Alliant Energy Corporation (Alliant Energy) has reported operating revenues of $3.68 billion for the year-end 2008, compared with the operating revenues of $3.44 billion in the previous year-end. It has also reported a net income of $288 million, or $2.61 per diluted share, for the year-end 2008, compared with the net income of $425.3 million, or $3.78 per diluted share, in the previous year-end.
Excluding the 2007 gain on Interstate Power and Light Company’s (IPL’s) electric transmission assets, utility EPS decreased 6%in 2008. The largest driver of decreased 2008 utility results was the historic flooding in June that resulted in significant disruptions to operations in Cedar Rapids, Iowa, which is Alliant Energy’s largest load center and home to two of its generating stations. The total incremental impact of lost sales, clean up and restoration costs, and facility impairments reduced earnings by around $0.23 per share, net of insurance proceeds. Other negative earnings factors in 2008 included the previously expected impacts of the sale of IPL’s electric transmission assets and lower sales resulting from unfavorable economic conditions. These items were partially offset by a number of items, including lower purchased power capacity costs, a lower effective income tax rate, and increased allowance for funds used during construction on capital deployed to wind generation projects.
Reduced earnings from Alliant Energy’s non-regulated businesses were the result of a reversal of capital loss deferred tax asset valuation allowances in 2007 and lower earnings from a short-term purchased power agreement associated with the Neenah Energy Facility (NEF). NEF is expected to be sold from the non-regulated business to Wisconsin Power and Light Company (WPL) in June 2009. These items were partially offset by increased earnings at RMT as a result of their engineering and construction activities on wind farm projects across the US.
Higher earnings at Alliant Energy’s parent company reflect increased interest income on the cash and short-term investments resulting from the proceeds from the sale of IPL’s electric transmission assets.
2008 presented a host of challenges to our company including historic flooding and an economy in a recession, said Bill Harvey, Alliant Energy chairman, president, and chief executive officer. Despite these obstacles our employees remained committed to delivering strong reliability for our customers and solid results for our shareowners. 2008 was also a pivotal year in the execution of our strategic plan. With significant progress made on our wind, energy efficiency, and environmental control projects we have placed our company on the path to a greener future.
The guidance does not include the impact of certain non-cash valuation adjustments that Alliant Energy may incur, the impact of any future adjustments made to Alliant Energy’s deferred tax asset valuation allowances, or the impacts of any cumulative effects of changes in accounting principles.
Drivers for Alliant Energy’s earnings estimates include, but are not limited to:
Normal weather conditions in its utility service territory
Ability to recover future purchased power, fuel and fuel-related costs through rates in a timely manner
State of economy in its utility service territory and resulting implications on sales, including the impact of the current recession
Ability of IPL and WPL to recover their operating costs and deferred expenditures, and to earn a reasonable rate of return in future rate proceedings
Continuing cost controls and operational efficiencies
Execution of IPL’s and WPL’s generation build-out and environmental expenditure plans
Ability to utilize tax capital losses generated to-date, and those that may be generated in the future, before they expire
RMT sales forecast and project execution as planned