LNT 9.30.2014 10-Q
Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
 
 
FORM 10-Q
 
 
 
 
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
 
or
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    
 
Commission
File Number
 
Name of Registrant, State of Incorporation,
Address of Principal Executive Offices and Telephone Number
 
IRS Employer
Identification Number
1-9894
 
ALLIANT ENERGY CORPORATION
 
39-1380265
 
 
(a Wisconsin corporation)
 
 
 
 
4902 N. Biltmore Lane
 
 
 
 
Madison, Wisconsin 53718
 
 
 
 
Telephone (608) 458-3311
 
 
 
 
 
1-4117
 
INTERSTATE POWER AND LIGHT COMPANY
 
42-0331370
 
 
(an Iowa corporation)
 
 
 
 
Alliant Energy Tower
 
 
 
 
Cedar Rapids, Iowa 52401
 
 
 
 
Telephone (319) 786-4411
 
 
 
 
 
0-337
 
WISCONSIN POWER AND LIGHT COMPANY
 
39-0714890
 
 
(a Wisconsin corporation)
 
 
 
 
4902 N. Biltmore Lane
 
 
 
 
Madison, Wisconsin 53718
 
 
 
 
Telephone (608) 458-3311
 
 
This combined Form 10-Q is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-Q relating to Interstate Power and Light Company and Wisconsin Power and Light Company is filed by each such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself.
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.    Yes x  No  ¨
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
  
Accelerated Filer
  
Non-accelerated Filer
  
Smaller Reporting Company Filer
Alliant Energy Corporation
x
  
 
  
 
  
 
Interstate Power and Light Company
 
  
 
  
x
  
 
Wisconsin Power and Light Company
 
  
 
  
x
  
 
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x
Number of shares outstanding of each class of common stock as of September 30, 2014:
Alliant Energy Corporation
Common stock, $0.01 par value, 110,935,680 shares outstanding
 
 
Interstate Power and Light Company
Common stock, $2.50 par value, 13,370,788 shares outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation)
 
 
Wisconsin Power and Light Company
Common stock, $5 par value, 13,236,601 shares outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation)



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TABLE OF CONTENTS
 
Page
Alliant Energy Corporation:
 
Interstate Power and Light Company:
 
Wisconsin Power and Light Company:
 


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Page


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DEFINITIONS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym
 
Definition
2013 Form 10-K
 
Combined Annual Report on Form 10-K filed by Alliant Energy, IPL and WPL for the year ended Dec. 31, 2013
AFUDC
 
Allowance for funds used during construction
Alliant Energy
 
Alliant Energy Corporation
AROs
 
Asset retirement obligations
ATC
 
American Transmission Company LLC
ATI
 
AE Transco Investments, LLC
CA
 
Certificate of authority
CAA
 
Clean Air Act
CAIR
 
Clean Air Interstate Rule
CDD
 
Cooling degree days
CEO
 
Chief Executive Officer
CFO
 
Chief Financial Officer
CO2
 
Carbon dioxide
Columbia
 
Columbia Energy Center
Corporate Services
 
Alliant Energy Corporate Services, Inc.
CPCN
 
Certificate of Public Convenience and Necessity
CRANDIC
 
Cedar Rapids and Iowa City Railway Company
CSAPR
 
Cross-State Air Pollution Rule
CWIP
 
Construction work in progress
DAEC
 
Duane Arnold Energy Center
D.C. Circuit Court
 
U.S. Court of Appeals for the D.C. Circuit
DCP
 
Deferred Compensation Plan
Dth
 
Dekatherm
Eagle Point
 
Eagle Point Solar
Edgewater
 
Edgewater Generating Station
EGU
 
Electric generating unit
EPA
 
U.S. Environmental Protection Agency
EPB
 
Emissions Plan and Budget
EPS
 
Earnings per weighted average common share
FASB
 
Financial Accounting Standards Board
FERC
 
Federal Energy Regulatory Commission
Financial Statements
 
Condensed Consolidated Financial Statements
FTR
 
Financial transmission right
Fuel-related
 
Electric production fuel and energy purchases
GAAP
 
U.S. generally accepted accounting principles
GHG
 
Greenhouse gases
HDD
 
Heating degree days
IPL
 
Interstate Power and Light Company
IPO
 
Initial public offering
IRS
 
Internal Revenue Service
ITC
 
ITC Midwest LLC
IUB
 
Iowa Utilities Board
Jo-Carroll
 
Jo-Carroll Energy, Inc.
Kewaunee
 
Kewaunee Nuclear Power Plant
Marshalltown
 
Marshalltown Generating Station
MDA
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations

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Abbreviation or Acronym
 
Definition
MGP
 
Manufactured gas plant
MidAmerican
 
MidAmerican Energy Company
MISO
 
Midcontinent Independent System Operator, Inc.
MPUC
 
Minnesota Public Utilities Commission
MW
 
Megawatt
MWh
 
Megawatt-hour
N/A
 
Not applicable
NAAQS
 
National Ambient Air Quality Standards
Nelson Dewey
 
Nelson Dewey Generating Station
Note(s)
 
Combined Notes to Condensed Consolidated Financial Statements
NOx
 
Nitrogen oxide
OPEB
 
Other postretirement benefits
PJM
 
PJM Interconnection, LLC
PM2.5
 
Fine particulate matter
PPA
 
Purchased power agreement
PSCW
 
Public Service Commission of Wisconsin
PSD
 
Prevention of Significant Deterioration
Receivables Agreement
 
Receivables Purchase and Sale Agreement
Resources
 
Alliant Energy Resources, LLC
Riverside
 
Riverside Energy Center
RMT
 
RMT, Inc.
RTO
 
Regional Transmission Organization
SCR
 
Selective catalytic reduction
SIP
 
State implementation plan
SO2
 
Sulfur dioxide
SSR
 
System Support Resource
U.S.
 
United States of America
Whiting Petroleum
 
Whiting Petroleum Corporation
WPL
 
Wisconsin Power and Light Company
WPL Transco
 
WPL Transco, LLC
XBRL
 
Extensible Business Reporting Language


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FORWARD-LOOKING STATEMENTS

Statements contained in this report that are not of historical fact are forward-looking statements intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified as such because the statements include words such as “may,” “believe,” “expect,” “anticipate,” “plan,” “project,” “will,” “projections,” “estimate,” or other words of similar import. Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, such statements. Some, but not all, of the risks and uncertainties of Alliant Energy, IPL and WPL that could materially affect actual results include:

federal and state regulatory or governmental actions, including the impact of energy, tax, financial and health care legislation, and of regulatory agency orders;
IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of fuel costs, operating costs, transmission costs, deferred expenditures, capital expenditures, and remaining costs related to EGUs that may be permanently closed, earning their authorized rates of return, and the payments to their parent of expected levels of dividends;
the ability to continue cost controls and operational efficiencies;
the impact of IPL’s retail electric base rate freeze in Iowa during 2014 through 2016;
the impact of WPL’s retail electric and gas base rate freeze in Wisconsin during 2015 and 2016;
weather effects on results of utility operations, including impacts of temperature changes in IPL’s and WPL’s service territories on customers’ demand for electricity and gas;
the impact of the economy in IPL’s and WPL’s service territories and the resulting impacts on sales volumes, margins and the ability to collect unpaid bills;
the impact of distributed generation, including alternative electric suppliers, in IPL’s and WPL’s service territories on system reliability, operating expenses and customers’ demand for electricity;
the impact of energy efficiency, franchise retention and customer-owned generation on sales volumes and margins;
developments that adversely impact Alliant Energy’s, IPL’s and WPL’s ability to implement their strategic plan, including unanticipated issues with new emission controls equipment for various coal-fired EGUs of IPL and WPL, IPL’s construction of Marshalltown, WPL’s proposed Riverside expansion, various replacements and expansion of IPL’s and WPL’s natural gas distribution systems, Resources’ selling price of the electricity output from its Franklin County wind project, the potential decommissioning of certain EGUs of IPL and WPL, and the anticipated sales of IPL’s electric and gas distribution assets in Minnesota;
issues related to the availability of EGUs and the supply and delivery of fuel and purchased electricity and the price thereof, including the ability to recover and to retain the recovery of purchased power, fuel and fuel-related costs through rates in a timely manner;
the impact that price changes may have on IPL’s and WPL’s customers’ demand for utility services and their ability to pay their bills;
issues associated with environmental remediation and environmental compliance, including compliance with the Consent Decree between WPL, the Sierra Club and the EPA, future changes in environmental laws and regulations, including the EPA’s recently issued proposed regulations for CO2 emissions reductions from existing fossil-fueled EGUs under Section 111(d) of the CAA, and litigation associated with environmental requirements;
the ability to defend against environmental claims brought by state and federal agencies, such as the EPA, or third parties, such as the Sierra Club, and the impact on operating expenses of defending and resolving such claims;
the ability to recover through rates all environmental compliance and remediation costs, including costs for projects put on hold due to uncertainty of future environmental laws and regulations;

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impacts that storms or natural disasters in IPL’s and WPL’s service territories may have on their operations and recovery of, and rate relief for, costs associated with restoration activities;
the direct or indirect effects resulting from terrorist incidents, including physical attacks and cyber attacks, or responses to such incidents;
the impact of penalties or third-party claims related to, or in connection with, a failure to maintain the security of personally identifiable information, including associated costs to notify affected persons and to mitigate their information security concerns;
the direct or indirect effects resulting from breakdown or failure of equipment in the operation of natural gas distribution systems, such as leaks, explosions and mechanical problems, and compliance with natural gas distribution safety regulations, such as those that may be issued by the Pipeline and Hazardous Materials Safety Administration;
impacts of future tax benefits from deductions for repairs expenditures and allocation of mixed service costs and temporary differences from historical tax benefits from such deductions that are included in rates when the differences reverse in future periods;
any material post-closing adjustments related to any past asset divestitures, including the sale of RMT, which could result from, among other things, warranties, parental guarantees or litigation;
continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;
inflation and interest rates;
changes to the creditworthiness of counterparties with which Alliant Energy, IPL and WPL have contractual arrangements, including participants in the energy markets and fuel suppliers and transporters;
issues related to electric transmission, including operating in RTO energy and ancillary services markets, the impacts of potential future billing adjustments and cost allocation changes from RTOs and recovery of costs incurred;
unplanned outages, transmission constraints or operational issues impacting fossil or renewable EGUs and risks related to recovery of resulting incremental costs through rates;
current or future litigation, regulatory investigations, proceedings or inquiries;
Alliant Energy’s ability to sustain its dividend payout ratio goal;
employee workforce factors, including changes in key executives, collective bargaining agreements and negotiations, work stoppages or restructurings;
access to technological developments;
material changes in retirement and benefit plan costs;
the impact of performance-based compensation plans accruals;
the effect of accounting pronouncements issued periodically by standard-setting bodies, including a new revenue recognition standard;
the impact of changes to production tax credits for wind projects;
the impact of adjustments made to deferred tax assets and liabilities from state apportionment assumptions;
the ability to utilize tax credits and net operating losses generated to date, and those that may be generated in the future, before they expire;
the ability to successfully complete tax audits, changes in tax accounting methods, including changes required by new tangible property regulations, and appeals with no material impact on earnings and cash flows; and
factors listed in MDA and Risk Factors in Item 1A in the 2013 Form 10-K.
Alliant Energy, IPL and WPL each assume no obligation, and disclaim any duty, to update the forward-looking statements in this report, except as required by law.

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PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(in millions, except per share amounts)
Operating revenues:
 
 
 
 
 
 
 
Utility:
 
 
 
 
 
 
 
Electric

$771.2

 

$798.1

 

$2,090.9

 

$2,043.4

Gas
47.2

 
39.8

 
364.8

 
310.5

Other
12.2

 
17.4

 
50.6

 
52.4

Non-regulated
12.5

 
11.3

 
39.9

 
37.9

Total operating revenues
843.1

 
866.6

 
2,546.2

 
2,444.2

Operating expenses:
 
 
 
 
 
 
 
Utility:
 
 
 
 
 
 
 
Electric production fuel and energy purchases
230.7

 
205.4

 
658.7

 
542.5

Purchased electric capacity
0.1

 
58.6

 
24.9

 
167.6

Electric transmission service
114.0

 
110.5

 
333.6

 
313.8

Cost of gas sold
21.8

 
14.3

 
228.7

 
181.2

Other operation and maintenance
156.7

 
156.3

 
478.4

 
453.7

Non-regulated operation and maintenance
2.3

 
3.1

 
5.4

 
8.4

Depreciation and amortization
97.1

 
92.1

 
288.4

 
277.4

Taxes other than income taxes
25.6

 
24.9

 
75.8

 
74.3

Total operating expenses
648.3

 
665.2

 
2,093.9

 
2,018.9

Operating income
194.8

 
201.4

 
452.3

 
425.3

Interest expense and other:
 
 
 
 
 
 
 
Interest expense
44.6

 
42.5

 
134.9

 
127.6

Equity income from unconsolidated investments, net
(11.5
)
 
(11.1
)
 
(34.2
)
 
(32.7
)
Allowance for funds used during construction
(8.3
)
 
(8.5
)
 
(25.8
)
 
(21.1
)
Interest income and other
(0.2
)
 
(0.6
)
 
(1.8
)
 
(1.7
)
Total interest expense and other
24.6

 
22.3

 
73.1

 
72.1

Income from continuing operations before income taxes
170.2

 
179.1

 
379.2

 
353.2

Income taxes
12.4

 
17.6

 
46.2

 
40.2

Income from continuing operations, net of tax
157.8

 
161.5

 
333.0

 
313.0

Loss from discontinued operations, net of tax
(1.9
)
 
(1.3
)
 
(2.2
)
 
(4.9
)
Net income
155.9

 
160.2

 
330.8

 
308.1

Preferred dividend requirements of subsidiaries
2.6

 
2.6

 
7.7

 
15.3

Net income attributable to Alliant Energy common shareowners

$153.3

 

$157.6

 

$323.1

 

$292.8

Weighted average number of common shares outstanding (basic and diluted)
110.8

 
110.8

 
110.8

 
110.8

Earnings per weighted average common share attributable to Alliant Energy common shareowners (basic and diluted):
 
 
 
 
 
 
 
Income from continuing operations, net of tax

$1.40

 

$1.43

 

$2.94

 

$2.69

Loss from discontinued operations, net of tax
(0.02
)
 
(0.01
)
 
(0.02
)
 
(0.05
)
Net income

$1.38

 

$1.42

 

$2.92

 

$2.64

Amounts attributable to Alliant Energy common shareowners:
 
 
 
 
 
 
 
Income from continuing operations, net of tax

$155.2

 

$158.9

 

$325.3

 

$297.7

Loss from discontinued operations, net of tax
(1.9
)
 
(1.3
)
 
(2.2
)
 
(4.9
)
Net income attributable to Alliant Energy common shareowners

$153.3

 

$157.6

 

$323.1

 

$292.8

Dividends declared per common share

$0.51

 

$0.47

 

$1.53

 

$1.41


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2014
 
December 31,
2013
 
(in millions)
ASSETS
 
 
 
Property, plant and equipment:
 
 
 
Utility:
 
 
 
Electric plant

$10,016.3

 

$9,415.7

Gas plant
936.6

 
909.9

Other plant
550.4

 
547.9

Accumulated depreciation
(3,896.2
)
 
(3,726.2
)
Net plant
7,607.1

 
7,147.3

Construction work in progress
639.1

 
677.9

Other, less accumulated depreciation
22.0

 
22.3

Total utility
8,268.2

 
7,847.5

Non-regulated and other:
 
 
 
Non-regulated Generation, less accumulated depreciation
242.8

 
249.4

Alliant Energy Corporate Services, Inc. and other, less accumulated depreciation
252.6

 
229.6

Total non-regulated and other
495.4

 
479.0

Total property, plant and equipment
8,763.6

 
8,326.5

Current assets:
 
 
 
Cash and cash equivalents
11.0

 
9.8

Accounts receivable, less allowance for doubtful accounts:
 
 
 
Customer
84.3

 
81.8

Unbilled utility revenues
64.6

 
92.3

Other
249.1

 
299.2

Production fuel, at weighted average cost
78.1

 
103.6

Materials and supplies, at weighted average cost
72.9

 
69.6

Gas stored underground, at weighted average cost
53.2

 
38.6

Regulatory assets
54.7

 
53.9

Other
294.4

 
262.4

Total current assets
962.3

 
1,011.2

Investments:
 
 
 
Investment in American Transmission Company LLC
285.6

 
272.1

Other
57.7

 
57.5

Total investments
343.3

 
329.6

Other assets:
 
 
 
Regulatory assets
1,469.6

 
1,359.3

Deferred charges and other
55.2

 
85.8

Total other assets
1,524.8

 
1,445.1

Total assets

$11,594.0

 

$11,112.4


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

 
September 30,
2014
 
December 31,
2013
 
(in millions, except per
share and share amounts)
CAPITALIZATION AND LIABILITIES
 
 
 
Capitalization:
 
 
 
Alliant Energy Corporation common equity:
 
 
 
Common stock - $0.01 par value - 240,000,000 shares authorized; 110,935,680 and 110,943,669 shares outstanding

$1.1

 

$1.1

Additional paid-in capital
1,508.9

 
1,507.8

Retained earnings
1,934.5

 
1,780.7

Accumulated other comprehensive loss
(0.2
)
 
(0.2
)
Shares in deferred compensation trust - 234,836 and 227,469 shares at a weighted average cost of $36.94 and $35.25 per share
(8.7
)
 
(8.0
)
Total Alliant Energy Corporation common equity
3,435.6

 
3,281.4

Cumulative preferred stock of Interstate Power and Light Company
200.0

 
200.0

Noncontrolling interest
1.7

 
1.8

Total equity
3,637.3

 
3,483.2

Long-term debt, net (excluding current portion)
2,799.5

 
2,977.8

Total capitalization
6,436.8

 
6,461.0

Current liabilities:
 
 
 
Current maturities of long-term debt
492.8

 
358.5

Commercial paper
353.8

 
279.4

Accounts payable
471.1

 
365.0

Regulatory liabilities
220.2

 
196.6

Other
204.0

 
233.8

Total current liabilities
1,741.9

 
1,433.3

Other long-term liabilities and deferred credits:
 
 
 
Deferred income tax liabilities
2,290.3

 
2,112.7

Regulatory liabilities
656.6

 
624.9

Pension and other benefit obligations
201.3

 
206.6

Other
267.1

 
273.9

Total long-term liabilities and deferred credits
3,415.3

 
3,218.1

Commitments and contingencies (Note 14)


 


Total capitalization and liabilities

$11,594.0

 

$11,112.4


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2014
 
2013
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$330.8

 

$308.1

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
288.4

 
277.4

Other amortizations
41.9

 
29.1

Deferred taxes and investment tax credits
54.2

 
92.2

Equity income from unconsolidated investments, net
(34.2
)
 
(32.7
)
Distributions from equity method investments
27.2

 
26.6

Other
(21.3
)
 
(14.1
)
Other changes in assets and liabilities:
 
 
 
Accounts receivable
96.1

 
(2.8
)
Regulatory assets
(154.3
)
 
(14.4
)
Regulatory liabilities
61.1

 
(74.9
)
Deferred income taxes
109.5

 
75.4

Other
(35.5
)
 
(26.8
)
Net cash flows from operating activities
763.9

 
643.1

Cash flows used for investing activities:
 
 
 
Construction and acquisition expenditures:
 
 
 
Utility business
(587.4
)
 
(524.4
)
Alliant Energy Corporate Services, Inc. and non-regulated businesses
(45.1
)
 
(35.9
)
Proceeds from Franklin County wind project cash grant

 
62.4

Other
(7.9
)
 
(15.3
)
Net cash flows used for investing activities
(640.4
)
 
(513.2
)
Cash flows used for financing activities:
 
 
 
Common stock dividends
(169.3
)
 
(156.2
)
Preferred dividends paid by subsidiaries
(7.7
)
 
(8.9
)
Payments to redeem cumulative preferred stock of IPL and WPL

 
(211.0
)
Proceeds from issuance of cumulative preferred stock of IPL

 
200.0

Payments to retire long-term debt
(47.7
)
 
(0.8
)
Net change in commercial paper
74.4

 
34.8

Other
28.0

 
8.7

Net cash flows used for financing activities
(122.3
)
 
(133.4
)
Net increase (decrease) in cash and cash equivalents
1.2

 
(3.5
)
Cash and cash equivalents at beginning of period
9.8

 
21.2

Cash and cash equivalents at end of period

$11.0

 

$17.7

Supplemental cash flows information:
 
 
 
Cash paid (refunded) during the period for:
 
 
 
Interest, net of capitalized interest

$131.8

 

$128.5

Income taxes, net of refunds

($5.3
)
 

($9.7
)
Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$141.1

 

$100.5


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(in millions)
Operating revenues:
 
 
 
 
 
 
 
Electric utility

$435.9

 

$457.6

 

$1,164.7

 

$1,137.4

Gas utility
28.7

 
24.6

 
208.1

 
180.9

Steam and other
11.6

 
12.2

 
44.2

 
37.4

Total operating revenues
476.2

 
494.4

 
1,417.0

 
1,355.7

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and energy purchases
132.1

 
110.9

 
370.2

 
282.5

Purchased electric capacity
0.1

 
42.7

 
24.9

 
120.3

Electric transmission service
82.7

 
80.0

 
241.7

 
226.0

Cost of gas sold
14.6

 
9.3

 
128.4

 
103.2

Other operation and maintenance
89.8

 
90.5

 
279.1

 
264.2

Depreciation and amortization
49.3

 
47.6

 
146.9

 
142.8

Taxes other than income taxes
13.7

 
13.4

 
40.4

 
40.9

Total operating expenses
382.3

 
394.4

 
1,231.6

 
1,179.9

Operating income
93.9

 
100.0

 
185.4

 
175.8

Interest expense and other:
 
 
 
 
 
 
 
Interest expense
21.9

 
19.6

 
67.0

 
58.9

Allowance for funds used during construction
(6.6
)
 
(5.8
)
 
(18.6
)
 
(14.3
)
Interest income and other

 

 
(0.1
)
 
(0.2
)
Total interest expense and other
15.3

 
13.8

 
48.3

 
44.4

Income before income taxes
78.6

 
86.2

 
137.1

 
131.4

Income tax benefit
(26.5
)
 
(26.4
)
 
(34.9
)
 
(37.4
)
Net income
105.1

 
112.6

 
172.0

 
168.8

Preferred dividend requirements
2.6

 
2.6

 
7.7

 
13.7

Earnings available for common stock

$102.5

 

$110.0

 

$164.3

 

$155.1

Earnings per share data is not disclosed given Alliant Energy Corporation is the sole shareowner of all shares of IPL’s common stock outstanding during the periods presented.
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Table of Contents


INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2014
 
December 31,
2013
 
(in millions)
ASSETS
 
Property, plant and equipment:
 
 
 
Electric plant

$5,252.6

 

$5,034.9

Gas plant
471.1

 
456.8

Steam and other plant
306.5

 
302.8

Accumulated depreciation
(2,118.3
)
 
(2,025.3
)
Net plant
3,911.9

 
3,769.2

Construction work in progress
500.2

 
346.4

Other, less accumulated depreciation
21.4

 
21.2

Total property, plant and equipment
4,433.5

 
4,136.8

Current assets:
 
 
 
Cash and cash equivalents
4.6

 
4.4

Accounts receivable, less allowance for doubtful accounts
200.1

 
246.9

Production fuel, at weighted average cost
51.8

 
75.6

Materials and supplies, at weighted average cost
41.3

 
39.4

Gas stored underground, at weighted average cost
32.5

 
18.9

Regulatory assets
30.3

 
28.5

Other
166.8

 
122.2

Total current assets
527.4

 
535.9

Investments
18.8

 
18.6

Other assets:
 
 
 
Regulatory assets
1,196.5

 
1,085.0

Deferred charges and other
18.3

 
29.7

Total other assets
1,214.8

 
1,114.7

Total assets

$6,194.5

 

$5,806.0


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Table of Contents


INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

 
September 30,
2014
 
December 31,
2013
 
(in millions, except per
share and share amounts)
CAPITALIZATION AND LIABILITIES
 
Capitalization:
 
 
 
Interstate Power and Light Company common equity:
 
 
 
Common stock - $2.50 par value - 24,000,000 shares authorized; 13,370,788 shares outstanding

$33.4

 

$33.4

Additional paid-in capital
1,242.8

 
1,152.8

Retained earnings
552.8

 
493.5

Total Interstate Power and Light Company common equity
1,829.0

 
1,679.7

Cumulative preferred stock
200.0

 
200.0

Total equity
2,029.0

 
1,879.7

Long-term debt, net (excluding current portion)
1,370.3

 
1,520.0

Total capitalization
3,399.3

 
3,399.7

Current liabilities:
 
 
 
Current maturities of long-term debt
150.0

 
38.4

Commercial paper
38.0

 

Accounts payable
286.1

 
187.1

Accounts payable to associated companies
50.2

 
29.1

Regulatory liabilities
143.8

 
143.8

Accrued taxes
34.5

 
51.1

Other
68.4

 
74.8

Total current liabilities
771.0

 
524.3

Other long-term liabilities and deferred credits:
 
 
 
Deferred income tax liabilities
1,316.6

 
1,193.0

Regulatory liabilities
479.4

 
471.1

Pension and other benefit obligations
46.2

 
48.6

Other
182.0

 
169.3

Total other long-term liabilities and deferred credits
2,024.2

 
1,882.0

Commitments and contingencies (Note 14)


 


Total capitalization and liabilities

$6,194.5

 

$5,806.0


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Table of Contents


INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2014
 
2013
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$172.0

 

$168.8

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
146.9

 
142.8

Other
(12.8
)
 
1.2

Other changes in assets and liabilities:
 
 
 
Accounts receivable
66.1

 
(43.0
)
Regulatory assets
(126.1
)
 
(9.8
)
Regulatory liabilities
14.8

 
(68.3
)
Deferred income taxes
112.5

 
71.0

Other
0.2

 
(3.0
)
Net cash flows from operating activities
373.6

 
259.7

Cash flows used for investing activities:
 
 
 
Utility construction and acquisition expenditures
(358.2
)
 
(274.3
)
Other
(18.3
)
 
(15.5
)
Net cash flows used for investing activities
(376.5
)
 
(289.8
)
Cash flows from financing activities:
 
 
 
Common stock dividends
(105.0
)
 
(95.7
)
Preferred stock dividends
(7.7
)
 
(8.3
)
Capital contributions from parent
90.0

 
90.0

Payments to redeem cumulative preferred stock

 
(150.0
)
Proceeds from issuance of cumulative preferred stock

 
200.0

Payments to retire long-term debt
(38.4
)
 

Net change in commercial paper
38.0

 
(11.3
)
Other
26.2

 
7.2

Net cash flows from financing activities
3.1

 
31.9

Net increase in cash and cash equivalents
0.2

 
1.8

Cash and cash equivalents at beginning of period
4.4

 
4.5

Cash and cash equivalents at end of period

$4.6

 

$6.3

Supplemental cash flows information:
 
 
 
Cash paid (refunded) during the period for:
 
 
 
Interest

$64.2

 

$60.9

Income taxes, net of refunds

($21.0
)
 

$10.7

Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$96.7

 

$57.4


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.



12

Table of Contents


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2014
 
2013
 
2014
 
2013
 
(in millions)
Operating revenues:
 
 
 
 
 
 
 
Electric utility

$335.3

 

$340.5

 

$926.2

 

$906.0

Gas utility
18.5

 
15.2

 
156.7

 
129.6

Other
0.6

 
5.2

 
6.4

 
15.0

Total operating revenues
354.4

 
360.9

 
1,089.3

 
1,050.6

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and energy purchases
98.6

 
94.5

 
288.5

 
260.0

Purchased electric capacity

 
15.9

 

 
47.3

Electric transmission service
31.3

 
30.5

 
91.9

 
87.8

Cost of gas sold
7.2

 
5.0

 
100.3

 
78.0

Other operation and maintenance
66.9

 
65.8

 
199.3

 
189.5

Depreciation and amortization
45.6

 
42.7

 
135.0

 
129.0

Taxes other than income taxes
10.9

 
10.6

 
32.7

 
30.7

Total operating expenses
260.5

 
265.0

 
847.7

 
822.3

Operating income
93.9

 
95.9

 
241.6

 
228.3

Interest expense and other:
 
 
 
 
 
 
 
Interest expense
21.0

 
21.2

 
63.2

 
63.8

Equity income from unconsolidated investments
(11.4
)
 
(11.1
)
 
(34.2
)
 
(32.7
)
Allowance for funds used during construction
(1.7
)
 
(2.7
)
 
(7.2
)
 
(6.8
)
Interest income and other
0.5

 

 
0.8

 

Total interest expense and other
8.4

 
7.4

 
22.6

 
24.3

Income before income taxes
85.5

 
88.5

 
219.0

 
204.0

Income taxes
23.9

 
27.2

 
68.0

 
64.7

Net income
61.6

 
61.3

 
151.0

 
139.3

Preferred dividend requirements

 

 

 
1.6

Earnings available for common stock

$61.6

 

$61.3

 

$151.0

 

$137.7

Earnings per share data is not disclosed given Alliant Energy Corporation is the sole shareowner of all shares of WPL’s common stock outstanding during the periods presented.
The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Table of Contents


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2014
 
December 31,
2013
 
(in millions)
ASSETS
 
Property, plant and equipment:
 
 
 
Electric plant

$4,763.7

 

$4,380.8

Gas plant
465.5

 
453.1

Other plant
243.9

 
245.1

Accumulated depreciation
(1,777.9
)
 
(1,700.9
)
Net plant
3,695.2

 
3,378.1

Leased Sheboygan Falls Energy Facility, less accumulated amortization
66.3

 
70.9

Construction work in progress
138.9

 
331.5

Other, less accumulated depreciation
0.6

 
1.1

Total property, plant and equipment
3,901.0

 
3,781.6

Current assets:
 
 
 
Cash and cash equivalents
2.3

 
0.5

Accounts receivable, less allowance for doubtful accounts:
 
 
 
Customer
76.7

 
73.0

Unbilled utility revenues
64.6

 
92.3

Other
30.8

 
33.1

Production fuel, at weighted average cost
26.3

 
28.0

Materials and supplies, at weighted average cost
29.8

 
28.9

Gas stored underground, at weighted average cost
20.7

 
19.7

Regulatory assets
24.4

 
25.4

Other
113.7

 
101.7

Total current assets
389.3

 
402.6

Investments:
 
 
 
Investment in American Transmission Company LLC
285.6

 
272.1

Other
19.0

 
19.5

Total investments
304.6

 
291.6

Other assets:
 
 
 
Regulatory assets
273.1

 
274.3

Deferred charges and other
38.5

 
54.3

Total other assets
311.6

 
328.6

Total assets

$4,906.5

 

$4,804.4


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

14

Table of Contents


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Continued)

 
September 30,
2014
 
December 31,
2013
 
(in millions, except per
share and share amounts)
CAPITALIZATION AND LIABILITIES
 
Capitalization:
 
 
 
Wisconsin Power and Light Company common equity:
 
 
 
Common stock - $5 par value - 18,000,000 shares authorized; 13,236,601 shares outstanding

$66.2

 

$66.2

Additional paid-in capital
959.0

 
959.0

Retained earnings
679.1

 
617.2

Total Wisconsin Power and Light Company common equity
1,704.3

 
1,642.4

Noncontrolling interest
7.1

 

Total equity
1,711.4

 
1,642.4

Long-term debt, net (excluding current portion)
1,293.4

 
1,323.6

Total capitalization
3,004.8

 
2,966.0

Current liabilities:
 
 
 
Current maturities of long-term debt
30.6

 
8.5

Commercial paper
146.7

 
183.7

Accounts payable
118.1

 
120.0

Accounts payable to associated companies
32.4

 
26.0

Regulatory liabilities
76.4

 
52.8

Other
54.8

 
60.5

Total current liabilities
459.0

 
451.5

Other long-term liabilities and deferred credits:
 
 
 
Deferred income tax liabilities
951.7

 
897.1

Regulatory liabilities
177.2

 
153.8

Capital lease obligations - Sheboygan Falls Energy Facility
90.7

 
94.5

Pension and other benefit obligations
84.3

 
88.4

Other
138.8

 
153.1

Total long-term liabilities and deferred credits
1,442.7

 
1,386.9

Commitments and contingencies (Note 14)


 


Total capitalization and liabilities

$4,906.5

 

$4,804.4


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Table of Contents


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2014
 
2013
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$151.0

 

$139.3

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
135.0

 
129.0

Other amortizations
36.1

 
21.9

Deferred taxes and investment tax credits
58.4

 
71.6

Equity income from unconsolidated investments
(34.2
)
 
(32.7
)
Distributions from equity method investments
27.2

 
26.6

Other
(7.3
)
 
(5.4
)
Other changes in assets and liabilities:
 
 
 
Accounts receivable
27.8

 
28.0

Regulatory assets
(28.2
)
 
(4.6
)
Derivative assets
(32.8
)
 
3.4

Regulatory liabilities
46.3

 
(6.6
)
Other
(13.5
)
 
(14.3
)
Net cash flows from operating activities
365.8

 
356.2

Cash flows used for investing activities:
 
 
 
Utility construction and acquisition expenditures
(229.2
)
 
(250.1
)
Other
(4.6
)
 
(2.3
)
Net cash flows used for investing activities
(233.8
)
 
(252.4
)
Cash flows used for financing activities:
 
 
 
Common stock dividends
(89.1
)
 
(87.2
)
Payments to redeem cumulative preferred stock

 
(61.0
)
Net change in commercial paper
(37.0
)
 
56.8

Other
(4.1
)
 
(6.5
)
Net cash flows used for financing activities
(130.2
)
 
(97.9
)
Net increase in cash and cash equivalents
1.8

 
5.9

Cash and cash equivalents at beginning of period
0.5

 
0.7

Cash and cash equivalents at end of period

$2.3

 

$6.6

Supplemental cash flows information:
 
 
 
Cash paid (refunded) during the period for:
 
 
 
Interest

$65.6

 

$65.9

Income taxes, net of refunds

$8.7

 

($0.6
)
Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$39.9

 

$39.2


The accompanying Combined Notes to Condensed Consolidated Financial Statements are an integral part of these statements.

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Table of Contents


ALLIANT ENERGY CORPORATION
INTERSTATE POWER AND LIGHT COMPANY
WISCONSIN POWER AND LIGHT COMPANY

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General - The interim unaudited Financial Statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. These Financial Statements should be read in conjunction with the financial statements and the notes thereto included in the latest combined Annual Report on Form 10-K.

In the opinion of management, all adjustments, which unless otherwise noted are normal and recurring in nature, necessary for a fair presentation of the results of operations, financial position and cash flows have been made. Results for the nine months ended September 30, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014. A change in management’s estimates or assumptions could have a material impact on financial condition and results of operations during the period in which such change occurred. Certain prior period amounts in the Financial Statements and Notes have been reclassified to conform to the current period presentation for comparative purposes. Unless otherwise noted, the Notes herein exclude discontinued operations for all periods presented.

(b) New Accounting Pronouncements -
Revenue Recognition - In May 2014, FASB issued an accounting standard providing principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard also requires disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Alliant Energy, IPL and WPL are required to adopt this standard on January 1, 2017 and are currently evaluating the impact on their financial condition and results of operations.

Discontinued Operations - In April 2014, FASB issued an accounting standard that changes the criteria for reporting and qualifying for discontinued operations. Under the new standard, a disposal of a component or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has, or will have, a major effect on an entity’s operational and financial results. The new standard also requires additional disclosures about discontinued operations and individually significant components of an entity that are disposed of or that are classified as held for sale and do not qualify for discontinued operations. Alliant Energy, IPL and WPL are required to apply the new standard to all prospective disposals subsequent to December 31, 2014. Alliant Energy and IPL are currently evaluating the impact of the new standard on IPL’s anticipated sales of its Minnesota electric and natural gas distribution assets. Early adoption is permitted for disposals that have not been previously classified as held for sale.

(2) REGULATORY MATTERS
Regulatory Assets and Regulatory Liabilities -
Regulatory assets were comprised of the following items (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
Tax-related

$937.6

 

$829.7

 

$910.6

 

$798.6

 

$27.0

 

$31.1

Pension and OPEB costs
345.4

 
355.3

 
170.2

 
174.2

 
175.2

 
181.1

AROs
74.6

 
65.7

 
43.1

 
36.7

 
31.5

 
29.0

Emission allowances
28.0

 
30.0

 
28.0

 
30.0

 

 

Environmental-related costs
26.6

 
25.0

 
22.0

 
21.0

 
4.6

 
4.0

Derivatives
23.3

 
21.1

 
17.7

 
5.9

 
5.6

 
15.2

Other
88.8

 
86.4

 
35.2

 
47.1

 
53.6

 
39.3

 

$1,524.3

 

$1,413.2

 

$1,226.8

 

$1,113.5

 

$297.5

 

$299.7



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Table of Contents


Regulatory liabilities were comprised of the following items (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
 
September 30,
2014
 
December 31,
2013
Cost of removal obligations

$422.7

 

$418.9

 

$280.9

 

$277.7

 

$141.8

 

$141.2

IPL’s tax benefit riders
266.3

 
265.4

 
266.3

 
265.4

 

 

Energy efficiency cost recovery
67.5

 
52.7

 
8.6

 
9.3

 
58.9

 
43.4

Derivatives
41.2

 
7.2

 
8.4

 
3.6

 
32.8

 
3.6

IPL’s electric transmission cost recovery
14.1

 
14.6

 
14.1

 
14.6

 

 

IPL’s electric transmission assets sale
13.7

 
21.6

 
13.7

 
21.6

 

 

Other
51.3

 
41.1

 
31.2

 
22.7

 
20.1

 
18.4

 

$876.8

 

$821.5

 

$623.2

 

$614.9

 

$253.6

 

$206.6


Tax-related - Alliant Energy’s and IPL’s tax-related regulatory assets are generally impacted by certain property-related differences at IPL for which deferred tax is not recorded in the income statement pursuant to Iowa rate-making principles. Deferred tax amounts for such property-related differences at IPL are recorded to regulatory assets, along with the necessary revenue requirement tax gross-ups. During the nine months ended September 30, 2014, Alliant Energy’s and IPL’s tax-related regulatory assets increased primarily due to property-related differences for qualifying repair expenditures and tax accounting method changes in 2014 for cost of removal expenditures and generation repair expenditures at IPL. The increase related to the tax accounting method changes was offset by increased regulatory liabilities as discussed below in “IPL’s tax benefit riders.”

Derivatives - Refer to Note 13 for discussion of derivative assets and derivative liabilities.

IPL’s tax benefit riders - IPL’s tax benefit riders utilize regulatory liabilities to credit bills of IPL’s Iowa retail electric and gas customers to help offset the impact of rate increases on such customers. These regulatory liabilities are related to tax benefits from tax accounting method changes for repairs expenditures, allocation of mixed service costs and allocation of insurance proceeds from floods in 2008. For the nine months ended September 30, 2014, Alliant Energy and IPL utilized “IPL’s tax benefit riders” regulatory liabilities to credit IPL’s Iowa retail electric and gas customers’ bills as follows (in millions):
Electric tax benefit rider

$64

Gas tax benefit rider
9

 

$73


In 2013, the U.S. Department of the Treasury issued tangible property regulations clarifying the tax treatment of costs incurred to acquire, maintain or improve tangible property and to retire and remove depreciable property. The regulations clarified the ability to deduct cost of removal expenditures on partial dispositions of assets. In 2014, the IRS issued implementation guidance related to these tangible property regulations, which allowed companies to file a tax accounting method change to deduct cost of removal expenditures on partial dispositions that were previously capitalized. During the second quarter of 2014, Alliant Energy, IPL and WPL implemented this tax accounting method change, which will result in the inclusion of additional tax deductions on Alliant Energy’s U.S. federal income tax return for the calendar year 2014. In 2013, the IRS also issued guidance that clarified acceptable units of property to be used when assessing whether costs incurred for electric generation projects may be deducted as repair expenditures or if they must be capitalized. After assessing the guidance, Alliant Energy, IPL and WPL decided in the third quarter of 2014 to implement the new units of property by filing a tax accounting method change as part of Alliant Energy’s U.S. federal income tax return for the calendar year 2013. IPL currently anticipates crediting its related tax benefits from these two tax accounting method changes to its Iowa retail electric and gas customers in the future, and as a result, Alliant Energy and IPL recorded an increase of $74 million to IPL’s tax benefit riders regulatory liabilities and IPL’s tax-related regulatory assets during the nine months ended September 30, 2014.

Refer to Note 9 for additional details regarding the tax benefit riders.


18

Table of Contents


Utility Rate Cases -
WPL’s Wisconsin Retail Electric and Gas Rate Case (2015/2016 Test Period) - In July 2014, WPL received an order from the PSCW authorizing WPL to implement its retail base rate filing as requested. The order is based on a forward-looking test period that includes 2015 and 2016 and authorizes WPL to maintain customer base rates for its retail electric customers at their current levels through the end of 2016. The retail electric base rate case included a return of and a return on costs for emission controls projects at Columbia Units 1 and 2 and Edgewater Unit 5, generation performance and reliability improvements at Columbia Units 1 and 2, other ongoing capital expenditures, and an increase in electric transmission service expense. The additional revenue requirement for these cost increases was offset by the impact of changes in the amortization of regulatory liabilities associated with energy efficiency cost recoveries and increased sales volumes. The order also authorizes WPL to implement a $5 million decrease in annual base rates for its retail gas customers effective January 1, 2015 followed by a freeze of such gas base rates through the end of 2016.

IPL’s Iowa Retail Electric Rate Case (2013 Test Year) - In September 2014, the IUB approved IPL’s settlement agreement as requested. The settlement agreement extends IPL’s Iowa retail electric base rate freeze through 2016 and provides retail electric customer billing credits of $105 million in aggregate, including targeting $70 million in 2014 (beginning May 2014), $25 million in 2015 and $10 million in 2016. For the three and nine months ended September 30, 2014, IPL recorded $26 million and $46 million, respectively, of such billing credits to reduce retail electric customers’ bills.

IPL’s Iowa Retail Electric Rate Case (2009 Test Year) -
Electric Tax Benefit Rider - In 2013, the IUB authorized IPL to reduce the electric tax benefit rider billing credits on customers’ bills by $24 million in 2013 and $15 million in 2014 to recognize the revenue requirement impact of the changes in tax accounting methods. For the three and nine months ended September 30, the revenue requirement adjustment recognized by both Alliant Energy and IPL is included in the table below (in millions). The revenue requirement adjustment resulted in increases to electric revenues in their income statements and was recognized through the energy adjustment clause as a reduction of the credits on IPL’s Iowa retail electric customers’ bills from the electric tax benefit rider.
 
Three Months
 
Nine Months
 
2014
 
2013
 
2014
 
2013
Revenue requirement adjustment

$4

 

$7

 

$11

 

$18


WPL’s Retail Fuel-related Rate Filing (2015 Test Year) - In June 2014, WPL filed a request with the PSCW to increase annual rates for WPL’s retail electric customers by $55 million, or approximately 5%, in 2015. The increase includes $41 million of anticipated increases in the retail share of electric fuel-related costs in 2015 attributable to $28 million for higher retail electric fuel-related costs per MWh anticipated in 2015 and $13 million from the impact of increased sales volumes approved in the retail electric base rate case for 2015. In addition, WPL’s request includes $14 million to recover a portion of the under-collection of fuel-related costs projected for 2014. Any rate changes granted from this request are expected to be effective on January 1, 2015. WPL currently expects a decision from the PSCW regarding this rate filing by the end of 2014.

WPL’s Retail Fuel-related Rate Filing (2014 Test Year) - In December 2013, WPL received an order from the PSCW authorizing an annual retail electric rate increase of $19 million, or approximately 2%, effective January 1, 2014 to reflect anticipated increases in retail fuel-related costs in 2014 compared to the fuel-related cost estimates used to determine rates for 2013. WPL’s 2014 fuel-related costs will be subject to deferral if they fall outside an annual bandwidth of plus or minus 2% of the approved annual forecasted fuel-related costs. Retail fuel-related costs incurred by WPL through September 30, 2014 were higher than fuel-related costs used to determine rates for such period resulting in an under-collection of fuel-related costs during the nine months ended September 30, 2014. As of September 30, 2014, Alliant Energy and WPL recorded $21 million in “Regulatory assets” on their balance sheets for fuel-related costs incurred during the nine months ended September 30, 2014 that are expected to fall outside the approved bandwidth of plus or minus 2% for 2014. The $21 million of deferred fuel-related costs is included in “Other” in Alliant Energy’s and WPL’s regulatory assets tables above.

(3) PROPERTY, PLANT AND EQUIPMENT
Emission Controls Projects -
IPL’s George Neal Unit 3 - Construction of the scrubber and baghouse at George Neal Unit 3 was completed in May 2014, which resulted in a transfer of the capitalized project costs from “Construction work in progress” to “Electric plant” on Alliant Energy’s and IPL’s balance sheets in 2014. As of September 30, 2014, the capitalized project costs consisted of capital expenditures of $59 million and AFUDC of $4 million for IPL’s allocated portion of the George Neal Unit 3 scrubber and baghouse.


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IPL’s Ottumwa Unit 1 - IPL is currently constructing a scrubber and baghouse at Ottumwa Unit 1 to reduce SO2 and mercury emissions at the EGU. Construction began in 2012 and is expected to be completed in 2014. As of September 30, 2014, Alliant Energy and IPL recorded capitalized expenditures of $151 million and AFUDC of $18 million for IPL’s allocated portion of the scrubber and baghouse in “Construction work in progress” on their balance sheets.

WPL’s Columbia Units 1 and 2 - Construction of the scrubbers and baghouses at Columbia Units 1 and 2 was completed in July 2014 and April 2014, respectively, which resulted in a transfer of the capitalized project costs from “Construction work in progress” to “Electric plant” on Alliant Energy’s and WPL’s balance sheets in 2014. As of September 30, 2014, the capitalized project costs consisted of capital expenditures of $272 million and AFUDC of $15 million for WPL’s allocated portion of the Columbia Units 1 and 2 scrubbers and baghouses.

WPL’s Edgewater Unit 5 - WPL is currently constructing a scrubber and baghouse at Edgewater Unit 5 to reduce SO2 and mercury emissions at the EGU. Construction began in 2014 and is expected to be completed in 2016. As of September 30, 2014, Alliant Energy and WPL recorded capitalized expenditures of $67 million and AFUDC of $2 million for the scrubber and baghouse in “Construction work in progress” on their balance sheets.

Natural Gas-Fired Generation Project -
IPL’s Marshalltown Generating Station - IPL is currently constructing Marshalltown, an approximate 650 MW natural gas-fired combined-cycle EGU. Construction began in 2014 and is expected to be completed in 2017. As of September 30, 2014, Alliant Energy and IPL recorded capitalized expenditures of $120 million and AFUDC of $2 million for Marshalltown in “Construction work in progress” on their balance sheets.

Anticipated Sale of IPL’s Minnesota Natural Gas Distribution Assets - In November 2014, the MPUC issued an oral decision approving the proposed sale of IPL’s Minnesota natural gas distribution assets. IPL currently expects to complete the sale by March 31, 2015 pending receipt of a final order from the MPUC and completion of various other contingencies. Proceeds from the sale of the natural gas distribution assets, which approximate the carrying value of such assets, are expected to be approximately $10 million, subject to customary closing adjustments. As of September 30, 2014, IPL’s assets and liabilities included in the sale agreement did not meet the criteria to be classified as held for sale due to uncertainties in the regulatory approval process that existed on such date. The operating results of IPL’s Minnesota natural gas distribution business also did not qualify as discontinued operations as of September 30, 2014.

(4) RECEIVABLES
(a) Sales of Accounts Receivable - IPL maintains a Receivables Agreement whereby it may sell its customer accounts receivables, unbilled revenues and certain other accounts receivables to a third party through wholly-owned and consolidated special purpose entities. The transfers of receivables meet the criteria for sale accounting established by the transfer of financial assets accounting rules. In March 2014, IPL extended through March 2016 the purchase commitment from the third party to which it sells its receivables. In exchange for the receivables sold, cash proceeds are received from the third party, and deferred proceeds are recorded in accounts receivable on Alliant Energy’s and IPL’s balance sheets.

As of September 30, 2014 and December 31, 2013, IPL sold $203.7 million and $238.0 million aggregate amounts of receivables, respectively. Maximum and average outstanding cash proceeds, and costs incurred related to the sales of accounts receivable program for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2014
 
2013
 
2014
 
2013
Maximum outstanding aggregate cash proceeds (based on daily outstanding balances)

$92.0

 

$155.0

 

$92.0

 

$170.0

Average outstanding aggregate cash proceeds (based on daily outstanding balances)
54.5

 
132.7

 
38.9

 
132.5

Costs incurred
0.2

 
0.3

 
0.6

 
1.0



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The attributes of IPL’s receivables sold under the Receivables Agreement were as follows (in millions):
 
September 30, 2014
 
December 31, 2013
Customer accounts receivable

$142.6

 

$151.6

Unbilled utility revenues
60.7

 
86.2

Other receivables
0.4

 
0.2

Receivables sold
203.7

 
238.0

Less: cash proceeds (a)
38.0

 
29.0

Deferred proceeds
165.7

 
209.0

Less: allowance for doubtful accounts
5.4

 
5.5

Fair value of deferred proceeds

$160.3

 

$203.5

Outstanding receivables past due

$17.8

 

$21.5


(a)
Changes in cash proceeds are presented in “Accounts receivable” in operating activities in Alliant Energy’s and IPL’s cash flows statements.

Additional attributes of IPL’s receivables sold under the Receivables Agreement for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2014
 
2013
 
2014
 
2013
Collections reinvested in receivables

$520.1

 

$481.1

 

$1,537.3

 

$1,407.4

Credit losses, net of recoveries
6.4

 
3.9

 
12.8

 
7.8


(b) Whiting Petroleum Tax Sharing Agreement - Prior to an IPO of Whiting Petroleum in 2003, Alliant Energy and Whiting Petroleum entered into a tax separation and indemnification agreement pursuant to which Alliant Energy and Whiting Petroleum made certain tax elections. These tax elections had the effect of increasing the tax basis of the assets of Whiting Petroleum’s consolidated tax group based on the sales price of Whiting Petroleum’s shares in the IPO. The increase in the tax basis of the assets was included in income in Alliant Energy’s U.S. federal income tax return for the calendar year 2003. Pursuant to the tax separation and indemnification agreement, Whiting Petroleum paid Resources the final payment of $26 million in March 2014, which represented the present value of certain future tax benefits expected to be realized by Whiting Petroleum through future tax deductions. The final payment resulted in a decrease in “Prepayments and other” on Alliant Energy’s balance sheet in 2014. The $26 million received by Alliant Energy is presented in operating activities in its cash flows statement for the nine months ended September 30, 2014.

(5) INVESTMENTS
Unconsolidated Equity Investments - Equity (income) loss from unconsolidated investments accounted for under the equity method of accounting for the three and nine months ended September 30 was as follows (in millions):
 
Alliant Energy
 
WPL
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013