffirming our 2020 for ongoing earnings guidance range.
Speaker Change: We've made great progress with the regulatory and economic development positioning us for long term growth.
John: And we're looking forward to sharing progress updates on our clean energy blueprint and economic development efforts as we lead up to the fall <unk> conference.
Speaker Change: I want to thank my colleagues for their collaboration and customer focus which have strengthened the communities we proudly serve.
John: I also want to thank the investors and analysts for your support of Alliant energy.
Operator: I look forward to the next chapter and continuing to serve Alliant Energy in my role as Board Chairman. At this time, I will turn the call back over to the operator to facilitate the question and answer session.
Speaker Change: I look forward to the next chapter and continuing to serve Alliant energy in my role as Board Chairman.
Speaker Change: At this time I will turn the call back over to the operator to facilitate the question and answer session.
Operator: Thank you. And at this time, if you would like to ask a question, please press star and one on your telephone keypad. You may withdraw your question by pressing star 2. Once again, to ask a question, please press star and 1 on your telephone keypad. I will take our first question from Nicholas Campanella on Barclays, please go ahead.
Speaker Change: Thank you and at this time, if you would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: We draw your question by pressing star two.
John: Once again to ask a question. Please press star one on your telephone keypad.
Speaker Change: And we'll take our first question from Nicholas Campanella with Barclays. Please go ahead.
Nathan Richardson: Hey everybody, it's actually Nathan Richardson on for Nick. I was just wondering, on slide 8, you say modest equity needs to maintain a 40-45% parity equity structure. I was wondering if you could quantify that a little bit more and maybe some more color on how we can think about that.
Speaker Change: Hi, everybody its actually Nathan Richardson on for Nick.
Speaker Change: I was just wondering oh sorry, okay.
Speaker Change: I was just wondering for slide eight you say modest equity needs to maintain 40% to 45% paradigm. When you structure I was wondering if you could quantify that a little bit more and maybe some more color on how we can think about that.
Robert Durian: Yeah, Nathan, this is Robert. Yeah, think of that as right now we currently have a share in a direct plan where we're issuing approximately $25 million a year. And so we see that continuing into the foreseeable future. That's really the only material equity needs that we have planned at this date. I will say that we're going to continue to monitor that, and as we'll talk about further here, we do expect to refresh our capital expenditure plans. In November, as part of the initial updates that we do on an annual basis, and as part of that process, we may revisit that, but largely based on future capital needs.
Speaker Change: Yeah. Nathan this is Robert Yeah, I'd think of that as right. Now. We currently have a shareowner direct plan, we're issuing approximately $25 million a year and so we see that to extend into the into the foreseeable future that's really the only material.
Speaker Change: Equity needs that we have planned at this stage I will say that we're going to continue to monitor that and as we'll talk maybe it further here, we do expect to refresh our capital expenditure plans in November as part of the natural updates that we do on an annual basis and as part of that process, we may revisit that but largely based on.
Speaker Change: Kind of future capital needs.
Robert Durian: Got it. That's super helpful. Thank you. And then one more in terms of weather headwinds year to date. I was wondering where, if you wouldn't mind, you're tracking in the 24 range right now.
Speaker Change: Got it that's super helpful. Thank you and then one more in terms of weather headwinds year to date I was wondering where if you wouldn't mind, where you're tracking in the 24 range right now.
Robert Durian: Yeah, So, a great question.
Speaker Change: Yes, so great question. So as we think about 'twenty 'twenty four there's a lot of moving parts to our to the earnings. This year, we talked a little bit about the nonrecurring charges, which are we consider related to legacy assets are not reflective of what we should expect in our ongoing earnings. So we excluded that we also have a temporary issue as it relates to.
Robert Durian: So, as we think about 2024, there are a lot of moving parts to earnings this year. We talked a little bit about the non-reoccurring charges, which we consider related to legacy assets and not reflective of what we should expect in our ongoing earnings, so we excluded that. We also have a temporary issue as it relates to the income tax expense that we'll see reversed here later this year. And then, really, after you get through those unusual items, you really focus on the key drivers for earnings.
Speaker Change: The income tax expense of double where see reverse here later this year and then really after you get through those are unusual items, you really focus on the key drivers for the earnings. So far this year have been the temperatures to date, we've seen about a 10% reduction in earnings through the first half of the year. Most of that was recorded in the first quarter, but some modest levels in the second quarter.
Robert Durian: So far this year, the temperatures have been. To date, we've seen about a 10-cent reduction in earnings through the first half of the year. Most of that was recorded in the first quarter, but some modest levels were in the second quarter as well. As we look at that, we are working, and the team's been very successful in identifying opportunities to offset some of those costs to this date. We have a line of sight to about half of the offsets there that we need to offset those temperature impacts, and the team continues to work on that. That gives us the confidence to reaffirm the guidance of 299 to 313, and we'll continue to work on that as we go through the rest of the year.
Speaker Change: As well.
Speaker Change: As we look at that so we are working and the team has been very successful in identifying opportunities to offset some of those costs to the state. We have line of sight. So about half of the offsets there that we need to offset those temperature impacts and the team continues to work on that so that gives us the confidence to reaffirm the guidance of 299 to 313.
Speaker Change: And we'll continue to work on that as we go through the rest of the year.
Speaker Change: Yeah.
Operator: Awesome. Thank you again. Have a good one. Thanks.
Speaker Change: Awesome. Thank you again have a good one.
Speaker Change: Thanks.
Speaker Change: Yeah.
Andrew Weisel: Our next question comes from Andrew Weisel with Scotiabank. Please go ahead.
Speaker Change: Our next question comes from Andrew Weisel with Scotiabank. Please go ahead.
Lisa Barton: Hi, good morning, and congratulations again to John. Thanks, Andrew. First question, Lisa, if you could clarify, I just want to make sure that you said you'll be in a position to announce some data center customers or contracts by the third quarter call. Or maybe you could just elaborate, or were you talking about an updated load forecast, perhaps? What was it that you were foreshadowing?
Andrew Weisel: Hi, good morning, and congratulations again to John.
John: Thanks, Andrew.
Speaker Change: First question, Lisa if you could clarify I just wanted to make sure I think you said you'll be in a position to announce some data center customers or contracts by the third quarter call or maybe you could just elaborate are we talking about updated load forecast, perhaps what was it that you were foreshadowing.
Lisa Barton: So, it's really all of the above. In terms of how our process works, Andrew, we thoroughly vet all economic development inquiries that come. We have executed multiple agreements with data centers to date. Obviously, these are all confidential, and once we feel that we have certainty with respect to the amount of the load and the timing of the load, we'll announce those projects. What we will be doing, as both I and Robert mentioned, is putting all of that together at our third quarter earnings call, really in preparation for EEI. So we will then be sharing what's the load, what's the timing, what are the resources needed to fill it. Those obligations and the CAFX that supports all of that growth.
Speaker Change: So it's really all of the above so in terms of how our process works Andrew we thoroughly that's all economic development inquiries that come we have executed multiple agreements with data centers to date. Obviously these are all confidential.
Robert: And once we feel that we have certainty with respect to the amount of the load and the timing of the load will announce those projects, what we will be doing as both I and Robert mentioned is putting all of that together.
Speaker Change: At our third quarter earnings call really in prep for E. So we will then be sharing what's the load what's the timing what are the resources needed to fill.
Speaker Change: Those obligations and the Capex that supports all of that growth.
Speaker Change: Yeah.
Andrew Weisel: Okay, great. So this is the typical cadence of the updates, but we'll have a bit more. (inaudible)
Speaker Change: Okay, great. So typical cadence of the updates will have a bit more.
Speaker Change: Juice or color or detail in terms of some of these economic development updates as that kind of what you're saying.
Lisa Barton: Exactly, and as a reminder, with our Clean Energy Blueprint, we did something unique this year where, in both Wisconsin and Iowa, we're looking at three different load levels, low, medium, and high. Why we're doing that is that allows us to identify the resource needs once we have settled in on the load and the timing. So we're very well positioned for EEI to be communicating our plans.
Speaker Change: Exactly and as a reminder, with our clean energy Blueprint, we did something a unique this year, where in both Wisconsin and Iowa, We're looking at three different load levels.
Speaker Change: And low medium and high and why we're doing that is that allows us to identify the resource needs. Once we have <unk>.
John: Settled in on the load and the timing.
John: So we're very well positioned for.
John: For us to be communicating our plans at EI.
Lisa Barton: Sounds great; definitely looking forward to that. Then, a couple questions on the Iowa settlement, if I may. First, when you think about years three to five, you know, five years certainly a long stay out, what are the upside and downside risks to the earned ROE relative to the allowed? In other words, you have this earning sharing mechanism. Under what scenario might you see the earned ROE exceed the allowed, or what might you, under what scenario might you under earn, and are there any off ramps, so to speak, where you might need some relief, for example, if we went into a hypothetical deep recession in two years?
Speaker Change: Sounds great definitely looking forward to that and then a couple of questions on the Iowa settlement if I may.
Speaker Change: First when do you think your three to five five years, certainly a long stay out what are the upside and downside risk to the earned ROE relative to be allowed in other words you have this earnings sharing mechanisms under what scenario might you might you see the earned ROE.
Speaker Change: <unk> be allowed or what might you under what scenario might you under earn and are there any offering so to speak where you might need some relief. For example, if we went into a hypothetical deep recession in two years.
Lisa Barton: Great question. So I'll start off by answering that, and then I'll turn it over to Robert to fill in on some of the details. The way that I really see that Iowa rate review settlement is a flywheel effect, and it's fueled very much by economic development. If we're successful in capturing economic development activities, then that's going to continue to fuel affordability and our ability to work within the provisions of the stayout.
Speaker Change: Great question, So I'll start off with answering that and then I'll turn it over to Robert for filling in on some of the details the way that I really see that Iowa rate review settlement. It's it's a flywheel effect and it's fueled very much by economic development if were successful in capturing economic development activities there.
Robert: And that's going to continue to fuel affordability and our ability to work within the provisions of the stay out our share owners are going to benefit from the tax benefits and energy benefits during that period and I will note that it is a very similar model that mid am has been operating.
Lisa Barton: Our share owners are going to benefit from tax benefits and energy benefits during that period, and I will note this. It is a very similar model that Mid-Am has been operating with very successfully over the past 10 years, so it's not new to the state. It's something that is familiar to the commission, which is why we're very bullish on it. Robert, why don't you talk a little bit about some of the off-ramps that we have?
Speaker Change: With very successfully over the past 10 years. So it's not new to this day is something that is familiar to the commission a which is why we're very bullish on it shot Robert why don't you talk a little bit of some of the off ramps that we have.
Robert Durian: And so when we structured the agreements with the intervening parties as part of the settlement agreements, we did take into consideration that situation that you described, Andrew, and there's a provision within the agreement, if you read into the details of it, that allow us to come back in for a rate case if our ROEs fall below a certain level, either on an annual basis or over a two-year period, and so we feel like that'll protect us well in case of any significant decrease, the tax benefits and the energy margins and the capacity revenues related to new generation, as well as the tax benefits for many repowering opportunities that we may have over that opportunity. So that gives us some level of optimism for that period.
Robert: And so when we structure of the agreements with the intervening parties as part of the settlement agreement.
Robert: We did take into consideration that situation that you described Andrew and Theres a provision within the agreement if you read into the details of it that allow us to come back in for a rate case, if our roe's fall below a certain level either on an annual basis or over a two year period, and so we feel like that will protect us well in case of any significant decrease but we.
Speaker Change: We remain pretty optimistic about the upside opportunities as Lisa described with the ability to capture some of this new data center load growth and benefit from that as well as a what I would say is more of an innovative model that allows us to keep the tax benefits and the energy margins and the capacity revenues related to new generation as well as the tax benefits.
Speaker Change: For many repowering opportunities that we may have over that opportunity. So that gives us some level of optimism for that period.
Robert Durian: Very innovative and very reassuring. Thank you. One last one, if I may, on advanced rate making. I know there was some confusion or noise, and I'm using those terms generously in the past about how that was.
Speaker Change: Very innovative and very reassuring. Thank you one last one if I may on advanced Ratemaking I know there was some confusion or noise in them I'm using those terms generously in the past about how that was applied to certain projects could you talk about how advanced advanced Ratemaking was discussed in the settlement and how you expect it to be.
Speaker Change: <unk> going forward.
Andrew Weisel: Yeah, Andrew, we didn't get into a lot of details on the advance for making principles in the settlement. As you may recall, there's legislation that's recently been passed in Iowa that expands the eligibility of advance for making principles to include not only renewables but now also...
Speaker Change: Yeah, Andrew we didn't get into a lot of details on the advanced remaking principles and the settlement as you may recall, there's legislation that's been recently passed in Iowa that expands the eligibility of the reinsurer, making principles to include not only renewables, but now also energy storage facilities as well as nuclear so so I'd say.
Speaker Change: And it opens us up for some additional opportunities over those next few years are mainly related to a what I would say larger gas projects renewable projects as well as now battery projects.
Lisa Barton: And the one thing, Andrew, that I would add is that, you know, my big takeaway from Iowa is that Iowa is open for business. When you look at the combination of the mega-site legislation and the changes to the advanced rate making, it really expands it to more resources, as well as the movement that the state has made with respect to taxes that are paid by customers. It's really a state that is dedicated to economic development, which we see as very good for us, and we are well positioned to support that growth.
Andrew Weisel: And the one thing Andrew that I would add is that you know my big takeaway with Iowa is I always open for business. When you look at the combination of the Mega site legislation you look at the changes to the advanced ratemaking, It really expands it to more resources.
Speaker Change: As well as the movement that the state has made with respect to taxes that are paid by customers. Its its really a state that is dedicated to economic development, which we see as very good for us and that we are well positioned to support that growth.
Andrew Weisel: Good stuff. Thank you very much.
Andrew Weisel: Good stuff. Thank you very much.
Operator: And once again, that is star and one. If you would like to join the queue, we will move next with Paul Zimbardo and Jeffrey. Please go ahead.
Speaker Change: And once again that is star one if you would like to join the queue.
Paul <unk>: We'll move next with Paul <unk> with Jefferies. Please go ahead.
Paul: Hi, good morning, Tim.
Paul <unk>: Good morning.
Paul Zimbardo: You know, the first thing I would like to do is make a small clarification with respect to the two Steam customer contracts you talked about through 2025 that are ending. Is there any ongoing earnings impact to think about from those?
Paul: The first that was a hopefully a small clarification with respect to the two steam customer contracts you've talked about through 2025 that are ending is there any ongoing earnings impact to think about from those.
Robert Durian: Yeah, Paul, think of that as a fairly modest portion of the earnings profile of IPL historically. And so do not think of that as a significant impact. We actually structured the agreements to end in 2025, and we got the depreciation expense to end as well, because we'll be fully depreciated on the steam assets. So the ongoing impacts should not be material.
Speaker Change: Yeah, I don't think of that as a fairly modest portion of the earnings profile of IPL historically, and so do not think of that as a significant impact we actually structure of the agreements are to <unk>.
Speaker Change: And in 2025, and we got the depreciation expense.
Speaker Change: And as well because we'll be fully depreciated at the same asset so the ongoing impact should not be material.
Speaker Change: Okay.
Paul Zimbardo: And then, not to front-run the bigger EEI update coming, but is there any way to kind of frame the scope of the capital needs, maybe like how much generation length you have under the current plan before factoring in the data centers? Any kind of flavor of what kind of system needs there could be on the generation side would be helpful.
Speaker Change: Great.
Speaker Change: And not to front run that the bigger E update coming but is there any way to kind of frame the scope of the capital needs maybe like how much generation you have under the current plan before factoring in the data centers any kind of flavor of like what kind of the system needs to be on the generation side would be helpful.
Lisa Barton: We don't have specifics on that. All we can say, Paul, is that we're fearing and feeling very well positioned for that. You know, if you think about a premium utility, looking kind of out into the future, that is really a utility that has significant load growth to drive affordability, and the ability to capture economic development, whether it be data centers, on-shoring, and so forth. And we feel very well positioned in that space.
Speaker Change: We don't have specifics on that on what we can say Paul is that we're hearing feeling very well positioned for that if you think about a premium utility you know looking kind of out into the future.
Speaker Change: That is really a utility that has significant load growth to drive affordability that ability to capture economic development, whether it be data centers onshoring, and so forth and we feel very well positioned in that space. You've got land. We've got transmission access we've got flexible rate mechanisms in states.
Lisa Barton: We've got land, we've got transmission access, we've got flexible rate mechanisms in states that are supportive of economic development. And so as we look at that more broadly, to unlock that potential for shareholders, you really need a utility that's focused on customers and communities, which we are, those mechanisms, and constructive regulatory jurisdictions. We know that for you all to have this information in the model, you need as much transparency as possible.
Speaker Change: They're supportive of economic development and so as we look at that more broadly to unlock that potential for shareholders really need that utility that's focused on customers and communities, which we are those mechanisms and constructive regulatory jurisdictions.
Speaker Change: We know that for you all to have this information in the model you need as much transparency as possible, but we really want to make sure that you've got the right information for that and that is best served by US first having the details of the load the timing of the load and then.
Lisa Barton: But we really want to make sure that you've got the right information for that, and that is best served by us first having the details of the load, the timing of the load, and then the resources that we need. I will say this about both Iowa and Wisconsin. The Clean Energy Blueprint, that resource planning mechanism that we have is very flexible, and it offers more flexibility than I think is there with a lot of peers in the industry. And so it puts us in a very good position to be able to grow and scale completely in line with the needs of our customers and communities.
Speaker Change: And the resources that we need I will say this about both Iowa and Wisconsin the.
Speaker Change: Clean energy blueprint that resource planning mechanism that we have is very flexible and it offers more flexibility than I think is there with a lot of peers in the industry and so it puts us in a very good position to be able to grow in scale completely in line with the needs of our customers and <unk>.
Speaker Change: Communities.
Paul Zimbardo: Okay, great. No, thank you. We at least have to try. Thanks. I know you do.
Speaker Change: Okay, great. Thank you well, we at least start to try.
Speaker Change: I know you do [laughter].
Speaker Change: Yeah.
Operator: And once again, that is the star and one for your questions. We will move next with Alex Mortimer from Mizuho Securities. Please go ahead.
Speaker Change: And once again that is star one for your questions. We will move next with Alex <unk> with Mizuho Securities. Please go ahead.
Alex: Hi, good morning team.
Speaker Change: Alex.
Alex Mortimer: So I know you say we'll get a more holistic update in the fall, but maybe just directionally, how should we think about the update to your low-growth forecast? You have a regional peer highlighting somewhere in the, you know, 4.5% to 5% range potentially. Does that seem reasonable to you, or are there, you know, puts and takes that may have you above or below those levels, especially as you highlight some of the updates in Iowa that do seem, you know, very bullish for your low-growth prospects?
Alex: So I know you say you will get a more holistic update in the fall, but maybe just directionally how should we think about the update to your load growth forecast you have a regional peer of highlighting somewhere in the four 5% to 5% range potentially does that seem reasonable to you or are there puts and takes I may have you above or below those levels, especially as you highlight.
Speaker Change: Some of the updates in Iowa that do seem very bullish for for your loan growth prospects.
Lisa Barton: You know, really, it's a matter of timing, and so, yeah, again, as soon as we have that information, we'll be putting it out.
Speaker Change: You know really all as a matter of timing and so yeah again as soon as we have that information, we will be putting it out.
Alex Mortimer: Okay, thank you so much. This is all I had.
Speaker Change: Okay. Thanks, so much it's all I had.
Operator: And we have no further questions at this time. I will turn the call back to management for closing remarks.
Speaker Change: And we show no further questions at this time I will turn the call back to management for closing remarks.
Susan Gille: With no more questions, this concludes our call. A replay will be available on our investor website. We thank you for your continued support of Alliant Energy, and feel free to contact me with any follow-up questions.
Speaker Change: With no more questions. This concludes our call.
Speaker Change: A replay will be available on our investor website.
Speaker Change: We thank you for your continued support of Alliant energy and feel free to contact me with any follow up question.
Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time.
Speaker Change: This does conclude today's program.
Operator: [inaudible] ?? ?? ?? ?? ?? ?? ?? ??
Speaker Change: You for your participation you may disconnect at any time.
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