COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General -
The interim unaudited condensed consolidated financial statements included herein have been prepared by Alliant Energy, IPL and WPL 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
accounting principles generally accepted in the U.S. (GAAP)
have been condensed or omitted, although management believes that the disclosures are adequate to make the information presented not misleading. Alliant Energy’s condensed consolidated financial statements include the accounts of Alliant Energy and its consolidated subsidiaries (including IPL, WPL, Resources and
Alliant Energy Corporate Services, Inc. (Corporate Services)
). IPL’s condensed consolidated financial statements include the accounts of IPL and its consolidated subsidiary. WPL’s condensed consolidated financial statements include the accounts of WPL and its consolidated subsidiary. These financial statements should be read in conjunction with the financial statements and the notes thereto included in Alliant Energy’s, IPL’s and WPL’s 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 condensed consolidated results of operations for the
three and six months ended June 30, 2013 and 2012
, the condensed consolidated financial position at
June 30, 2013
and
December 31, 2012
, and the condensed consolidated statements of cash flows for the
six months ended June 30, 2013 and 2012
have been made. Results for the
six
months ended
June 30, 2013
are not necessarily indicative of results that may be expected for the year ending
December 31, 2013
. A change in management’s estimates or assumptions could have a material impact on Alliant Energy’s, IPL’s and WPL’s respective financial condition and results of operations during the period in which such change occurred. Certain prior period amounts in the Condensed Consolidated Financial Statements and Combined Notes to Condensed Consolidated Financial Statements have been reclassified to conform to the current period presentation for comparative purposes. Unless otherwise noted, the notes herein have been revised to exclude discontinued operations and assets and liabilities held for sale for all periods presented.
(b) Regulatory Assets and Regulatory Liabilities -
Regulatory assets were comprised of the following items (in millions):
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Alliant Energy
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IPL
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WPL
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June 30, 2013
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December 31, 2012
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June 30, 2013
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December 31, 2012
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June 30, 2013
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December 31, 2012
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Tax-related
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$793.1
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$770.7
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$768.2
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$746.2
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$24.9
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$24.5
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Pension and other postretirement benefits costs
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533.2
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549.2
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271.7
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279.3
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261.5
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269.9
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Asset retirement obligations (AROs)
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66.6
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62.4
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39.2
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38.6
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27.4
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23.8
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Derivatives
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37.1
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40.2
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10.0
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16.3
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27.1
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23.9
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Environmental-related costs
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31.5
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34.9
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27.2
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30.3
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4.3
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4.6
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Emission allowances
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30.0
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30.0
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30.0
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30.0
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—
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—
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Other
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120.6
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125.0
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77.9
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77.2
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42.7
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47.8
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$1,612.1
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$1,612.4
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$1,224.2
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$1,217.9
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$387.9
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$394.5
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Regulatory liabilities were comprised of the following items (in millions):
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Alliant Energy
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IPL
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WPL
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June 30, 2013
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December 31, 2012
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June 30, 2013
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December 31, 2012
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June 30, 2013
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December 31, 2012
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Cost of removal obligations
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$412.8
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$408.7
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$273.1
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$268.0
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$139.7
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$140.7
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IPL’s tax benefit riders
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313.0
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355.8
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313.0
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355.8
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—
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—
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Energy conservation cost recovery
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62.1
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55.1
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16.7
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10.0
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45.4
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45.1
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IPL’s electric transmission assets sale
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27.1
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32.5
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27.1
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32.5
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—
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—
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Commodity cost recovery
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25.0
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17.7
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7.4
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5.2
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17.6
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12.5
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Other
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58.1
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46.3
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35.1
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29.9
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23.0
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16.4
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$898.1
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$916.1
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$672.4
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$701.4
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$225.7
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$214.7
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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 are recorded to regulatory assets, along with the necessary revenue requirement tax gross-ups. During the
six months ended June 30
,
2013
, Alliant Energy’s and IPL’s tax-related regulatory assets increased primarily due to qualifying repair expenditures at IPL.
IPL’s tax benefit riders -
Alliant Energy’s and IPL’s “IPL’s tax benefit riders” regulatory liabilities in the above table decreased
$43 million
during the
six months ended June 30
,
2013
due to the following items:
Electric tax benefit rider
- In January 2011, the
Iowa Utilities Board (IUB)
approved an electric tax benefit rider proposed by IPL, which utilizes regulatory liabilities to credit bills of Iowa retail electric customers beginning in February 2011 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. IPL utilized
$38 million
of regulatory liabilities to credit Iowa retail electric customers’ bills during the
six months ended June 30
,
2013
.
Gas tax benefit rider
- In November 2012, the IUB approved a gas tax benefit rider proposed by IPL, which utilizes regulatory liabilities to credit bills of Iowa retail gas customers beginning in January 2013 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. IPL utilized
$5 million
of regulatory liabilities to credit Iowa retail gas customers’ bills during the
six months ended June 30
,
2013
.
Refer to
Note 4
for additional details regarding IPL’s tax benefit riders.
Other -
Based on the
Public Service Commission of Wisconsin’s (PSCW’s)
July 2012 order related to WPL’s 2013/2014 test period Wisconsin retail electric and gas rate case, WPL was authorized to recover previously incurred costs associated with the acquisition of a
25%
ownership interest in Edgewater Unit 5 and proposed clean air compliance plan projects. As a result, Alliant Energy and WPL recorded a
$5 million
increase to regulatory assets, and a
$5 million
credit to “Utility - Other operation and maintenance” in their Condensed Consolidated Statements of Income in the second quarter of 2012.
(c) Comprehensive Income -
For the
three and six
months ended
June 30, 2013
and
2012
, Alliant Energy had no other comprehensive income; therefore, its comprehensive income was equal to its net income and its comprehensive income attributable to Alliant Energy common shareowners was equal to its net income attributable to Alliant Energy common shareowners for such periods. For the
three and six
months ended
June 30, 2013
and
2012
, IPL and WPL had no other comprehensive income; therefore, their comprehensive income was equal to their net income and their comprehensive income available for common stock was equal to their earnings available for common stock for such periods.
(2) UTILITY RATE CASES
WPL’s Wisconsin Retail Electric and Gas Rate Case (2013/2014 Test Period)
- In July 2012, WPL received an order from the PSCW authorizing WPL to implement a decrease in annual base rates for WPL’s retail gas customers of
$13 million
effective January 1, 2013 followed by a freeze of such gas base rates through the end of 2014. The order also authorized WPL to maintain customer base rates for its retail electric customers at their current levels through the end of 2014. The order included provisions that require WPL to defer a portion of its earnings if its annual return on common equity exceeds certain levels during the test period and allows WPL to request a change in retail base rates during the test period if its annual return on common equity falls below a certain level. As of
June 30, 2013
, WPL did not record any deferred amounts for these provisions.
IPL’s Iowa Retail Gas Rate Case (2011 Test Year)
-
In May 2012, IPL filed a request with the IUB to increase annual rates for its Iowa retail gas customers. IPL’s request included a proposal to reduce customer bills utilizing a gas tax benefit rider over a
three
-year period by approximately
$36 million
in aggregate. In conjunction with the filing, IPL implemented an interim retail gas rate increase of
$9 million
, or approximately
3%
, on an annual basis, effective June 4, 2012. In November 2012, the IUB approved a settlement agreement between IPL, the
Iowa Office of Consumer Advocate (OCA)
and the Iowa Consumers Coalition related to IPL’s request, resulting in a final increase in annual rates for IPL’s Iowa retail gas customers of
$11 million
, or approximately
4%
, effective January 10, 2013. The parties and the IUB also agreed to IPL’s proposed gas tax benefit rider. Refer to
Note 1
(b) for additional details on IPL’s gas tax benefit rider.
IPL’s Iowa Retail Electric Rate Case (2009 Test Year)
- In February 2013, the IUB issued an order allowing IPL to recognize a revenue requirement adjustment of
$24 million
for the year ended December 31, 2013 related to certain tax benefits from tax accounting method changes. The revenue requirement adjustment is 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. For the three and
six months ended June 30
,
2013
, Alliant Energy and IPL recognized
$5 million
and
$11 million
, respectively, of the revenue requirement adjustment resulting in increases to electric revenues on their Condensed Consolidated Statements of Income.
WPL’s Retail Fuel-related Rate Filing (2014 Test Year)
-
In July 2013, WPL filed a request with the PSCW to increase annual rates for WPL’s retail electric customers by
$31 million
, or approximately
3%
, to reflect anticipated increases in retail electric production fuel and energy purchases costs (fuel-related costs) in 2014.
WPL’s Retail Fuel-related Rate Filing (2013 Test Year)
- In December 2012, WPL received an order from the PSCW authorizing an annual retail electric rate decrease of
$29 million
, or approximately
3%
, effective January 1, 2013 to reflect anticipated decreases in retail fuel-related costs in 2013 compared to the fuel-related cost estimates used to determine rates for 2012. WPL’s 2013 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.
(3) RECEIVABLES
(a) Sales of Accounts Receivable -
IPL maintains a
Receivables Purchase and Sale Agreement (Agreement)
whereby it may sell its customer accounts receivables, unbilled revenues and certain other accounts receivables to a third-party financial institution through wholly-owned and consolidated special purpose entities. In exchange for the receivables sold, IPL receives cash proceeds from the third-party financial institution (based on seasonal limits up to
$180 million
, including
$150 million
as of June 30, 2013), and deferred proceeds recorded in “Accounts receivable” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets.
As of
June 30, 2013
and
December 31, 2012
, IPL sold
$206.3 million
and
$198.4 million
aggregate amounts of receivables, respectively. IPL’s maximum and average outstanding cash proceeds, and costs incurred related to the sales of accounts receivable program for the
three and six
months ended
June 30
were as follows (in millions):
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Three Months
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Six Months
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2013
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2012
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2013
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2012
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Maximum outstanding aggregate cash proceeds (based on daily outstanding balances)
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$150.0
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$150.0
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$170.0
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$160.0
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Average outstanding aggregate cash proceeds (based on daily outstanding balances)
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125.6
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|
135.1
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132.4
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139.0
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Costs incurred
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0.4
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|
0.3
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|
0.7
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|
0.7
|
The attributes of IPL’s receivables sold under the Agreement were as follows (in millions):
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June 30, 2013
|
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December 31, 2012
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Customer accounts receivable
|
$128.2
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$118.2
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Unbilled utility revenues
|
78.0
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|
77.4
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Other receivables
|
0.1
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|
2.8
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Receivables sold
|
206.3
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198.4
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Less: cash proceeds (a)
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135.0
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130.0
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Deferred proceeds
|
71.3
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|
68.4
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Less: allowance for doubtful accounts
|
2.0
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|
1.6
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Fair value of deferred proceeds
|
$69.3
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$66.8
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Outstanding receivables past due
|
$19.1
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$16.1
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(a)
|
Changes in cash proceeds are recorded in “Sales of accounts receivable” in operating activities in Alliant Energy’s and IPL’s Condensed Consolidated Statements of Cash Flows.
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Additional attributes of IPL’s receivables sold under the Agreement for the
three and six
months ended
June 30
were as follows (in millions):
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Three Months
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Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Collections reinvested in receivables
|
$435.0
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$369.5
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$926.3
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$811.8
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Credit losses, net of recoveries
|
2.0
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2.2
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3.9
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4.3
|
(b) Franklin County Wind Project Cash Grant
- In accordance with the American Recovery and Reinvestment Act of 2009, Alliant Energy filed an application with the U.S. Department of the Treasury in February 2013 requesting a cash grant for a portion of the qualifying project expenditures of the Franklin County wind project that was placed into service in December 2012. In March 2013, Alliant Energy received the proceeds from the cash grant, resulting in a
$62.4 million
decrease in “Accounts receivable - other” on its Condensed Consolidated Balance Sheets during the
six months ended June 30
, 2013. The grant proceeds were used by Alliant Energy to reduce short-term borrowings incurred during the construction of the wind project.
(4) INCOME TAXES
Income Tax Rates
-
The provision for income taxes for earnings from continuing operations is based on an estimated annual effective income tax rate that excludes the impact of significant unusual or infrequently occurring items, discontinued operations or extraordinary items. The effective income tax rates for Alliant Energy, IPL and WPL differ from the federal statutory rate of
35%
generally due to effects of enacted tax legislation, utility rate-making, including IPL’s tax benefit riders, tax credits, state income taxes and certain non-deductible expenses. Changes in state apportionment rates caused by the planned sale of Alliant Energy’s RMT business also impacted the effective income tax rates for the
six months ended June 30
, 2012 for Alliant Energy, IPL and WPL. The effective income tax rates shown in the following table for the
three and six
months ended
June 30
were computed by dividing income tax expense (benefit) by income from continuing operations before income taxes.
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Three Months
|
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Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Alliant Energy
|
13.3
|
%
|
|
19.5
|
%
|
|
13.0
|
%
|
|
28.3
|
%
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IPL
|
(24.7
|
%)
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(12.0
|
%)
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(24.3
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%)
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22.6
|
%
|
WPL
|
33.1
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%
|
|
34.6
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%
|
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32.5
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%
|
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39.4
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%
|
State apportionment change due to planned sale of RMT -
Alliant Energy, IPL and WPL utilize state apportionment projections to record their deferred tax assets and liabilities each reporting period. Deferred tax assets and liabilities for temporary differences between the tax basis of assets and liabilities and the amounts reported in the condensed consolidated financial statements are recorded utilizing currently enacted tax rates and estimates of future state apportionment rates expected to be in effect at the time the temporary differences reverse. These state apportionment projections are most significantly impacted by the estimated amount of revenues expected in the future from each state jurisdiction for Alliant Energy’s consolidated tax groups, including both its regulated and its non-regulated operations. In the first quarter of 2012,
Alliant Energy, IPL and WPL recorded
$15 million
,
$8 million
and
$7 million
, respectively, of deferred income tax expense due to changes in state apportionment projections caused by the planned sale of Alliant Energy’s RMT business. These income tax expense amounts recognized during the first quarter of 2012 increased Alliant Energy’s, IPL’s and WPL’s effective income tax rates for continuing operations for the
six months ended June 30
,
2012
by
9.7%
,
34.6%
and
6.2%
, respectively.
IPL’s tax benefit riders -
Alliant Energy’s and IPL’s effective income tax rates include the impact of reducing income tax expense with offsetting reductions to regulatory liabilities as a result of implementing the tax benefit riders. The tax impacts of the tax benefit riders decreased Alliant Energy’s and IPL’s effective income tax rates for continuing operations for the
three and six
months ended
June 30
as follows. Refer to
Note 1
(b) for additional details of IPL’s tax benefit riders.
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Three Months
|
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Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Alliant Energy
|
(11.7
|
%)
|
|
(11.7
|
%)
|
|
(12.3
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%)
|
|
(11.9
|
%)
|
IPL
|
(33.3
|
%)
|
|
(34.9
|
%)
|
|
(35.6
|
%)
|
|
(35.5
|
%)
|
Production tax credits -
Alliant Energy has
three
wind projects that are currently generating production tax credits: WPL’s
68
MW Cedar Ridge wind project, which began generating electricity in late 2008; IPL’s
200
MW Whispering Willow - East wind project, which began generating electricity in late 2009; and WPL’s
200
MW Bent Tree - Phase I wind project, which began generating electricity in late 2010. For the
three and six
months ended
June 30
, production tax credits (net of state tax impacts) resulting from these wind projects were as follows (in millions):
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Three Months
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Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Cedar Ridge (WPL)
|
|
$1.1
|
|
|
|
$1.0
|
|
|
|
$2.3
|
|
|
|
$2.3
|
|
Bent Tree - Phase I (WPL)
|
3.5
|
|
|
2.7
|
|
|
7.0
|
|
|
4.2
|
|
Subtotal (WPL)
|
4.6
|
|
|
3.7
|
|
|
9.3
|
|
|
6.5
|
|
Whispering Willow - East (IPL)
|
4.1
|
|
|
3.1
|
|
|
8.0
|
|
|
6.7
|
|
|
|
$8.7
|
|
|
|
$6.8
|
|
|
|
$17.3
|
|
|
|
$13.2
|
|
The tax impacts of the production tax credits decreased Alliant Energy’s, IPL’s and WPL’s effective income tax rates for continuing operations for the
three and six
months ended
June 30
as follows:
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|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Alliant Energy
|
(7.9
|
%)
|
|
(6.3
|
%)
|
|
(7.7
|
%)
|
|
(6.6
|
%)
|
IPL
|
(10.5
|
%)
|
|
(8.6
|
%)
|
|
(10.1
|
%)
|
|
(8.9
|
%)
|
WPL
|
(7.2
|
%)
|
|
(6.5
|
%)
|
|
(7.0
|
%)
|
|
(6.4
|
%)
|
Effect of rate-making on property-related differences -
Alliant Energy’s and IPL’s effective income tax rates are impacted by certain property-related differences for which deferred tax is not recognized in the income statement pursuant to rate-making principles, the majority of which relates to IPL. The tax impacts of the effect of rate-making on property-related differences decreased Alliant Energy’s and IPL’s effective income tax rates for continuing operations for the
three and six
months ended
June 30
as follows. The primary factor contributing to the increase in the current tax benefits recorded for the effect of rate-making on property-related differences during the
three and six
months ended
June 30, 2013
was repair expenditures at IPL.
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|
|
|
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Alliant Energy
|
(6.4
|
%)
|
|
(4.0
|
%)
|
|
(5.6
|
%)
|
|
(3.6
|
%)
|
IPL
|
(17.4
|
%)
|
|
(8.1
|
%)
|
|
(15.5
|
%)
|
|
(7.7
|
%)
|
Deferred Tax Assets and Liabilities
-
For the
six months ended June 30
,
2013
, Alliant Energy’s and WPL’s current deferred tax assets decreased
$27.9 million
and
$42.6 million
, respectively. These decreases were primarily due to a transfer of deferred tax assets from current deferred tax assets to non-current deferred tax liabilities during the
six months ended June 30
,
2013
caused by a decrease in the amount of federal net operating loss carryforwards expected to be utilized during the next 12 months. The decrease in the amount of net operating loss carryforwards expected to be utilized during the next 12 months was impacted by the extension of bonus depreciation deductions in the first quarter of 2013 with the enactment of the
American Taxpayer Relief Act of 2012 (ATR Act)
in January 2013.
For the
six months ended June 30
,
2013
, Alliant Energy’s and IPL’s non-current deferred tax liabilities increased
$56.9 million
and
$44.3 million
, respectively. These increases were primarily due to property-related differences resulting from bonus depreciation deductions and the effect of rate-making on property-related differences recorded during the
six months ended June 30
,
2013
, partially offset by the transfer of certain deferred tax assets discussed above.
Carryforwards -
At
June 30, 2013
, tax carryforwards and associated deferred tax assets and expiration dates were estimated as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
Carryforward
Amount
|
|
Deferred
Tax Assets
|
|
Earliest
Expiration Date
|
Federal net operating losses
|
|
$841
|
|
|
|
$289
|
|
|
2029
|
State net operating losses
|
795
|
|
|
42
|
|
|
2018
|
Federal tax credits
|
155
|
|
|
153
|
|
|
2022
|
|
|
|
|
$484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
Carryforward
Amount
|
|
Deferred
Tax Assets
|
|
Earliest
Expiration Date
|
Federal net operating losses
|
|
$385
|
|
|
|
$132
|
|
|
2029
|
State net operating losses
|
228
|
|
|
13
|
|
|
2018
|
Federal tax credits
|
47
|
|
|
46
|
|
|
2022
|
|
|
|
|
$191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WPL
|
Carryforward
Amount
|
|
Deferred
Tax Assets
|
|
Earliest
Expiration Date
|
Federal net operating losses
|
|
$342
|
|
|
|
$117
|
|
|
2029
|
State net operating losses
|
147
|
|
|
7
|
|
|
2018
|
Federal tax credits
|
50
|
|
|
49
|
|
|
2022
|
|
|
|
|
$173
|
|
|
|
Uncertain Tax Positions
- In 2013, statutes of limitations will expire for Alliant Energy’s, IPL’s and WPL’s tax returns in multiple state jurisdictions. The expiration of the statutes of limitations will not have any impact on Alliant Energy’s, IPL’s and WPL’s uncertain tax positions in 2013. As of
June 30, 2013
, Alliant Energy, IPL and WPL do not expect to have material changes to their unrecognized tax benefits during the next 12 months.
(5) BENEFIT PLANS
(a) Pension and Other Postretirement Benefits Plans -
Net Periodic Benefit Costs (Credits)
-
The components of net periodic benefit costs (credits) for Alliant Energy’s, IPL’s and WPL’s sponsored defined benefit pension and other postretirement benefits plans for the
three and six
months ended
June 30
are included in the tables below (in millions). In the “IPL” and “WPL” tables below, the defined benefit pension plans costs represent those respective costs for IPL’s and WPL’s bargaining unit employees covered under the qualified plans that are sponsored by IPL and WPL, respectively, as well as amounts directly assigned to each of IPL and WPL related to IPL’s and WPL’s current and former non-bargaining employees who are participants in the Alliant Energy and Corporate Services sponsored qualified and non-qualified defined benefit pension plans. In the “IPL” and “WPL” tables below, the other postretirement benefits plans costs (credits) represent costs (credits) for all IPL and WPL employees, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
Defined Benefit Pension Plans
|
|
Other Postretirement Benefits Plans
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Service cost
|
|
$4.0
|
|
|
|
$3.4
|
|
|
|
$7.9
|
|
|
|
$6.7
|
|
|
|
$1.6
|
|
|
|
$1.8
|
|
|
|
$3.2
|
|
|
|
$3.5
|
|
Interest cost
|
12.2
|
|
|
12.9
|
|
|
24.5
|
|
|
25.9
|
|
|
2.1
|
|
|
2.5
|
|
|
4.2
|
|
|
5.1
|
|
Expected return on plan assets
|
(18.5
|
)
|
|
(17.2
|
)
|
|
(37.0
|
)
|
|
(34.4
|
)
|
|
(2.0
|
)
|
|
(1.9
|
)
|
|
(4.0
|
)
|
|
(3.8
|
)
|
Amortization of prior service cost (credit)
|
—
|
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|
(2.9
|
)
|
|
(3.0
|
)
|
|
(5.9
|
)
|
|
(6.0
|
)
|
Amortization of actuarial loss
|
9.1
|
|
|
8.3
|
|
|
18.1
|
|
|
16.6
|
|
|
1.2
|
|
|
1.5
|
|
|
2.4
|
|
|
3.1
|
|
|
|
$6.8
|
|
|
|
$7.4
|
|
|
|
$13.6
|
|
|
|
$14.9
|
|
|
|
$—
|
|
|
|
$0.9
|
|
|
|
($0.1
|
)
|
|
|
$1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
Defined Benefit Pension Plans
|
|
Other Postretirement Benefits Plans
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Service cost
|
|
$2.1
|
|
|
|
$1.9
|
|
|
|
$4.3
|
|
|
|
$3.8
|
|
|
|
$0.7
|
|
|
|
$0.7
|
|
|
|
$1.4
|
|
|
|
$1.5
|
|
Interest cost
|
5.7
|
|
|
5.9
|
|
|
11.4
|
|
|
12.0
|
|
|
0.9
|
|
|
1.1
|
|
|
1.8
|
|
|
2.2
|
|
Expected return on plan assets
|
(8.8
|
)
|
|
(8.1
|
)
|
|
(17.6
|
)
|
|
(16.3
|
)
|
|
(1.4
|
)
|
|
(1.3
|
)
|
|
(2.8
|
)
|
|
(2.6
|
)
|
Amortization of prior service cost (credit)
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
(1.5
|
)
|
|
(1.6
|
)
|
|
(3.1
|
)
|
|
(3.2
|
)
|
Amortization of actuarial loss
|
3.8
|
|
|
3.5
|
|
|
7.6
|
|
|
7.0
|
|
|
0.7
|
|
|
0.9
|
|
|
1.4
|
|
|
1.8
|
|
|
|
$2.9
|
|
|
|
$3.3
|
|
|
|
$5.8
|
|
|
|
$6.6
|
|
|
|
($0.6
|
)
|
|
|
($0.2
|
)
|
|
|
($1.3
|
)
|
|
|
($0.3
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WPL
|
Defined Benefit Pension Plans
|
|
Other Postretirement Benefits Plans
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Service cost
|
|
$1.5
|
|
|
|
$1.3
|
|
|
|
$2.9
|
|
|
|
$2.6
|
|
|
|
$0.6
|
|
|
|
$0.7
|
|
|
|
$1.2
|
|
|
|
$1.4
|
|
Interest cost
|
5.1
|
|
|
5.4
|
|
|
10.3
|
|
|
10.8
|
|
|
0.9
|
|
|
1.1
|
|
|
1.7
|
|
|
2.1
|
|
Expected return on plan assets
|
(7.9
|
)
|
|
(7.4
|
)
|
|
(15.9
|
)
|
|
(14.8
|
)
|
|
(0.3
|
)
|
|
(0.4
|
)
|
|
(0.6
|
)
|
|
(0.7
|
)
|
Amortization of prior service cost (credit)
|
0.1
|
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
(1.0
|
)
|
|
(0.9
|
)
|
|
(2.0
|
)
|
|
(1.9
|
)
|
Amortization of actuarial loss
|
4.3
|
|
|
3.9
|
|
|
8.6
|
|
|
7.9
|
|
|
0.5
|
|
|
0.5
|
|
|
1.0
|
|
|
1.1
|
|
|
|
$3.1
|
|
|
|
$3.3
|
|
|
|
$6.1
|
|
|
|
$6.6
|
|
|
|
$0.7
|
|
|
|
$1.0
|
|
|
|
$1.3
|
|
|
|
$2.0
|
|
Corporate Services provides services to IPL and WPL and, as a result, IPL and WPL are allocated pension and other postretirement benefits costs (credits) associated with Corporate Services employees. The following table includes the allocated qualified and non-qualified pension and other postretirement benefits costs (credits) associated with Corporate Services employees providing services to IPL and WPL for the
three and six
months ended
June 30
(in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Benefits Costs
|
|
Other Postretirement Benefits Costs (Credits)
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
IPL
|
|
$0.5
|
|
|
|
$0.5
|
|
|
|
$1.0
|
|
|
|
$1.0
|
|
|
|
$—
|
|
|
|
$0.1
|
|
|
|
($0.1
|
)
|
|
|
$0.1
|
|
WPL
|
0.4
|
|
|
0.3
|
|
|
0.7
|
|
|
0.6
|
|
|
(0.1
|
)
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
Estimated Future and Actual Employer Contributions
-
Estimated and actual funding for the qualified and non-qualified defined benefit pension and other postretirement benefits plans for
2013
are as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated for Calendar Year 2013
|
|
Actual Through June 30, 2013
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
Defined benefit pension plans (a)
|
|
$2.4
|
|
|
|
$0.8
|
|
|
|
$0.2
|
|
|
|
$1.5
|
|
|
|
$0.5
|
|
|
|
$0.1
|
|
Other postretirement benefits plans
|
3.0
|
|
|
—
|
|
|
3.0
|
|
|
1.0
|
|
|
—
|
|
|
1.0
|
|
|
|
(a)
|
Alliant Energy sponsors several non-qualified defined benefit pension plans that cover certain current and former key employees of IPL and WPL. Alliant Energy allocates pension costs to IPL and WPL for these plans. In addition, IPL and WPL amounts reflect funding for their non-bargaining employees who are participants in the Alliant Energy and Corporate Services sponsored qualified and non-qualified defined benefit pension plans.
|
Cash Balance Plan
-
Refer to
Note 12
(c) for discussion of a class-action lawsuit filed against the Cash Balance Plan in 2008.
401(k) Savings Plans
-
A significant number of Alliant Energy, IPL and WPL employees participate in defined contribution retirement plans (401(k) savings plans). For the
three and six
months ended
June 30
, costs related to the 401(k) savings plans, which are partially based on the participants’ level of contribution, were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL (a)
|
|
WPL (a)
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
401(k) costs
|
|
$4.6
|
|
|
|
$4.5
|
|
|
|
$10.0
|
|
|
|
$9.7
|
|
|
|
$2.4
|
|
|
|
$2.3
|
|
|
|
$5.2
|
|
|
|
$5.0
|
|
|
|
$2.1
|
|
|
|
$1.9
|
|
|
|
$4.4
|
|
|
|
$4.2
|
|
|
|
(a)
|
IPL’s and WPL’s amounts include allocated costs associated with Corporate Services employees.
|
(b) Equity-based Compensation Plans -
A summary of compensation expense and the related income tax benefits recognized for share-based compensation awards for the
three and six
months ended
June 30
was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Compensation expense
|
|
$1.9
|
|
|
|
$2.1
|
|
|
|
$4.6
|
|
|
|
$3.7
|
|
|
|
$1.0
|
|
|
|
$1.1
|
|
|
|
$2.4
|
|
|
|
$1.9
|
|
|
|
$0.9
|
|
|
|
$0.9
|
|
|
|
$2.0
|
|
|
|
$1.6
|
|
Income tax benefits
|
0.8
|
|
|
0.9
|
|
|
1.9
|
|
|
1.5
|
|
|
0.4
|
|
|
0.5
|
|
|
1.0
|
|
|
0.8
|
|
|
0.3
|
|
|
0.3
|
|
|
0.8
|
|
|
0.6
|
|
As of
June 30, 2013
, total unrecognized compensation cost related to share-based compensation awards was
$10.8 million
, which is expected to be recognized over a weighted average period of between
1
and
2
years. Share-based compensation expense is recognized on a straight-line basis over the requisite service periods and is primarily recorded in “Utility - Other operation and maintenance” in the Condensed Consolidated Statements of Income.
Performance Shares and Units
-
Alliant Energy assumes it will make future payouts of its performance shares and units in cash; therefore, performance shares and units are accounted for as liability awards.
Performance Shares -
A summary of the performance shares activity was as follows:
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Shares (a)
|
|
Shares (a)
|
Nonvested shares, January 1
|
145,277
|
|
|
236,979
|
|
Granted
|
49,093
|
|
|
45,612
|
|
Vested (b)
|
(54,430
|
)
|
|
(111,980
|
)
|
Forfeited
|
—
|
|
|
(25,334
|
)
|
Nonvested shares, June 30
|
139,940
|
|
|
145,277
|
|
|
|
(a)
|
Share amounts represent the target number of performance shares. Each performance share’s value is based on the price of one share of Alliant Energy’s common stock at the end of the performance period. The actual number of shares that will be paid out upon vesting is dependent upon actual performance and may range from
zero
to
200%
of the target number of shares.
|
|
|
(b)
|
In the first quarter of 2013,
54,430
performance shares granted in 2010 vested at
197.5%
of the target, resulting in payouts valued at
$4.8 million
, which consisted of a combination of cash and common stock (
4,177
shares). In the first quarter of 2012,
111,980
performance shares granted in 2009 vested at
162.5%
of the target, resulting in payouts valued at
$8.0 million
, which consisted of a combination of cash and common stock (
6,399
shares).
|
Performance Units -
A summary of the performance unit activity was as follows:
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Units (a)
|
|
Units (a)
|
Nonvested units, January 1
|
64,969
|
|
|
42,996
|
|
Granted
|
22,201
|
|
|
24,686
|
|
Vested (b)
|
(19,760
|
)
|
|
—
|
|
Forfeited
|
(1,013
|
)
|
|
(878
|
)
|
Nonvested units, June 30
|
66,397
|
|
|
66,804
|
|
|
|
(a)
|
Unit amounts represent the target number of performance units. Each performance unit’s value is based on the closing price of one share of Alliant Energy’s common stock on the grant date of the award. The actual payout for performance units is dependent upon actual performance and may range from
zero
to
200%
of the target number of units.
|
|
|
(b)
|
In the first quarter of 2013,
19,760
performance units granted in 2010 vested at
197.5%
of the target, resulting in cash payouts valued at
$1.3 million
.
|
Fair Value of Awards -
Information related to fair values of nonvested performance shares and units at
June 30, 2013
by year of grant were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Performance Shares
|
|
Performance Units
|
|
2013 Grant
|
|
2012 Grant
|
|
2011 Grant
|
|
2013 Grant
|
|
2012 Grant
|
|
2011 Grant
|
Nonvested awards
|
49,093
|
|
|
45,612
|
|
|
45,235
|
|
|
22,201
|
|
|
23,392
|
|
|
20,804
|
|
Alliant Energy common stock closing price on June 30, 2013
|
|
$50.42
|
|
|
|
$50.42
|
|
|
|
$50.42
|
|
|
|
|
|
|
|
Alliant Energy common stock closing price on grant date
|
|
|
|
|
|
|
|
$47.58
|
|
|
|
$43.05
|
|
|
|
$38.75
|
|
Estimated payout percentage based on performance criteria
|
99
|
%
|
|
95
|
%
|
|
120
|
%
|
|
99
|
%
|
|
95
|
%
|
|
120
|
%
|
Fair values of each nonvested award
|
|
$49.92
|
|
|
|
$47.90
|
|
|
|
$60.50
|
|
|
|
$47.10
|
|
|
|
$40.90
|
|
|
|
$46.50
|
|
At
June 30, 2013
, fair values of nonvested performance shares and units were calculated using a Monte Carlo simulation to determine the anticipated total shareowner returns of Alliant Energy and its investor-owned utility peer groups. Expected volatility was based on historical volatilities using daily stock prices over the past three years. Expected dividend yields were calculated based on the most recent quarterly dividend rates announced prior to the measurement date and stock prices at the measurement date. The risk-free interest rate was based on the three-year U.S. Treasury rate in effect as of the measurement date.
Performance-contingent Restricted Stock
-
A summary of the performance-contingent restricted stock activity was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Shares
|
|
Weighted
Average
Fair Value
|
|
Shares
|
|
Weighted
Average
Fair Value
|
Nonvested shares, January 1
|
211,651
|
|
|
|
$32.42
|
|
|
301,738
|
|
|
|
$32.60
|
|
Granted
|
49,093
|
|
|
47.58
|
|
|
45,612
|
|
|
43.05
|
|
Vested (a)
|
—
|
|
|
—
|
|
|
(65,172
|
)
|
|
32.56
|
|
Forfeited (b)
|
(101,822
|
)
|
|
23.67
|
|
|
(70,527
|
)
|
|
39.93
|
|
Nonvested shares, June 30
|
158,922
|
|
|
42.71
|
|
|
211,651
|
|
|
32.42
|
|
|
|
(a)
|
In 2012,
65,172
performance-contingent restricted shares granted in 2010 vested because the specified performance criteria for such shares were met.
|
|
|
(b)
|
In 2013 and 2012,
101,822
and
65,516
performance-contingent restricted shares granted in 2009 and 2008, respectively, were forfeited because the specified performance criteria for such shares were not met. The remaining forfeitures during 2012 were primarily caused by retirements and terminations of participants.
|
Performance Contingent Cash Awards
-
A summary of the performance contingent cash awards activity was as follows:
|
|
|
|
|
|
|
|
2013
|
|
2012
|
|
Awards
|
|
Awards
|
Nonvested awards, January 1
|
59,639
|
|
|
46,676
|
|
Granted
|
39,530
|
|
|
36,936
|
|
Vested (a)
|
—
|
|
|
(21,605
|
)
|
Forfeited
|
(1,413
|
)
|
|
(1,533
|
)
|
Nonvested awards, June 30
|
97,756
|
|
|
60,474
|
|
|
|
(a)
|
In the first quarter of 2012,
21,605
performance contingent cash awards granted in 2010 vested, resulting in cash payouts valued at
$0.9 million
.
|
(6) COMMON EQUITY
Common Share Activity
-
A summary of Alliant Energy’s common stock activity was as follows:
|
|
|
|
Shares outstanding, January 1
|
110,987,400
|
|
Equity-based compensation plans (
Note 5
(b))
|
(23,374
|
)
|
Other (a)
|
(20,357
|
)
|
Shares outstanding, June 30
|
110,943,669
|
|
|
|
(a)
|
Includes shares transferred from employees to Alliant Energy to satisfy tax withholding requirements in connection with the vesting of certain restricted stock under the equity-based compensation plans.
|
Dividend Restrictions
-
As of
June 30, 2013
, IPL’s amount of retained earnings that were free of dividend restrictions was
$430 million
. As of
June 30, 2013
, WPL’s amount of retained earnings that were free of dividend restrictions was
$61 million
for the remainder of
2013
.
Restricted Net Assets of Subsidiaries
-
As of
June 30, 2013
, the amount of net assets of IPL and WPL that were not available to be transferred to their parent company, Alliant Energy, in the form of loans, advances or cash dividends without the consent of IPL’s and WPL’s regulatory authorities was
$1.1 billion
and
$1.5 billion
, respectively.
Capital Transactions with Subsidiaries
-
For the
six months ended June 30
,
2013
, IPL received capital contributions of
$60.0 million
from its parent company. For the
six months ended June 30
,
2013
, IPL and WPL each paid common stock dividends of
$63.5 million
and
$58.2 million
, respectively, to its parent company.
(7) REDEEMABLE PREFERRED STOCK
IPL
-
In March 2013, IPL issued
8,000,000
shares of
5.1%
cumulative preferred stock and received proceeds of
$200 million
. The proceeds were used by IPL to redeem its
8.375%
cumulative preferred stock, reduce commercial paper classified as long-term debt by
$40 million
and for other general corporate purposes. Alliant Energy and IPL incurred
$5 million
of issuance costs related to this transaction, which were recorded as a reduction of “Additional paid-in capital” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets during the
six months ended June 30
, 2013.
On or after March 15, 2018
, IPL may, at its option, redeem the
5.1%
cumulative preferred stock for cash at a redemption price of
$25
per share plus accrued and unpaid dividends up to the redemption date.
The articles of incorporation of IPL contain a provision that grants the holders of its
5.1%
cumulative preferred stock voting rights to elect
two
members of IPL’s Board of Directors if preferred dividends equal to
six
or more quarterly dividend requirements (whether or not consecutive) are in arrears. Such voting rights would not provide the holders of IPL’s preferred stock control of the decision on redemption of IPL’s preferred stock and could not force IPL to exercise its call option. Therefore, IPL’s
5.1%
cumulative preferred stock is presented in total equity on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets in a manner consistent with noncontrolling interests.
In March 2013, IPL redeemed all
6,000,000
outstanding shares of its
8.375%
cumulative preferred stock for
$150 million
plus accrued and unpaid dividends to the redemption date. Alliant Energy and IPL recorded a
$5 million
charge during the
six months ended June 30
, 2013 related to this transaction in “Preferred dividend requirements” in their Condensed Consolidated Statements of Income.
WPL
-
In March 2013, WPL redeemed all
1,049,225
outstanding shares of its
4.40%
through
6.50%
cumulative preferred stock for
$61 million
plus accrued and unpaid dividends to the redemption date. Alliant Energy and WPL recorded a
$1 million
charge during the
six months ended June 30
, 2013 related to this transaction in “Preferred dividend requirements” in their Condensed Consolidated Statements of Income.
Refer to
Note 10
for information on the fair value of cumulative preferred stock.
(8) DEBT
(a) Short-term Debt -
Information regarding commercial paper classified as short-term debt and back-stopped by Alliant Energy’s, IPL’s and WPL’s credit facilities was as follows (dollars in millions):
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
Parent
|
|
|
|
|
June 30, 2013
|
(Consolidated)
|
|
Company
|
|
IPL
|
|
WPL
|
Commercial paper:
|
|
|
|
|
|
|
|
Amount outstanding
|
$223.1
|
|
$74.2
|
|
$—
|
|
$148.9
|
Weighted average remaining maturity
|
2 days
|
|
2 days
|
|
N/A
|
|
2 days
|
Weighted average interest rates
|
0.2%
|
|
0.3%
|
|
N/A
|
|
0.2%
|
Available credit facility capacity (a)
|
$721.9
|
|
$225.8
|
|
$245.0
|
|
$251.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
Three Months Ended June 30
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Maximum amount outstanding
(based on daily outstanding balances)
|
|
$223.1
|
|
|
|
$162.8
|
|
|
|
$6.0
|
|
|
|
$30.3
|
|
|
|
$159.4
|
|
|
|
$35.6
|
|
Average amount outstanding
(based on daily outstanding balances)
|
|
$191.4
|
|
|
|
$100.8
|
|
|
|
$0.2
|
|
|
|
$7.6
|
|
|
|
$125.7
|
|
|
|
$14.9
|
|
Weighted average interest rates
|
0.2
|
%
|
|
0.4
|
%
|
|
0.3
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
|
0.3
|
%
|
Six Months Ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
Maximum amount outstanding
(based on daily outstanding balances)
|
|
$243.4
|
|
|
|
$162.8
|
|
|
|
$26.3
|
|
|
|
$35.4
|
|
|
|
$160.0
|
|
|
|
$35.6
|
|
Average amount outstanding
(based on daily outstanding balances)
|
|
$181.2
|
|
|
|
$83.6
|
|
|
|
$2.5
|
|
|
|
$10.2
|
|
|
|
$99.4
|
|
|
|
$14.0
|
|
Weighted average interest rates
|
0.3
|
%
|
|
0.4
|
%
|
|
0.4
|
%
|
|
0.4
|
%
|
|
0.2
|
%
|
|
0.2
|
%
|
|
|
(a)
|
Alliant Energy’s and IPL’s available credit facility capacities reflect outstanding commercial paper classified as both short- and long-term debt at
June 30, 2013
. Refer to
Note 8
(b) for further discussion of
$55 million
of commercial paper outstanding at
June 30, 2013
classified as long-term debt on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets.
|
(b) Long-term Debt -
As of
June 30, 2013
,
$55 million
of commercial paper was recorded in “Long-term debt, net” on Alliant Energy’s and IPL’s Condensed Consolidated Balance Sheets due to the existence of long-term credit facilities that back-stop this commercial paper balance, along with Alliant Energy’s and IPL’s intent and ability to refinance these balances on a long-term basis. As of
June 30, 2013
, this commercial paper balance had a remaining maturity of
3 days
and a
0.3%
weighted average interest rate.
(9) INVESTMENTS
Unconsolidated Equity Investments
-
Equity (income) loss from Alliant Energy’s and WPL’s unconsolidated investments accounted for under the equity method of accounting for the
three and six
months ended
June 30
was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
WPL
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
American Transmission Company LLC (ATC)
|
|
($10.6
|
)
|
|
|
($10.3
|
)
|
|
|
($20.9
|
)
|
|
|
($20.2
|
)
|
|
|
($10.6
|
)
|
|
|
($10.3
|
)
|
|
|
($20.9
|
)
|
|
|
($20.2
|
)
|
Other
|
(0.3
|
)
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
0.2
|
|
|
(0.2
|
)
|
|
(0.3
|
)
|
|
(0.7
|
)
|
|
(0.5
|
)
|
|
|
($10.9
|
)
|
|
|
($10.6
|
)
|
|
|
($21.6
|
)
|
|
|
($20.0
|
)
|
|
|
($10.8
|
)
|
|
|
($10.6
|
)
|
|
|
($21.6
|
)
|
|
|
($20.7
|
)
|
Summary financial information from the unaudited financial statements of ATC for the
three and six
months ended
June 30
was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Operating revenues
|
|
$152.2
|
|
|
|
$152.1
|
|
|
|
$303.9
|
|
|
|
$299.8
|
|
Operating income
|
82.2
|
|
|
80.4
|
|
|
164.2
|
|
|
158.5
|
|
Net income
|
61.3
|
|
|
59.3
|
|
|
121.8
|
|
|
117.4
|
|
(10) FAIR VALUE MEASUREMENTS
Fair Value of Financial Instruments
-
The carrying amounts of Alliant Energy’s, IPL’s and WPL’s current assets and current liabilities approximate fair value because of the short maturity of such financial instruments. Carrying amounts and the related estimated fair values of other financial instruments were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$60.5
|
|
|
|
$60.5
|
|
|
|
$45.1
|
|
|
|
$45.1
|
|
|
|
$15.4
|
|
|
|
$15.4
|
|
Deferred proceeds (sales of receivables) (
Note 3
(a))
|
69.3
|
|
|
69.3
|
|
|
69.3
|
|
|
69.3
|
|
|
—
|
|
|
—
|
|
Capitalization and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (including current maturities) (
Note 8
(b))
|
3,142.9
|
|
|
3,619.5
|
|
|
1,364.7
|
|
|
1,586.8
|
|
|
1,331.9
|
|
|
1,572.1
|
|
Cumulative preferred stock (
Note 7
)
|
200.0
|
|
|
188.4
|
|
|
200.0
|
|
|
188.4
|
|
|
—
|
|
|
—
|
|
|
37.1
|
|
|
37.1
|
|
|
9.7
|
|
|
9.7
|
|
|
27.4
|
|
|
27.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
|
Carrying
Amount
|
|
Fair
Value
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$26.2
|
|
|
|
$26.2
|
|
|
|
$17.5
|
|
|
|
$17.5
|
|
|
|
$8.7
|
|
|
|
$8.7
|
|
Deferred proceeds (sales of receivables) (
Note 3
(a))
|
66.8
|
|
|
66.8
|
|
|
66.8
|
|
|
66.8
|
|
|
—
|
|
|
—
|
|
Capitalization and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (including current maturities) (
Note 8
(b))
|
3,138.1
|
|
|
3,860.5
|
|
|
1,359.5
|
|
|
1,679.9
|
|
|
1,331.5
|
|
|
1,713.3
|
|
Cumulative preferred stock (
Note 7
)
|
205.1
|
|
|
212.6
|
|
|
145.1
|
|
|
151.8
|
|
|
60.0
|
|
|
60.8
|
|
|
40.4
|
|
|
40.4
|
|
|
16.1
|
|
|
16.1
|
|
|
24.3
|
|
|
24.3
|
|
Valuation Hierarchy
-
Fair value measurement accounting establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The three levels of the fair value hierarchy and examples of each are as follows:
Level 1 -
Pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date. As of
June 30, 2013
, Level 1 items included IPL’s
5.1%
cumulative preferred stock. As of
December 31, 2012
, Level 1 items included IPL’s
8.375%
cumulative preferred stock and WPL’s
4.50%
cumulative preferred stock.
Level 2 -
Pricing inputs are quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active as of the reporting date. As of
June 30, 2013
and
December 31, 2012
, Level 2 items included certain of IPL’s and WPL’s non-exchange traded commodity contracts and substantially all of the long-term debt instruments. Level 2 items as of
December 31, 2012
also included the remainder of WPL’s cumulative preferred stock.
Level 3 -
Pricing inputs are unobservable inputs for assets or liabilities for which little or no market data exist and require significant management judgment or estimation. As of
June 30, 2013
and
December 31, 2012
, Level 3 items included IPL’s deferred proceeds, and IPL’s and WPL’s
financial transmission rights (FTRs)
and certain non-exchange traded commodity contracts.
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.
Valuation Techniques
-
Derivative assets and derivative liabilities -
Alliant Energy, IPL and WPL periodically use derivative instruments for risk management purposes to mitigate exposures to fluctuations in certain commodity prices and transmission congestion costs, and maintain risk policies that govern the use of such derivative instruments. As of
June 30, 2013
and
December 31, 2012
, Alliant Energy’s, IPL’s and WPL’s derivative instruments were not designated as hedging instruments and included the following:
|
|
|
Risk management purpose
|
Type of instrument
|
Mitigate pricing volatility for:
|
|
Electricity purchased to supply customers
|
Electric swap, swaption and physical purchase contracts (IPL and WPL)
|
Fuel used to supply natural gas-fired electric generating facilities
|
Natural gas swap and physical purchase contracts (IPL and WPL)
|
|
Natural gas options (WPL)
|
Natural gas supplied to retail customers
|
Natural gas options and physical purchase contracts (IPL and WPL)
|
|
Natural gas swap contracts (IPL)
|
Fuel used at coal-fired generating facilities
|
Coal physical purchase contract with volumetric optionality (WPL)
|
Optimize the value of natural gas pipeline capacity
|
Natural gas physical purchase and sale contracts (IPL and WPL)
|
|
Natural gas swap contracts (IPL)
|
Manage transmission congestion costs
|
FTRs (IPL and WPL)
|
IPL’s and WPL’s swap, swaption, option and physical forward commodity contracts were non-exchange-based derivative instruments and were valued using indicative price quotations from a pricing vendor that provides daily exchange forward price settlements, from broker or dealer quotations, from market publications or from on-line exchanges. The indicative price quotations reflected the average of the bid-ask mid-point prices and were obtained from sources believed to provide the most liquid market for the commodity. IPL and WPL corroborated a portion of these indicative price quotations using quoted prices for similar assets or liabilities in active markets and categorized derivative instruments based on such indicative price quotations as Level 2. IPL’s and WPL’s commodity contracts that were valued using indicative price quotations based on significant assumptions such as seasonal or monthly shaping and indicative price quotations that could not be readily corroborated were categorized as Level 3. IPL’s and WPL’s swap, swaption, option and physical forward commodity contracts were predominately at liquid trading points. IPL’s and WPL’s FTRs were valued using monthly or annual auction shadow prices from relevant auctions and were categorized as Level 3. Refer to
Note 11
for additional details of derivative assets and derivative liabilities.
Level 3 inputs include observable and unobservable inputs used in the fair value measurements of IPL’s and WPL’s commodity contracts. The observable inputs are obtained from third-party pricing sources, counterparties and brokers and include bids, offers, historical transactions (including historical price differences between locations with both observable and unobservable prices) and executed trades. The significant unobservable inputs used in the fair value measurement of IPL’s and WPL’s commodity contracts are forecasted electricity, natural gas and coal prices, and the expected volatility of such prices. Significant changes in any of those inputs would result in a significantly lower or higher fair value measurement.
Deferred proceeds (sales of receivables) -
The fair value of IPL’s deferred proceeds related to its sales of receivables program was calculated each reporting date using the cost approach valuation technique. The fair value represents the carrying amount of receivables sold less the allowance for doubtful accounts associated with the receivables sold and cash proceeds received from the receivables sold due to the short-term nature of the collection period. These inputs were considered unobservable and deferred proceeds were categorized as Level 3. Deferred proceeds represent IPL’s maximum exposure to loss related to the receivables sold. Refer to
Note 3
(a) for additional information regarding deferred proceeds.
Long-term debt (including current maturities) -
For long-term debt instruments that are actively traded, the fair value was based upon quoted market prices for similar liabilities on each reporting date. For long-term debt instruments that are not actively traded, the fair value was based on a discounted cash flow methodology and utilizes assumptions of current market pricing curves at each reporting date. Refer to
Note 8
(b) for additional information regarding long-term debt.
Cumulative preferred stock -
As of
June 30, 2013
, the fair value of IPL’s
5.1%
cumulative preferred stock was based on its closing market price quoted by the New York Stock Exchange. As of
December 31, 2012
, the fair value of IPL’s
8.375%
cumulative preferred stock was based on its closing market price quoted by the New York Stock Exchange, the fair value of WPL’s
4.50%
cumulative preferred stock was based on the closing market price quoted by the NYSE Amex LLC, and the fair value of WPL’s remaining preferred stock was calculated based on the market yield of similar securities. Refer to
Note 7
for additional information regarding cumulative preferred stock.
Items subject to fair value measurement disclosure requirements were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
June 30, 2013
|
|
December 31, 2012
|
|
Fair
|
|
Level
|
|
Level
|
|
Level
|
|
Fair
|
|
Level
|
|
Level
|
|
Level
|
|
Value
|
|
1
|
|
2
|
|
3
|
|
Value
|
|
1
|
|
2
|
|
3
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives - commodity contracts
|
|
$60.5
|
|
|
|
$—
|
|
|
|
$13.7
|
|
|
|
$46.8
|
|
|
|
$26.2
|
|
|
|
$—
|
|
|
|
$4.8
|
|
|
|
$21.4
|
|
Deferred proceeds
|
69.3
|
|
|
—
|
|
|
—
|
|
|
69.3
|
|
|
66.8
|
|
|
—
|
|
|
—
|
|
|
66.8
|
|
Capitalization and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt (including current maturities)
|
3,619.5
|
|
|
—
|
|
|
3,619.1
|
|
|
0.4
|
|
|
3,860.5
|
|
|
—
|
|
|
3,860.0
|
|
|
0.5
|
|
Cumulative preferred stock
|
188.4
|
|
|
188.4
|
|
|
—
|
|
|
—
|
|
|
212.6
|
|
|
162.3
|
|
|
50.3
|
|
|
—
|
|
Derivatives - commodity contracts
|
37.1
|
|
|
—
|
|
|
32.8
|
|
|
4.3
|
|
|
40.4
|
|
|
—
|
|
|
30.9
|
|
|
9.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
June 30, 2013
|
|
December 31, 2012
|
|
Fair
|
|
Level
|
|
Level
|
|
Level
|
|
Fair
|
|
Level
|
|
Level
|
|
Level
|
|
Value
|
|
1
|
|
2
|
|
3
|
|
Value
|
|
1
|
|
2
|
|
3
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives - commodity contracts
|
|
$45.1
|
|
|
|
$—
|
|
|
|
$3.0
|
|
|
|
$42.1
|
|
|
|
$17.5
|
|
|
|
$—
|
|
|
|
$3.1
|
|
|
|
$14.4
|
|
Deferred proceeds
|
69.3
|
|
|
—
|
|
|
—
|
|
|
69.3
|
|
|
66.8
|
|
|
—
|
|
|
—
|
|
|
66.8
|
|
Capitalization and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
1,586.8
|
|
|
—
|
|
|
1,586.8
|
|
|
—
|
|
|
1,679.9
|
|
|
—
|
|
|
1,679.9
|
|
|
—
|
|
Cumulative preferred stock
|
188.4
|
|
|
188.4
|
|
|
—
|
|
|
—
|
|
|
151.8
|
|
|
151.8
|
|
|
—
|
|
|
—
|
|
Derivatives - commodity contracts
|
9.7
|
|
|
—
|
|
|
8.2
|
|
|
1.5
|
|
|
16.1
|
|
|
—
|
|
|
14.2
|
|
|
1.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WPL
|
June 30, 2013
|
|
December 31, 2012
|
|
Fair
|
|
Level
|
|
Level
|
|
Level
|
|
Fair
|
|
Level
|
|
Level
|
|
Level
|
|
Value
|
|
1
|
|
2
|
|
3
|
|
Value
|
|
1
|
|
2
|
|
3
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives - commodity contracts
|
|
$15.4
|
|
|
|
$—
|
|
|
|
$10.7
|
|
|
|
$4.7
|
|
|
|
$8.7
|
|
|
|
$—
|
|
|
|
$1.7
|
|
|
|
$7.0
|
|
Capitalization and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt
|
1,572.1
|
|
|
—
|
|
|
1,572.1
|
|
|
—
|
|
|
1,713.3
|
|
|
—
|
|
|
1,713.3
|
|
|
—
|
|
Cumulative preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60.8
|
|
|
10.5
|
|
|
50.3
|
|
|
—
|
|
Derivatives - commodity contracts
|
27.4
|
|
|
—
|
|
|
24.6
|
|
|
2.8
|
|
|
24.3
|
|
|
—
|
|
|
16.7
|
|
|
7.6
|
|
Alliant Energy, IPL and WPL generally record gains and losses from IPL’s and WPL’s derivative instruments with offsets to regulatory assets or regulatory liabilities, based on their fuel and natural gas cost recovery mechanisms, as well as other specific regulatory authorizations. Based on these recovery mechanisms, the changes in the fair value of derivative liabilities resulted in comparable changes to regulatory assets, and the changes in the fair value of derivative assets resulted in comparable changes to regulatory liabilities on the Condensed Consolidated Balance Sheets.
Information for fair value measurements using significant unobservable inputs (Level 3 inputs) was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
Commodity Contract Derivative
|
|
|
|
Assets and (Liabilities), net
|
|
Deferred Proceeds
|
Three Months Ended June 30
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Beginning balance, April 1
|
|
$4.9
|
|
|
|
($15.1
|
)
|
|
|
$122.1
|
|
|
|
$32.9
|
|
Total net gains (losses) (realized/unrealized) included in changes in net assets (a)
|
(1.2
|
)
|
|
3.0
|
|
|
—
|
|
|
—
|
|
Transfers into Level 3 (b)
|
—
|
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
Transfers out of Level 3 (c)
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
Purchases
|
50.9
|
|
|
35.8
|
|
|
—
|
|
|
—
|
|
Settlements (d)
|
(12.1
|
)
|
|
(4.7
|
)
|
|
(52.8
|
)
|
|
48.8
|
|
Ending balance, June 30
|
|
$42.5
|
|
|
|
$18.8
|
|
|
|
$69.3
|
|
|
|
$81.7
|
|
The amount of total net gains (losses) for the period included in changes in net assets attributable to the change in unrealized gains (losses) relating to assets and liabilities held at June 30 (a)
|
|
($1.2
|
)
|
|
|
$3.5
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
Commodity Contract Derivative
|
|
|
|
Assets and (Liabilities), net
|
|
Deferred Proceeds
|
Six Months Ended June 30
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Beginning balance, January 1
|
|
$11.9
|
|
|
|
($0.9
|
)
|
|
|
$66.8
|
|
|
|
$53.7
|
|
Total net losses (realized/unrealized) included in changes in net assets (a)
|
(3.0
|
)
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
Transfers into Level 3 (b)
|
—
|
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
Transfers out of Level 3 (c)
|
3.6
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
Purchases
|
50.9
|
|
|
35.8
|
|
|
—
|
|
|
—
|
|
Settlements (d)
|
(20.9
|
)
|
|
(7.8
|
)
|
|
2.5
|
|
|
28.0
|
|
Ending balance, June 30
|
|
$42.5
|
|
|
|
$18.8
|
|
|
|
$69.3
|
|
|
|
$81.7
|
|
The amount of total net losses for the period included in changes in net assets attributable to the change in unrealized losses relating to assets and liabilities held at June 30 (a)
|
|
($3.0
|
)
|
|
|
($4.1
|
)
|
|
|
$—
|
|
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
Commodity Contract Derivative
|
|
|
|
Assets and (Liabilities), net
|
|
Deferred Proceeds
|
Three Months Ended June 30
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Beginning balance, April 1
|
|
$4.3
|
|
|
|
($11.4
|
)
|
|
|
$122.1
|
|
|
|
$32.9
|
|
Total net gains (losses) (realized/unrealized) included in changes in net assets (a)
|
(0.1
|
)
|
|
2.9
|
|
|
—
|
|
|
—
|
|
Transfers into Level 3 (b)
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
Purchases
|
46.1
|
|
|
26.8
|
|
|
—
|
|
|
—
|
|
Settlements (d)
|
(9.7
|
)
|
|
(4.0
|
)
|
|
(52.8
|
)
|
|
48.8
|
|
Ending balance, June 30
|
|
$40.6
|
|
|
|
$14.1
|
|
|
|
$69.3
|
|
|
|
$81.7
|
|
The amount of total net gains (losses) for the period included in changes in net assets attributable to the change in unrealized gains (losses) relating to assets and liabilities held at June 30 (a)
|
|
($0.1
|
)
|
|
|
$3.6
|
|
|
|
$—
|
|
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
Commodity Contract Derivative
|
|
|
|
Assets and (Liabilities), net
|
|
Deferred Proceeds
|
Six Months Ended June 30
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Beginning balance, January 1
|
|
$12.5
|
|
|
|
$4.3
|
|
|
|
$66.8
|
|
|
|
$53.7
|
|
Total net losses (realized/unrealized) included in changes in net assets (a)
|
(3.0
|
)
|
|
(9.4
|
)
|
|
—
|
|
|
—
|
|
Transfers into Level 3 (b)
|
—
|
|
|
(1.3
|
)
|
|
—
|
|
|
—
|
|
Transfers out of Level 3 (c)
|
1.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Purchases
|
46.1
|
|
|
26.8
|
|
|
—
|
|
|
—
|
|
Settlements (d)
|
(16.1
|
)
|
|
(6.3
|
)
|
|
2.5
|
|
|
28.0
|
|
Ending balance, June 30
|
|
$40.6
|
|
|
|
$14.1
|
|
|
|
$69.3
|
|
|
|
$81.7
|
|
The amount of total net losses for the period included in changes in net assets attributable to the change in unrealized losses relating to assets and liabilities held at June 30 (a)
|
|
($3.0
|
)
|
|
|
($7.0
|
)
|
|
|
$—
|
|
|
|
$—
|
|
|
|
|
|
|
|
|
|
|
WPL
|
Commodity Contract Derivative
|
|
Assets and (Liabilities), net
|
Three Months Ended June 30
|
2013
|
|
2012
|
Beginning balance, April 1
|
|
$0.6
|
|
|
|
($3.7
|
)
|
Total net gains (losses) (realized/unrealized) included in changes in net assets (a)
|
(1.1
|
)
|
|
0.1
|
|
Transfers into Level 3 (b)
|
—
|
|
|
(0.4
|
)
|
Transfers out of Level 3 (c)
|
—
|
|
|
0.4
|
|
Purchases
|
4.8
|
|
|
9.0
|
|
Settlements
|
(2.4
|
)
|
|
(0.7
|
)
|
Ending balance, June 30
|
|
$1.9
|
|
|
|
$4.7
|
|
The amount of total net losses for the period included in changes in net assets attributable to the change in unrealized losses relating to assets and liabilities held at June 30 (a)
|
|
($1.1
|
)
|
|
|
($0.1
|
)
|
|
|
|
|
|
|
|
|
|
WPL
|
Commodity Contract Derivative
|
|
Assets and (Liabilities), net
|
Six Months Ended June 30
|
2013
|
|
2012
|
Beginning balance, January 1
|
|
($0.6
|
)
|
|
|
($5.2
|
)
|
Total net gains (realized/unrealized) included in changes in net assets (a)
|
—
|
|
|
3.1
|
|
Transfers into Level 3 (b)
|
—
|
|
|
(1.0
|
)
|
Transfers out of Level 3 (c)
|
2.5
|
|
|
0.3
|
|
Purchases
|
4.8
|
|
|
9.0
|
|
Settlements
|
(4.8
|
)
|
|
(1.5
|
)
|
Ending balance, June 30
|
|
$1.9
|
|
|
|
$4.7
|
|
The amount of total net gains for the period included in changes in net assets attributable to the change in unrealized gains relating to assets and liabilities held at June 30 (a)
|
|
$—
|
|
|
|
$2.9
|
|
|
|
(a)
|
Gains and losses related to derivative assets and derivative liabilities are recorded in “Regulatory assets” and “Regulatory liabilities” on the Condensed Consolidated Balance Sheets.
|
|
|
(b)
|
Markets for similar assets and liabilities became inactive and observable market inputs became unavailable for transfers into Level 3. The transfers were valued as of the beginning of the period.
|
|
|
(c)
|
Observable market inputs became available for certain commodity contracts previously classified as Level 3 for transfers out of Level 3. The transfers were valued as of the beginning of the period.
|
|
|
(d)
|
Settlements related to deferred proceeds are due to the change in the carrying amount of receivables sold less the allowance for doubtful accounts associated with the receivables sold and cash proceeds received from the receivables sold.
|
Commodity Contracts -
As of
June 30, 2013
, the fair value of Alliant Energy’s, IPL’s and WPL’s electric, natural gas and coal commodity contracts categorized as Level 3, excluding FTRs, were recognized as net derivative liabilities of
$2.7 million
,
$0.4 million
and
$2.3 million
, respectively. As of
June 30, 2013
, Alliant Energy’s, IPL’s and WPL’s FTRs classified as Level 3 were recognized as net derivative assets of
$45.2 million
,
$41.0 million
and
$4.2 million
, respectively.
(11) DERIVATIVE INSTRUMENTS
Commodity Derivatives
-
Purpose -
Alliant Energy, IPL and WPL periodically use derivative instruments for risk management purposes to mitigate exposures to fluctuations in certain commodity prices and transmission congestion costs. Refer to
Note 10
for detailed discussion of Alliant Energy’s, IPL’s and WPL’s derivative instruments as of
June 30, 2013
and
December 31, 2012
.
Notional Amounts -
As of
June 30, 2013
, notional amounts by delivery year related to outstanding swap contracts, option contracts, physical forward contracts, FTRs and coal contracts that were accounted for as commodity derivative instruments were as follows (units in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
Total
|
Alliant Energy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity (megawatt-hours (MWhs))
|
2,620
|
|
|
4,801
|
|
|
2,190
|
|
|
1,318
|
|
|
1,314
|
|
|
1,314
|
|
|
13,557
|
|
FTRs (MWs)
|
26
|
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
48
|
|
Natural gas (dekatherms (Dths))
|
52,111
|
|
|
19,846
|
|
|
2,031
|
|
|
455
|
|
|
—
|
|
|
—
|
|
|
74,443
|
|
Coal (tons)
|
448
|
|
|
981
|
|
|
562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,991
|
|
IPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity (MWhs)
|
1,302
|
|
|
1,099
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,401
|
|
FTRs (MWs)
|
16
|
|
|
14
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
Natural gas (Dths)
|
40,455
|
|
|
13,386
|
|
|
1,581
|
|
|
455
|
|
|
—
|
|
|
—
|
|
|
55,877
|
|
WPL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electricity (MWhs)
|
1,318
|
|
|
3,702
|
|
|
2,190
|
|
|
1,318
|
|
|
1,314
|
|
|
1,314
|
|
|
11,156
|
|
FTRs (MWs)
|
10
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18
|
|
Natural gas (Dths)
|
11,656
|
|
|
6,460
|
|
|
450
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,566
|
|
Coal (tons)
|
448
|
|
|
981
|
|
|
562
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,991
|
|
The notional amounts in the above table were computed by aggregating the absolute value of purchase and sale positions within commodities for each delivery year.
Financial Statement Presentation -
Alliant Energy, IPL and WPL record derivative instruments at fair value each reporting date on the balance sheet as assets or liabilities. The fair values of current derivative assets were included in “Other current assets,” non-current derivative assets were included in “Deferred charges and other,” current derivative liabilities were included in “Other current liabilities” and non-current derivative liabilities were included in “Other long-term liabilities and deferred credits” on the Condensed Consolidated Balance Sheets as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
Commodity contracts
|
June 30,
2013
|
|
December 31,
2012
|
|
June 30,
2013
|
|
December 31,
2012
|
|
June 30,
2013
|
|
December 31,
2012
|
Current derivative assets
|
|
$51.1
|
|
|
|
$23.5
|
|
|
|
$44.4
|
|
|
|
$17.0
|
|
|
|
$6.7
|
|
|
|
$6.5
|
|
Non-current derivative assets
|
9.4
|
|
|
2.7
|
|
|
0.7
|
|
|
0.5
|
|
|
8.7
|
|
|
2.2
|
|
Current derivative liabilities
|
21.8
|
|
|
31.1
|
|
|
8.4
|
|
|
14.1
|
|
|
13.4
|
|
|
17.0
|
|
Non-current derivative liabilities
|
15.3
|
|
|
9.3
|
|
|
1.3
|
|
|
2.0
|
|
|
14.0
|
|
|
7.3
|
|
Changes in unrealized gains (losses) from commodity derivative instruments not designated as hedging instruments were recorded with offsets to regulatory assets or regulatory liabilities on the Condensed Consolidated Balance Sheets as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Three Months Ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory assets
|
|
($25.9
|
)
|
|
|
$7.7
|
|
|
|
($6.9
|
)
|
|
|
$5.0
|
|
|
|
($19.0
|
)
|
|
|
$2.7
|
|
Regulatory liabilities
|
1.2
|
|
|
4.1
|
|
|
(2.5
|
)
|
|
4.4
|
|
|
3.7
|
|
|
(0.3
|
)
|
Six Months Ended June 30
|
|
|
|
|
|
|
|
|
|
|
|
Regulatory assets
|
(16.4
|
)
|
|
(32.0
|
)
|
|
(4.2
|
)
|
|
(17.2
|
)
|
|
(12.2
|
)
|
|
(14.8
|
)
|
Regulatory liabilities
|
17.6
|
|
|
5.5
|
|
|
6.3
|
|
|
4.4
|
|
|
11.3
|
|
|
1.1
|
|
Credit Risk-related Contingent Features -
Alliant Energy, IPL and WPL have entered into various agreements that contain credit risk-related contingent features including requirements for them to maintain certain credit ratings from each of the major credit rating agencies and/or limitations on their liability positions under the various agreements based upon their credit ratings. In the event of a downgrade in their credit ratings or if their liability positions exceed certain contractual limits, Alliant Energy, IPL or WPL may need to provide credit support in the form of letters of credit or cash collateral up to the amount of their exposure under the contracts, or may need to unwind the contracts and pay the underlying liability positions.
Certain of these agreements with credit risk-related contingency features are accounted for as derivative instruments. The aggregate fair value of all derivatives with credit risk-related contingent features that were in a net liability position on
June 30, 2013
was
$37.1 million
,
$9.7 million
and
$27.4 million
for Alliant Energy, IPL and WPL, respectively. At
June 30, 2013
, Alliant Energy, IPL and WPL all had investment-grade credit ratings. If the most restrictive credit risk-related contingent features for derivative agreements in a net liability position were triggered on
June 30, 2013
, Alliant Energy, IPL and WPL would be required to post
$37.1 million
,
$9.7 million
and
$27.4 million
, respectively, of credit support to their counterparties.
Balance Sheet Offsetting
- Alliant Energy, IPL and WPL do not net the fair value amounts of derivative instruments subject to a master netting arrangement by counterparty on the Condensed Consolidated Balance Sheets. Alliant Energy, IPL and WPL also do not offset fair value amounts recognized for the right to reclaim cash collateral (receivable) or the obligation to return cash collateral (payable) against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement. However, if Alliant Energy, IPL and WPL did net the fair value amounts of derivative instruments and related cash collateral by counterparty, derivative assets and derivative liabilities related to commodity contracts would have been presented on their Condensed Consolidated Balance Sheets as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
Gross
|
|
|
|
Gross
|
|
|
|
Gross
|
|
|
|
(as reported)
|
|
Net
|
|
(as reported)
|
|
Net
|
|
(as reported)
|
|
Net
|
June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
|
$60.5
|
|
|
|
$46.3
|
|
|
|
$45.1
|
|
|
|
$43.4
|
|
|
|
$15.4
|
|
|
|
$2.9
|
|
Derivative liabilities
|
37.1
|
|
|
22.9
|
|
|
9.7
|
|
|
8.0
|
|
|
27.4
|
|
|
14.9
|
|
December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Derivative assets
|
26.2
|
|
|
19.3
|
|
|
17.5
|
|
|
14.5
|
|
|
8.7
|
|
|
4.8
|
|
Derivative liabilities
|
40.4
|
|
|
33.0
|
|
|
16.1
|
|
|
12.6
|
|
|
24.3
|
|
|
20.4
|
|
As of
June 30, 2013
and
December 31, 2012
, both Alliant Energy’s and IPL’s net derivative liabilities in the above table include
$0
and
$0.5 million
, respectively, of cash collateral posted by IPL. Trade receivables and payables associated with derivative assets and derivative liabilities are also subject to a master netting arrangement. As of
June 30, 2013
and
December 31, 2012
, these trade receivables and payables were insignificant and were not included in the above table.
(12) COMMITMENTS AND CONTINGENCIES
(a) Capital Purchase Obligations -
Alliant Energy, IPL and WPL have entered into capital purchase obligations that contain minimum future commitments related to capital expenditures for certain of their emission controls and generation performance improvement projects. These projects include generation performance improvements at IPL’s Ottumwa Unit 1, installation of a scrubber at Lansing Unit 4 to reduce
sulfur dioxide (SO2)
emissions at the generating facility and the installation of scrubbers and baghouses at WPL’s Columbia Units 1 and 2 to reduce SO2 and mercury emissions at the generating facility. At
June 30, 2013
, Alliant Energy’s, IPL’s and WPL’s minimum future commitments related to these projects were
$65 million
,
$21 million
and
$44 million
, respectively.
(b) Operating Expense Purchase Obligations -
Alliant Energy, IPL and WPL have entered into various commodity supply, transportation and storage contracts to meet their obligations to provide electricity and natural gas to IPL’s and WPL’s utility customers. Alliant Energy, IPL and WPL also enter into other operating expense purchase obligations with various vendors for other goods and services. At
June 30, 2013
, minimum future commitments related to these operating expense purchase obligations were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
Purchased power (a):
|
|
|
|
|
|
Duane Arnold Energy Center (DAEC) (IPL) (b)
|
|
$1,762
|
|
|
|
$1,762
|
|
|
|
$—
|
|
Kewaunee Nuclear Power Plant (Kewaunee) (WPL)
|
38
|
|
|
—
|
|
|
38
|
|
Other (c)
|
263
|
|
|
1
|
|
|
262
|
|
|
2,063
|
|
|
1,763
|
|
|
300
|
|
Natural gas
|
363
|
|
|
227
|
|
|
136
|
|
Coal (d)
|
236
|
|
|
122
|
|
|
114
|
|
SO2 emission allowances
|
34
|
|
|
34
|
|
|
—
|
|
Other (e)
|
32
|
|
|
18
|
|
|
9
|
|
|
|
$2,728
|
|
|
|
$2,164
|
|
|
|
$559
|
|
|
|
(a)
|
Includes payments required by
purchased power agreements (PPAs)
for capacity rights and minimum quantities of MWhs required to be purchased.
|
|
|
(b)
|
Includes commitments incurred under an existing PPA that expires February 2014 and a new PPA completed in March 2013. The new PPA grants IPL rights to purchase
431
MWs of capacity and the resulting energy from DAEC for a term from the expiration of the existing PPA in February 2014 through December 31, 2025. If energy delivered under the new PPA is less than the targeted energy amount, an adjustment payment will be made to IPL, which will be reflected in IPL’s energy adjustment clause.
|
|
|
(c)
|
In June 2013, WPL entered into a new PPA for a term from January 1, 2014 through December 31, 2018.
|
|
|
(d)
|
Corporate Services entered into system-wide coal contracts on behalf of IPL and WPL that include minimum future commitments. These commitments were assigned to IPL and WPL based on information available as of
June 30, 2013
regarding expected future usage, which is subject to change.
|
|
|
(e)
|
Includes individual commitments incurred during the normal course of business that exceeded
$1 million
at
June 30, 2013
.
|
(c) Legal Proceedings -
Air Permitting Violation Claims
-
In 2009, the EPA sent a
Notice of Violation (NOV)
to WPL as an owner and the operator of the
Edgewater Generating Station (Edgewater)
, the
Nelson Dewey Generating Station (Nelson Dewey)
and the
Columbia Energy Center (Columbia)
. The NOV alleged that the owners of Edgewater, Nelson Dewey and Columbia failed to comply with appropriate pre-construction review and permitting requirements and as a result violated the
Prevention of Significant Deterioration (PSD)
program requirements, Title V Operating Permit requirements of the
Clean Air Act (CAA)
and the Wisconsin
state implementation plan (SIP)
. In 2010, the Sierra Club filed in the
U.S. District Court for the Western District of Wisconsin (Court)
a complaint against WPL, as owner and operator of Nelson Dewey and Columbia, based on allegations that modifications were made at the facilities without complying with the PSD program requirements, Title V Operating Permit requirements of the CAA and state regulatory counterparts contained within the Wisconsin SIP designed to implement the CAA. In 2010, the Sierra Club filed in the U.S. District Court for the Eastern District of Wisconsin a complaint against WPL, as owner and operator of Edgewater, which contained similar allegations regarding air permitting violations at Edgewater. In the Edgewater complaint, additional allegations were made regarding violations of emission limits for visible emissions.
In April 2013, WPL, along with the other owners of Edgewater and Columbia, entered into a Consent Decree with the EPA and the Sierra Club to resolve the claims relating to Edgewater, Columbia and Nelson Dewey, while admitting no liability. In June 2013, the Consent Decree was approved by the Court, thereby resolving all claims made in the lawsuits filed in both the Court and the U.S. District Court for the Eastern District of Wisconsin. Under the Consent Decree, WPL is required to install the following emission controls systems:
|
|
•
|
Selective catalytic reduction (SCR)
system at Edgewater Unit 5 by May 1, 2013 (placed in-service in December 2012);
|
|
|
•
|
Scrubbers and baghouses at Columbia Units 1 and 2 by December 31, 2014;
|
|
|
•
|
Scrubber and baghouse at Edgewater Unit 5 by December 31, 2016; and
|
|
|
•
|
SCR system at Columbia Unit 2 by December 31, 2018.
|
WPL is also required to fuel switch or retire Nelson Dewey Units 1 and 2 and Edgewater Unit 3 by December 31, 2015, and Edgewater Unit 4 by December 31, 2018. In addition, the Consent Decree establishes emission rate limits for SO2,
nitrogen oxide (NOx)
and particulate matter for Columbia Units 1 and 2, Nelson Dewey Units 1 and 2 and Edgewater Units 4 and 5. The Consent Decree also includes annual plant-wide emission caps for SO2 and NOx for Columbia, Edgewater and Nelson Dewey. WPL paid a civil penalty of approximately
$2 million
and will complete approximately
$7 million
in environmental mitigation projects.
Final recovery of the costs expected to be incurred related to the Consent Decree will be decided by the PSCW in future rate cases or other proceedings. Alliant Energy and WPL currently expect to recover any material costs incurred by WPL related to compliance with the terms of the Consent Decree from WPL’s electric customers, except for costs related to the civil penalty.
Alliant Energy Cash Balance Pension Plan (Plan)
-
In 2008, a class-action lawsuit was filed against the Plan in the Court. The complaint alleged that certain Plan participants who received distributions prior to their normal retirement age did not receive the full benefit to which they were entitled in violation of ERISA because the Plan applied an improper interest crediting rate to project the cash balance account to their normal retirement age. These Plan participants were limited to individuals who, prior to normal retirement age, received a lump-sum distribution or an annuity payment. The Court originally certified two subclasses of plaintiffs that in aggregate include all persons vested or partially vested in the Plan who received these distributions from January 1, 1998 to August 17, 2006 including: (1) persons who received distributions from January 1, 1998 through February 28, 2002; and (2) persons who received distributions from March 1, 2002 to August 17, 2006.
In June 2010, the Court issued an opinion and order that granted the plaintiffs’ motion for summary judgment on liability. In December 2010, the Court issued an opinion and order that decided the interest crediting rate that the Plan used to project the cash balance accounts of the plaintiffs during the class period should have been
8.2%
and that a pre-retirement mortality discount would not be applied to the damages calculation. In May 2011, the Plan was amended and the Plan subsequently made approximately
$10 million
in additional payments in 2011 to certain former participants in the Plan. This amendment was required based on an agreement Alliant Energy reached with the Internal Revenue Service, which resulted in a favorable determination letter for the Plan in 2011. In November 2011, plaintiffs filed a motion for leave to file a supplemental complaint to assert that the 2011 amendment to the Plan was itself an ERISA violation. In March 2012, the Plan and the plaintiffs each filed motions for summary judgment related to the supplemental complaint, and the plaintiffs filed a motion for class certification, seeking to amend the class definition and for appointment of class representatives and class counsel.
In July 2012, the Court issued an opinion and order granting plaintiffs’ motion for class certification, but only as to the interest crediting rate and the pre-retirement mortality discount claims of lump-sum recipients. As a result of the opinion and order,
two
new subclasses were certified in lieu of the prior subclass certification. Subclass A involves persons who received a lump-sum distribution between January 1, 1998 and August 17, 2006 and who received an interest crediting rate of less than
8.2%
under the Plan as amended in May 2011. Subclass B involves persons who received a lump-sum distribution between January 1, 1998 and August 17, 2006 and who would have received a larger benefit under the Plan as amended in May 2011 if a pre-retirement mortality discount had not been applied. In the opinion and order the Court then granted plaintiffs’ motion for summary judgment as to the two subclasses, and denied as moot the parties’ motions for summary judgment with respect to issues beyond the two subclasses.
In August 2012, as amended in September 2012, the Court entered a final judgment for the two subclasses in the total amount of
$18.7 million
. The judgment amount includes pre-judgment interest through July 2012 and takes into account the approximate
$10 million
of additional benefits paid by the Plan following the Plan amendment in 2011. In September 2012,
the Plan appealed the judgment, and the interlocutory orders that led to the judgment, to the Seventh Circuit Court of Appeals. In November 2012, the Plan filed its opening brief with the Seventh Circuit Court of Appeals in which it seeks to reverse all or part of the judgment. In April 2013, the Seventh Circuit Court of Appeals heard oral arguments and has not yet issued its final decision.
The judgment discussed above did not address any award for plaintiffs’ attorney’s fees or costs. In September 2012, the plaintiffs filed a motion with the Court for payment of plaintiffs’ attorney’s fees and costs in the amount of
$9.6 million
, of which
$4.3 million
was requested to be paid out of the common fund awarded to the two subclasses in the September 2012 judgment. In February 2013, the Court awarded plaintiffs’ attorney’s fees and costs in the amount of
$6.4 million
. The Court ordered that all of the fees and costs be paid from the
$18.7 million
judgment previously awarded and not be in addition to that judgment.
Alliant Energy, IPL and WPL have not recognized any material loss contingency amounts for the final judgment of damages as of
June 30, 2013
. A material loss contingency for the judgment will not be recognized unless a final unappealable ruling is received, or a settlement is reached, which results in an amendment to the Plan and payment of additional benefits to Plan participants. Alliant Energy, IPL and WPL are currently unable to predict the final outcome of the class-action lawsuit or the ultimate impact on their financial condition or results of operations but believe an adverse outcome could have a material effect on their retirement plan funding and expense.
Flood Damage Claims
- In June 2013, several plaintiffs filed a complaint against
Cedar Rapids and Iowa City Railway Company (CRANDIC)
, Alliant Energy and various other defendants in the Iowa District Court for Linn County. Plaintiffs assert claims of negligence and strict liability based on their allegations that CRANDIC (along with other defendants) caused or exacerbated flooding of the Cedar River in June 2008. Plaintiffs allege that CRANDIC caused or exacerbated the flooding when a railroad bridge and rail cars owned by CRANDIC collapsed into the Cedar River on June 12, 2008. Plaintiffs purport to represent a class of residential and commercial property owners who allegedly incurred property damage from the 2008 flooding of the Cedar River. The complaint also alleges that Alliant Energy should be held liable for the actions of CRANDIC; however, Alliant Energy believes this allegation is without merit. In June 2013, CRANDIC and Alliant Energy filed their answer to the complaint denying all claims. In July 2013, a co-defendant removed the case from the Iowa District Court for Linn County to the U.S. District Court for the Northern District of Iowa, and CRANDIC and Alliant Energy filed a consent to the removal. The case is pending in the U.S. District Court for the Northern District of Iowa, and a case schedule has not yet been established. Alliant Energy and CRANDIC believe the case is without merit and are vigorously contesting the case. As a result, Alliant Energy does not currently believe any material losses from these claims are both probable and reasonably estimated and therefore has not recognized any material loss contingency amounts for this complaint as of
June 30, 2013
. Due to the early stages of the claim and the lack of specific damages identified, Alliant Energy is currently unable to provide an estimate of potential loss or range of potential loss.
(d) Guarantees and Indemnifications -
RMT
-
In January 2013, Alliant Energy sold RMT. RMT provided renewable energy services including construction and high voltage connection services for wind and solar projects. As part of the sale, Alliant Energy provided indemnifications to the buyer of RMT for losses resulting from potential breach of the representations and warranties made by Alliant Energy as of the sale date and for the potential breach of its obligations under the sale agreement. These indemnifications are limited to
$3 million
and expire in July 2014.
In addition, Alliant Energy, as part of the sale, indemnified the buyer for any claims, including claims of warranty under the project obligations that were commenced or are based on actions that occurred prior to the sale, except for liabilities already accounted for through adjustments to the purchase price. The indemnification obligations either cease to exist when the statute of limitation for such claims is met or, in the case of RMT’s projects, when the warranty period under the agreements expires. The warranty periods for RMT’s projects generally range from
12
to
60
months with the latest expiring in 2016.
Alliant Energy also continues to guarantee RMT’s performance obligations related to certain of RMT’s projects that were commenced prior to Alliant Energy’s sale of RMT. As of
June 30, 2013
, Alliant Energy had
$546 million
of performance guarantees outstanding, with
$199 million
,
$294 million
and
$53 million
expiring in 2013, 2014 and 2015, respectively.
Alliant Energy currently believes that no material cash payments will be made and has not recognized any material liabilities related to these matters as of
June 30, 2013
. Refer to
Note 14
for further discussion of RMT.
Whiting Petroleum Corporation (Whiting)
-
In 2004, Alliant Energy sold its remaining interest in Whiting. Whiting is an independent oil and gas company. Alliant Energy continues to guarantee the obligations related to the abandonment of certain platforms off the coast of California and related onshore plant and equipment that were owned by Whiting prior to Alliant Energy’s sale of Whiting. The guarantee does not include a maximum limit. As of
June 30, 2013
, the present value of the abandonment obligations is estimated at
$31 million
. Alliant Energy believes that no payments will be made under this guarantee. Alliant Energy has not recognized any material liabilities related to this guarantee as of
June 30, 2013
.
(e) Environmental Matters -
Manufactured Gas Plant (MGP)
Sites
-
IPL and WPL have current or previous ownership interests in various sites that are previously associated with the production of gas for which IPL and WPL may have future liability for investigation, remediation and monitoring costs. IPL and WPL are working pursuant to the requirements of various federal and state agencies to investigate, mitigate, prevent and remediate, where necessary, the environmental impacts to property, including natural resources, at and around the sites in order to protect public health and the environment. IPL and WPL are currently monitoring and/or remediating
27
and
5
sites, respectively.
Alliant Energy, IPL and WPL record environmental liabilities related to these MGP sites based upon periodic studies. Such amounts are based on the best current estimate of the remaining amount to be incurred for investigation, remediation and monitoring costs for those sites where the investigation process has been or is substantially completed, and the minimum of the estimated cost range for those sites where the investigation is in its earlier stages. There are inherent uncertainties associated with the estimated remaining costs for MGP projects primarily due to unknown site conditions and potential changes in regulatory agency requirements. It is possible that future cost estimates will be greater than current estimates as the investigation process proceeds and as additional facts become known. The amounts recognized as liabilities are reduced for expenditures incurred and are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted. Management currently estimates the range of remaining costs to be incurred for the investigation, remediation and monitoring of these sites to be
$16 million
(
$14 million
for IPL and
$2 million
for WPL) to
$30 million
(
$26 million
for IPL and
$4 million
for WPL). At
June 30, 2013
, Alliant Energy, IPL and WPL recorded
$26 million
,
$23 million
and
$3 million
, respectively, in other current and non-current environmental liabilities for their remaining costs to be incurred for these MGP sites.
Other Environmental Contingencies
-
In addition to the environmental liabilities discussed above, Alliant Energy, IPL and WPL are also monitoring various environmental regulations that may have a significant impact on their future operations. Given uncertainties regarding the outcome, timing and compliance plans for these environmental matters, Alliant Energy, IPL and WPL are currently not able to determine the complete financial impact of these regulations but do believe that future capital investments and/or modifications to their electric generating facilities to comply with these regulations could be significant. Specific current, proposed or potential environmental matters that may require significant future expenditures include, among others:
Clean Air Interstate Rule (CAIR)
, Clean Air Visibility Rule, Utility
Maximum Achievable Control Technology (MACT)
Rule, Wisconsin State Mercury Rule, Wisconsin
Reasonably Available Control Technology (RACT)
Rule, Industrial Boiler and Process Heater MACT Rule, Ozone
National Ambient Air Quality Standards (NAAQS)
Rule, Fine Particle NAAQS Rule, Nitrogen Dioxide NAAQS Rule, SO2 NAAQS Rule, Federal Clean Water Act including Section 316(b), Wisconsin and Iowa State Thermal Rules, Hydroelectric Fish Passage Device, Effluent Limitation Guidelines, Coal Combustion Residuals, Polychlorinated Biphenyls, and various legislation and EPA regulations to monitor and regulate the emission of
greenhouse gases (GHG)
, including
New Source Performance Standards (NSPS)
for GHG Emissions from Electric Utilities. Some recent developments concerning these environmental matters are included below:
Water Quality -
Effluent Limitation Guidelines
are expected to require changes to discharge limits for wastewater from steam
electric generating units (EGUs)
. In June 2013, the EPA published proposed effluent limitation guidelines for public comment. Compliance with these proposed guidelines would be required after July 1, 2017 but before July 1, 2022, depending on each facility’s wastewater permit cycle for existing steam EGUs and immediately upon operation for new steam EGUs constructed after the issuance of the final guidelines.
GHG Emissions -
EPA NSPS for GHG Emissions from Electric Utilities
- The EPA is currently expected to issue revised proposed NSPS for GHG for new EGUs by September 20, 2013. A date for finalizing these standards has not yet been established. The EPA is expected to issue proposed and final NSPS for GHG for existing EGUs by June 1, 2014 and June 1, 2015, respectively, which would provide guidelines that states must follow to achieve required GHG reductions. SIPs that provide details of how these guidelines are to be met will be required from state agencies by June 30, 2016.
(13) SEGMENTS OF BUSINESS
Alliant Energy
-
Certain financial information relating to Alliant Energy’s business segments is as follows. Intersegment revenues were not material to Alliant Energy’s operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility
|
|
Non-Regulated,
|
|
Alliant Energy
|
|
Electric
|
|
Gas
|
|
Other
|
|
Total
|
|
Parent and Other
|
|
Consolidated
|
|
(in millions)
|
Three Months Ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$612.1
|
|
|
|
$73.4
|
|
|
|
$17.8
|
|
|
|
$703.3
|
|
|
|
$14.7
|
|
|
|
$718.0
|
|
Operating income
|
85.9
|
|
|
5.6
|
|
|
2.9
|
|
|
94.4
|
|
|
8.8
|
|
|
103.2
|
|
Amounts attributable to Alliant Energy common shareowners:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
|
|
|
|
56.6
|
|
|
9.3
|
|
|
65.9
|
|
Loss from discontinued operations, net of tax
|
|
|
|
|
|
|
—
|
|
|
(0.6
|
)
|
|
(0.6
|
)
|
Net income attributable to Alliant Energy common shareowners
|
|
|
|
|
|
|
56.6
|
|
|
8.7
|
|
|
65.3
|
|
Three Months Ended June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$612.6
|
|
|
|
$50.0
|
|
|
|
$13.8
|
|
|
|
$676.4
|
|
|
|
$13.9
|
|
|
|
$690.3
|
|
Operating income
|
91.8
|
|
|
3.6
|
|
|
1.5
|
|
|
96.9
|
|
|
11.9
|
|
|
108.8
|
|
Amounts attributable to Alliant Energy common shareowners:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
|
|
|
|
51.8
|
|
|
13.7
|
|
|
65.5
|
|
Income from discontinued operations, net of tax
|
|
|
|
|
|
|
—
|
|
|
0.4
|
|
|
0.4
|
|
Net income attributable to Alliant Energy common shareowners
|
|
|
|
|
|
|
51.8
|
|
|
14.1
|
|
|
65.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Utility
|
|
Non-Regulated,
|
|
Alliant Energy
|
|
Electric
|
|
Gas
|
|
Other
|
|
Total
|
|
Parent and Other
|
|
Consolidated
|
|
(in millions)
|
Six Months Ended June 30, 2013
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$1,245.3
|
|
|
|
$270.7
|
|
|
|
$35.0
|
|
|
|
$1,551.0
|
|
|
|
$26.6
|
|
|
|
$1,577.6
|
|
Operating income
|
159.5
|
|
|
42.9
|
|
|
5.8
|
|
|
208.2
|
|
|
15.7
|
|
|
223.9
|
|
Amounts attributable to Alliant Energy common shareowners:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
|
|
|
|
121.5
|
|
|
17.3
|
|
|
138.8
|
|
Loss from discontinued operations, net of tax
|
|
|
|
|
|
|
—
|
|
|
(3.6
|
)
|
|
(3.6
|
)
|
Net income attributable to Alliant Energy common shareowners
|
|
|
|
|
|
|
121.5
|
|
|
13.7
|
|
|
135.2
|
|
Six Months Ended June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenues
|
|
$1,185.0
|
|
|
|
$217.1
|
|
|
|
$27.5
|
|
|
|
$1,429.6
|
|
|
|
$26.4
|
|
|
|
$1,456.0
|
|
Operating income
|
150.9
|
|
|
31.3
|
|
|
3.2
|
|
|
185.4
|
|
|
19.0
|
|
|
204.4
|
|
Amounts attributable to Alliant Energy common shareowners:
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations, net of tax
|
|
|
|
|
|
|
78.2
|
|
|
26.6
|
|
|
104.8
|
|
Loss from discontinued operations, net of tax
|
|
|
|
|
|
|
—
|
|
|
(4.0
|
)
|
|
(4.0
|
)
|
Net income attributable to Alliant Energy common shareowners
|
|
|
|
|
|
|
78.2
|
|
|
22.6
|
|
|
100.8
|
|
IPL
-
Certain financial information relating to IPL’s business segments is as follows. Intersegment revenues were not material to IPL’s operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric
|
|
Gas
|
|
Other
|
|
Total
|
|
(in millions)
|
Three Months Ended June 30, 2013
|
|
|
|
|
|
|
|
Operating revenues
|
|
$329.6
|
|
|
|
$42.0
|
|
|
|
$11.8
|
|
|
|
$383.4
|
|
Operating income
|
29.4
|
|
|
2.6
|
|
|
2.7
|
|
|
34.7
|
|
Earnings available for common stock
|
|
|
|
|
|
|
22.2
|
|
Three Months Ended June 30, 2012
|
|
|
|
|
|
|
|
Operating revenues
|
|
$321.0
|
|
|
|
$26.8
|
|
|
|
$12.9
|
|
|
|
$360.7
|
|
Operating income
|
33.1
|
|
|
0.8
|
|
|
1.5
|
|
|
35.4
|
|
Earnings available for common stock
|
|
|
|
|
|
|
16.6
|
|
Six Months Ended June 30, 2013
|
|
|
|
|
|
|
|
Operating revenues
|
|
$679.8
|
|
|
|
$156.3
|
|
|
|
$25.2
|
|
|
|
$861.3
|
|
Operating income
|
46.6
|
|
|
23.3
|
|
|
5.9
|
|
|
75.8
|
|
Earnings available for common stock
|
|
|
|
|
|
|
45.1
|
|
Six Months Ended June 30, 2012
|
|
|
|
|
|
|
|
Operating revenues
|
|
$614.1
|
|
|
|
$119.6
|
|
|
|
$25.7
|
|
|
|
$759.4
|
|
Operating income
|
39.8
|
|
|
15.0
|
|
|
4.5
|
|
|
59.3
|
|
Earnings available for common stock
|
|
|
|
|
|
|
11.9
|
|
WPL
-
Certain financial information relating to WPL’s business segments is as follows. Intersegment revenues were not material to WPL’s operations.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Electric
|
|
Gas
|
|
Other
|
|
Total
|
|
(in millions)
|
Three Months Ended June 30, 2013
|
|
|
|
|
|
|
|
Operating revenues
|
|
$282.5
|
|
|
|
$31.4
|
|
|
|
$6.0
|
|
|
|
$319.9
|
|
Operating income
|
56.5
|
|
|
3.0
|
|
|
0.2
|
|
|
59.7
|
|
Earnings available for common stock
|
|
|
|
|
|
|
34.4
|
|
Three Months Ended June 30, 2012
|
|
|
|
|
|
|
|
Operating revenues
|
|
$291.6
|
|
|
|
$23.2
|
|
|
|
$0.9
|
|
|
|
$315.7
|
|
Operating income
|
58.7
|
|
|
2.8
|
|
|
—
|
|
|
61.5
|
|
Earnings available for common stock
|
|
|
|
|
|
|
35.2
|
|
Six Months Ended June 30, 2013
|
|
|
|
|
|
|
|
Operating revenues
|
|
$565.5
|
|
|
|
$114.4
|
|
|
|
$9.8
|
|
|
|
$689.7
|
|
Operating income (loss)
|
112.9
|
|
|
19.6
|
|
|
(0.1
|
)
|
|
132.4
|
|
Earnings available for common stock
|
|
|
|
|
|
|
76.4
|
|
Six Months Ended June 30, 2012
|
|
|
|
|
|
|
|
Operating revenues
|
|
$570.9
|
|
|
|
$97.5
|
|
|
|
$1.8
|
|
|
|
$670.2
|
|
Operating income (loss)
|
111.1
|
|
|
16.3
|
|
|
(1.3
|
)
|
|
126.1
|
|
Earnings available for common stock
|
|
|
|
|
|
|
66.3
|
|
(14) DISCONTINUED OPERATIONS AND ASSETS AND LIABILITIES HELD FOR SALE
In January 2013, Alliant Energy sold RMT in order to narrow its strategic focus and risk profile. Alliant Energy does not currently believe that adjustments to the gain or loss related to the sale of RMT in periods after
June 30, 2013
will be material. The operating results of RMT have been separately classified and reported as discontinued operations in Alliant Energy’s Condensed Consolidated Statements of Income. A summary of the components of discontinued operations in Alliant Energy’s Condensed Consolidated Statements of Income for the
three and six months ended June 30
was as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Operating revenues
|
|
$—
|
|
|
|
$93.9
|
|
|
|
$0.9
|
|
|
|
$148.5
|
|
Operating expenses
|
0.9
|
|
|
93.0
|
|
|
6.5
|
|
|
154.9
|
|
Interest expense and other
|
—
|
|
|
0.2
|
|
|
—
|
|
|
0.2
|
|
Income (loss) before income taxes
|
(0.9
|
)
|
|
0.7
|
|
|
(5.6
|
)
|
|
(6.6
|
)
|
Income tax expense (benefit)
|
(0.3
|
)
|
|
0.3
|
|
|
(2.0
|
)
|
|
(2.6
|
)
|
Income (loss) from discontinued operations, net of tax
|
|
($0.6
|
)
|
|
|
$0.4
|
|
|
|
($3.6
|
)
|
|
|
($4.0
|
)
|
As of
December 31, 2012
, Alliant Energy’s Condensed Consolidated Balance Sheet included assets held for sale recorded in “Other current assets” and liabilities held for sale recorded in “Other current liabilities” as follows (in millions):
|
|
|
|
|
Current assets
|
|
$27.9
|
|
Current liabilities
|
31.4
|
|
Net liabilities held for sale
|
|
($3.5
|
)
|
(15) ASSET RETIREMENT OBLIGATIONS (AROs)
A reconciliation of the changes in AROs associated with long-lived assets is as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliant Energy
|
|
IPL
|
|
WPL
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Balance, January 1
|
|
$101.5
|
|
|
|
$91.1
|
|
|
|
$45.5
|
|
|
|
$56.2
|
|
|
|
$46.9
|
|
|
|
$34.9
|
|
Revisions in estimated cash flows (a)
|
3.4
|
|
|
(9.9
|
)
|
|
0.8
|
|
|
(9.2
|
)
|
|
2.6
|
|
|
(0.7
|
)
|
Liabilities settled
|
(0.1
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
(1.7
|
)
|
|
(0.1
|
)
|
|
(0.1
|
)
|
Liabilities incurred
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Accretion expense
|
1.8
|
|
|
1.8
|
|
|
0.8
|
|
|
1.0
|
|
|
0.8
|
|
|
0.8
|
|
Balance, June 30
|
|
$106.6
|
|
|
|
$81.9
|
|
|
|
$47.1
|
|
|
|
$46.3
|
|
|
|
$50.2
|
|
|
|
$34.9
|
|
|
|
(a)
|
For the
six months ended June 30
, 2012, IPL recorded revisions in estimated cash flows of
($8.2) million
based on revised remediation timing and cost information for asbestos remediation at its Sixth Street Generating Station.
|
(16) RELATED PARTIES
System Coordination and Operating Agreement
-
IPL and WPL are parties to a system coordination and operating agreement whereby Corporate Services serves as agent on behalf of IPL and WPL. The agreement, which has been approved or reviewed by the
Federal Energy Regulatory Commission (FERC)
and all state regulatory bodies having jurisdiction, provides a contractual basis for coordinated planning, construction, operation and maintenance of the interconnected electric generation systems of IPL and WPL. As agent of the agreement, Corporate Services enters into energy, capacity, ancillary services, and transmission sale and purchase transactions. Corporate Services allocates such sales and purchases among IPL and WPL based on procedures included in the agreement. The sales credited to and purchases billed to IPL and WPL for the
three and six
months ended
June 30
were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
|
WPL
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Sales credited
|
|
$1
|
|
|
|
$2
|
|
|
|
$3
|
|
|
|
$4
|
|
|
|
$4
|
|
|
|
$4
|
|
|
|
$7
|
|
|
|
$6
|
|
Purchases billed
|
76
|
|
|
78
|
|
|
152
|
|
|
150
|
|
|
14
|
|
|
13
|
|
|
28
|
|
|
37
|
|
Service Agreement
-
Pursuant to a service agreement, IPL and WPL receive various administrative and general services from an affiliate, Corporate Services. These services are billed to IPL and WPL at cost based on expenses incurred by Corporate Services for the benefit of IPL and WPL, respectively. These costs consisted primarily of employee compensation and benefits, fees associated with various professional services and a return on net assets. The amounts billed to IPL and WPL for the
three and six
months ended
June 30
were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPL
|
|
WPL
|
|
Three Months
|
|
Six Months
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Corporate Services billings
|
|
$36
|
|
|
|
$34
|
|
|
|
$68
|
|
|
|
$63
|
|
|
|
$23
|
|
|
|
$27
|
|
|
|
$49
|
|
|
|
$50
|
|
Net intercompany payables to Corporate Services were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
IPL
|
|
WPL
|
|
June 30, 2013
|
|
December 31, 2012
|
|
June 30, 2013
|
|
December 31, 2012
|
Net payables to Corporate Services
|
$73
|
|
$72
|
|
$39
|
|
$40
|
ATC
-
Pursuant to various agreements, WPL receives a range of transmission services from ATC. WPL provides operation, maintenance, and construction services to ATC. WPL and ATC also bill each other for use of shared facilities owned by each party. The related amounts billed between the parties for the
three and six
months ended
June 30
were as follows (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
ATC billings to WPL
|
|
$24
|
|
|
|
$23
|
|
|
|
$48
|
|
|
|
$45
|
|
WPL billings to ATC
|
4
|
|
|
2
|
|
|
7
|
|
|
4
|
|
WPL owed ATC net amounts of
$7 million
as of
June 30, 2013
and
$6 million
as of
December 31, 2012
.
(17) EARNINGS PER SHARE
A reconciliation of the weighted average common shares outstanding used in the basic and diluted
earnings per weighted average common share (EPS)
calculation for the
three and six
months ended
June 30
was as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
|
|
Six Months
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
Basic EPS calculation
|
110,776
|
|
|
110,756
|
|
|
110,772
|
|
|
110,736
|
|
Effect of dilutive share-based awards
|
4
|
|
|
13
|
|
|
6
|
|
|
19
|
|
Diluted EPS calculation
|
110,780
|
|
|
110,769
|
|
|
110,778
|
|
|
110,755
|
|
For the
three and six
months ended
June 30, 2013
and
2012
, there were
no
potentially dilutive securities excluded from the calculation of diluted EPS.