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Alliant Energy expects state proceedings on tax reform to conclude in Q2

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Alliant Energy expects state proceedings on tax reform to conclude in Q2

Pending state regulatory decisions on additional wind energy capacity and how to treat rate impacts of a new federal tax law will influence whether Alliant Energy Corp. makes any changes to its long-term financing plan.

Alliant Chairman and CEO Patricia Kampling held the company's forecast EPS for 2018 at $2.11 and its long-term EPS growth rate at 5% to 7%. She does not expect changes to the company's financing plan for 2018 but held back on sharing more for 2019 and beyond.

Kampling prefers to wait until the Iowa Utilities Board makes a decision on its request to add another 500 MW of wind. Overall, Alliant plans to add 1,000 MW of wind, of which 500 MW got board approval in 2016. In August 2017, the company requested board approval for the second 500 MW and expects a decision "in the coming weeks," Kampling said Feb. 23 on the company's fourth-quarter 2017 earnings call.

In a November 2017 presentation, Alliant reaffirmed a $6.9 billion CapEx plan for 2017 through 2021 and an additional $5 billion in spending from 2022 to 2026. Of the 1,000 MW of wind planned in Iowa, Kampling expects the first 300 MW of wind to come online in 2019 and the remaining 700 MW to come on in 2020. The CapEx plan assumes the entire 1,000-MW wind addition will be approved by regulators, she said.

Kampling said Alliant is studying its capacity needs beyond 2025, as its power purchase agreement with NextEra Energy Inc. for the output of the Duane Arnold Energy Center (DAEC) nuclear plant is due to expire that year and "it appears that there will be more competitive options for our customers."

Alliant Senior Vice President, CFO and Treasurer Robert Durian expects decisions in the second quarter from Iowa and Wisconsin regulators on how its utilities should treat impacts from the U.S. tax reform law to lower corporate income tax rate to 21% from 35%.

The lower tax rate is expected to result in lower tax liabilities at utilities Wisconsin Power and Light Co. and Interstate Power & Light Co. in 2018, which would lead to refunds for electric and gas customers. Alliant expects to provide those refunds through billing credits. Executives also expect lower electric transmission costs at both utilities.

Durian expects to share more information on Alliant's CapEx plan and equity needs in a month or two. To counter lower expected cash flows, he expects the company will need to issue additional debt and equity to maintain its authorized capital structures under the rates allowed its utilities, but the timing depends on future regulatory proceedings.

"We do not anticipate any changes to the 2018 financing plan we shared last November, which included up to $200 million of new common equity in additional long-term debt at [Interstate Power & Light] and Alliant Energy Finance," Durian said.

Non-GAAP earnings for fourth quarter 2017 from continuing operations were $75.7 million, or 33 cents per share, which missed the S&P Capital IQ consensus EPS estimate of 36 cents. Earnings in the same quarter in 2016 were $63 million, or 28 cents per share. Federal tax reform resulted in 8-cent-higher EPS in the fourth quarter, the company said.

Full-year 2017 earnings were $457.3 million, or $1.99 per share, compared to $371.5 million, or $1.65 per share, in 2016 on a GAAP basis. The 2017 results beat S&P Capital IQ consensus estimates of $1.94 per share.

The higher earnings in 2017 reflect a gain of 7 cents per share from its utility and corporate services segments. The nonutility and parent company collectively showed a gain of 26 cents per share in part because of tax reform impacts and a charge in 2016 that was not in 2017 from the acquisition of the 99-MW Franklin County Wind Farm a deal Alliant closed in 2017.