The additional 500 MW of wind energy that Alliant Energy Corp. is seeking approval for in Iowa is a "cost-effective addition" to the company's resource plan, according to company Chairman, President and CEO Patricia Kampling.
On Alliant's second-quarter 2017 earnings call Aug. 4, Kampling said the additional wind capacity would help keep energy costs stable for its customers over the long term. "Wind energy will continue to be a significant resource, which normally enhances our ability to manage cost for customers, but also fulfills their increasing desire for renewable energy," Kampling said on the call.
The company on Aug. 3 unveiled plans for the added wind capacity in Iowa, which combined with previously approved expansions would represent a $1.8 billion investment and add up to 1,000 MW of new wind capacity in the state.
Alliant subsidiary Interstate Power & Light Co. filed an application with the Iowa Utilities Board seeking approval of the proposed wind investment, as well as for advance rate-making principles. The utility is seeking a cost cap of $1,780/kW, including allowance for funds used during construction, or AFUDC, and transmission costs, an 11% return on common equity, a 40-year depreciable life and a 10% AFUDC return on equity used for modeling that allows for the higher of 10% or the 2016 test year base rate review result.
Kampling noted that Alliant subsidiary Wisconsin Power and Light Co. still plans to file with the Wisconsin Public Service Commission for an additional 200 MW of wind later this year. "We are in the early stages of that process," she added.
"Please keep in mind that our current published capital expenditure plan includes the 500 MW already approved in Iowa and an additional 200 [MW] each for IPL and WPL, for total wind expansion of 900 MW during the 2017-2020 period," Kampling said. "Since the time we issued our capital guidance, wind install costs are trending lower and are now coming in below our original forecast."
Additionally, as construction schedules and in-service dates are evaluated, costs will likely shift between years within the plan, according to Kampling. "As a result, we don't expect our 2017 or 2020 capital plan to increase by the full project amount for the additional 300 MW of wind," she said. "We will update our capital energy plan as part of our third-quarter earnings release in November, but I want to be clear that this additional wind investment aligns with our earnings growth objective of 5% to 7%."
Alliant is also adding solar generation to its energy mix, Kampling said. The company's West Dubuque project is roughly 85% complete, and the Port of Dubuque project is about 55% complete, with both expected to come online in September.
Temperatures during the quarter were, on average, normal despite a stormy and wet spring, Kampling said, adding that in comparison, last spring was a little warmer, which led to a negative quarter-over-quarter variance of 1 cent per share. "With the normal temperatures, we achieved solid earnings this quarter of 41 cents per share, which is 4 cents per share higher than the second quarter of 2016," she noted. "These results were in line with our expectations and reflect revenue increases at both utilities."
Kampling noted that the company is reaffirming its 2017 earnings guidance range of $1.92 to $2.06 per share. "Our earnings growth objective remains at 5% to 7% annually through 2020 based on non-GAAP 2016 earnings per share of $1.88," she said. The company's robust capital expenditure plans, modest sales growth and constructive regulatory outcomes continue to support its long-term earnings growth, she added.