10-Q 1 lnt930201610-q.htm 10-Q Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
 
 
FORM 10-Q
 
 
 
 
 
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2016
 
or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    
 
Commission
File Number
 
Name of Registrant, State of Incorporation,
Address of Principal Executive Offices and Telephone Number
 
IRS Employer
Identification Number
1-9894
 
ALLIANT ENERGY CORPORATION
 
39-1380265
 
 
(a Wisconsin corporation)
 
 
 
 
4902 N. Biltmore Lane
 
 
 
 
Madison, Wisconsin 53718
 
 
 
 
Telephone (608) 458-3311
 
 
 
 
 
1-4117
 
INTERSTATE POWER AND LIGHT COMPANY
 
42-0331370
 
 
(an Iowa corporation)
 
 
 
 
Alliant Energy Tower
 
 
 
 
Cedar Rapids, Iowa 52401
 
 
 
 
Telephone (319) 786-4411
 
 
 
 
 
0-337
 
WISCONSIN POWER AND LIGHT COMPANY
 
39-0714890
 
 
(a Wisconsin corporation)
 
 
 
 
4902 N. Biltmore Lane
 
 
 
 
Madison, Wisconsin 53718
 
 
 
 
Telephone (608) 458-3311
 
 
This combined Form 10-Q is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-Q relating to Interstate Power and Light Company and Wisconsin Power and Light Company is filed by each such registrant on its own behalf. Each of Interstate Power and Light Company and Wisconsin Power and Light Company makes no representation as to information relating to registrants other than itself.
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days.    Yes   No 
Indicate by check mark whether the registrants have submitted electronically and posted on their corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrants were required to submit and post such files).    Yes   No 
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, or smaller reporting companies. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
  
Accelerated Filer
  
Non-accelerated Filer
  
Smaller Reporting Company Filer
Alliant Energy Corporation
  
 
  
 
  
 
Interstate Power and Light Company
 
  
 
  
  
 
Wisconsin Power and Light Company
 
  
 
  
  
 
Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).    Yes   No 
Number of shares outstanding of each class of common stock as of September 30, 2016:
Alliant Energy Corporation
Common stock, $0.01 par value, 227,500,428 shares outstanding
 
 
Interstate Power and Light Company
Common stock, $2.50 par value, 13,370,788 shares outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation)
 
 
Wisconsin Power and Light Company
Common stock, $5 par value, 13,236,601 shares outstanding (all of which are owned beneficially and of record by Alliant Energy Corporation)





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




DEFINITIONS
The following abbreviations or acronyms used in this Form 10-Q are defined below:
Abbreviation or Acronym
 
Definition
2015 Form 10-K
 
Combined Annual Report on Form 10-K filed by Alliant Energy, IPL and WPL for the year ended Dec. 31, 2015
AEF
 
Alliant Energy Finance, LLC
AFUDC
 
Allowance for funds used during construction
Alliant Energy
 
Alliant Energy Corporation
AROs
 
Asset retirement obligations
ATC
 
American Transmission Company LLC
CAA
 
Clean Air Act
CCR
 
Coal Combustion Residuals
CDD
 
Cooling degree days
CEO
 
Chief Executive Officer
CFO
 
Chief Financial Officer
Columbia
 
Columbia Energy Center
Corporate Services
 
Alliant Energy Corporate Services, Inc.
CRANDIC
 
Cedar Rapids and Iowa City Railway Company
DAEC
 
Duane Arnold Energy Center
Dth
 
Dekatherm
Edgewater
 
Edgewater Generating Station
EGU
 
Electric generating unit
EPA
 
U.S. Environmental Protection Agency
EPS
 
Earnings per weighted average common share
FERC
 
Federal Energy Regulatory Commission
Financial Statements
 
Condensed Consolidated Financial Statements
FTR
 
Financial transmission right
Fuel-related
 
Electric production fuel and purchased power
GAAP
 
U.S. generally accepted accounting principles
HDD
 
Heating degree days
IPL
 
Interstate Power and Light Company
ITC
 
ITC Midwest LLC
IUB
 
Iowa Utilities Board
Marshalltown
 
Marshalltown Generating Station
MDA
 
Management’s Discussion and Analysis of Financial Condition and Results of Operations
MGP
 
Manufactured gas plant
MISO
 
Midcontinent Independent System Operator, Inc.
MW
 
Megawatt
MWh
 
Megawatt-hour
N/A
 
Not applicable
NAAQS
 
National Ambient Air Quality Standards
Nelson Dewey
 
Nelson Dewey Generating Station
Note(s)
 
Combined Notes to Condensed Consolidated Financial Statements
NOx
 
Nitrogen oxide
OPEB
 
Other postretirement benefits
PSCW
 
Public Service Commission of Wisconsin
Receivables Agreement
 
Receivables Purchase and Sale Agreement
Resources
 
Alliant Energy Resources, LLC
Riverside
 
Riverside Energy Center
RMT
 
RMT, Inc.
SCR
 
Selective catalytic reduction
SO2
 
Sulfur dioxide
U.S.
 
United States of America
Whiting Petroleum
 
Whiting Petroleum Corporation
WPL
 
Wisconsin Power and Light Company


 
1
 


FORWARD-LOOKING STATEMENTS

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

federal and state regulatory or governmental actions, including the impact of energy, tax, financial and health care legislation, and of regulatory agency orders;
IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, the recovery of fuel costs, operating costs, transmission costs, deferred expenditures, capital expenditures, and remaining costs related to EGUs that may be permanently closed, earning their authorized rates of return, and the payments to their parent of expected levels of dividends;
the ability to continue cost controls and operational efficiencies;
the impact of IPL’s retail electric base rate freeze in Iowa during 2016;
the impacts of WPL’s retail electric and gas base rate freeze in Wisconsin during 2016 and WPL’s pending retail base rate case for the 2017/2018 Test Period;
weather effects on results of utility operations, including impacts of temperature changes in IPL’s and WPL’s service territories on customers’ demand for electricity and gas;
the impact of the economy in IPL’s and WPL’s service territories and the resulting impacts on sales volumes, margins and the ability to collect unpaid bills;
the impact of customer- and third party-owned generation, including alternative electric suppliers, in IPL’s and WPL’s service territories on system reliability, operating expenses and customers’ demand for electricity;
the impact of energy efficiency, franchise retention, customer- and third party-owned generation and customer disconnects on sales volumes and margins;
the impact that price changes may have on IPL’s and WPL’s customers’ demand for electric, gas and steam services and their ability to pay their bills;
developments that adversely impact the ability to implement the strategic plan, including issues with planned and potential new wind generation projects, IPL’s Marshalltown EGU, WPL’s Riverside expansion and related third party purchase options, new environmental control equipment for various fossil-fueled EGUs of IPL and WPL, various replacements, modernization and expansion of IPL’s and WPL’s electric and gas distribution systems, the proposed transfer of the Franklin County wind farm to IPL, and the potential decommissioning of certain EGUs of IPL and WPL;
the ability to qualify for the full level of production tax credits on planned and potential new wind farms and the impact of changes to production tax credits for wind farms;
issues related to the availability and operations of EGUs, including start-up risks, breakdown or failure of equipment, performance below expected or contracted levels of output or efficiency, operator error, employee safety, transmission constraints, compliance with mandatory reliability standards and risks related to recovery of resulting incremental costs through rates;
disruptions in the supply and delivery of natural gas, purchased electricity and coal, including due to the bankruptcy of coal mining companies;
changes in the price of delivered coal, natural gas and purchased electricity due to shifts in supply and demand caused by market conditions and regulations, and the ability to recover and to retain the recovery of related changes in purchased power, fuel and fuel-related costs through rates in a timely manner;
impacts on equity income from unconsolidated investments due to further potential changes to ATC’s authorized return on equity;
issues associated with environmental remediation and environmental compliance, including compliance with the Consent Decree between WPL, the EPA and the Sierra Club, the Consent Decree between IPL, the EPA, the Sierra Club, the State of Iowa and Linn County in Iowa, the CCR Rule, the Clean Power Plan, future changes in environmental laws and regulations, including the EPA’s regulations for carbon dioxide emissions reductions from new and existing fossil-fueled EGUs, and litigation associated with environmental requirements;
the ability to defend against environmental claims brought by state and federal agencies, such as the EPA, state natural resources agencies or third parties, such as the Sierra Club, and the impact on operating expenses of defending and resolving such claims;

 
2
 


the ability to recover through rates all environmental compliance and remediation costs, including costs for projects put on hold due to uncertainty of future environmental laws and regulations;
impacts that storms or natural disasters in IPL’s and WPL’s service territories may have on their operations and recovery of, and rate relief for, costs associated with restoration activities;
the direct or indirect effects resulting from terrorist incidents, including physical attacks and cyber attacks, or responses to such incidents;
the impact of penalties or third-party claims related to, or in connection with, a failure to maintain the security of personally identifiable information, including associated costs to notify affected persons and to mitigate their information security concerns;
the direct or indirect effects resulting from breakdown or failure of equipment in the operation of gas distribution systems, such as leaks, explosions and mechanical problems, and compliance with gas transmission and distribution safety regulations, such as proposed rules recently issued by the Pipeline and Hazardous Materials Safety Administration;
risks associated with integration of a new customer billing and information system, which was completed in the first quarter of 2016;
impacts of IPL’s future tax benefits from Iowa rate-making practices, including deductions for repairs expenditures and allocation of mixed service costs, and recoverability of the associated regulatory assets from customers, when the differences reverse in future periods;
any material post-closing adjustments related to any past asset divestitures, including the sales of IPL’s Minnesota electric and natural gas assets, RMT and Whiting Petroleum, which could result from, among other things, warranties, parental guarantees or litigation;
continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;
inflation and interest rates;
changes to the creditworthiness of counterparties with which Alliant Energy, IPL and WPL have contractual arrangements, including participants in the energy markets and fuel suppliers and transporters;
issues related to electric transmission, including operating in Regional Transmission Organization energy and ancillary services markets, the impacts of potential future billing adjustments and cost allocation changes from Regional Transmission Organizations and recovery of costs incurred;
current or future litigation, regulatory investigations, proceedings or inquiries;
reputational damage from negative publicity, protests, fines, penalties and other negative consequences resulting in regulatory and/or legal actions;
Alliant Energy’s ability to sustain its dividend payout ratio goal;
employee workforce factors, including changes in key executives, collective bargaining agreements and negotiations, work stoppages or restructurings;
inability to access technological developments, including those related to wind turbines, solar generation, smart technology, battery storage and other future technologies;
changes in technology that alter the channels through which electric customers buy or utilize power;
impacts of ATC’s potential restructuring;
material changes in retirement and benefit plan costs;
the impact of performance-based compensation plans accruals;
the effect of accounting standards issued periodically by standard-setting bodies, including revenue recognition and lease standards;
the impact of adjustments made to deferred tax assets and liabilities from state apportionment assumptions;
the ability to utilize tax credits and net operating losses generated to date, and those that may be generated in the future, before they expire;
impacts of the extension of bonus depreciation deductions;
the ability to successfully complete tax audits and changes in tax accounting methods with no material impact on earnings and cash flows; and
factors listed in MDA and Risk Factors in Item 1A in the 2015 Form 10-K.

Alliant Energy, IPL and WPL each assume no obligation, and disclaim any duty, to update the forward-looking statements in this report, except as required by law.


 
3
 


PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(in millions, except per share amounts)
Operating revenues:
 
 
 
 
 
 
 
Electric utility

$864.3

 

$835.8

 

$2,209.1

 

$2,147.5

Gas utility
39.5

 
38.0

 
248.7

 
288.1

Other utility
9.4

 
13.4

 
35.0

 
44.6

Non-regulated
11.4

 
11.7

 
30.2

 
33.3

Total operating revenues
924.6

 
898.9

 
2,523.0

 
2,513.5

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and purchased power
245.9

 
245.8

 
646.3

 
646.9

Electric transmission service
138.6

 
127.6

 
396.8

 
367.7

Cost of gas sold
12.5

 
13.6

 
132.3

 
166.3

Asset valuation charges for Franklin County wind farm
86.4

 

 
86.4

 

Other operation and maintenance
148.6

 
151.1

 
438.2

 
456.3

Depreciation and amortization
104.1

 
99.3

 
308.7

 
299.9

Taxes other than income taxes
25.9

 
25.6

 
77.2

 
78.6

Total operating expenses
762.0

 
663.0

 
2,085.9

 
2,015.7

Operating income
162.6

 
235.9

 
437.1

 
497.8

Interest expense and other:
 
 
 
 
 
 
 
Interest expense
48.8

 
46.4

 
144.8

 
139.5

Equity income from unconsolidated investments, net
(9.2
)
 
(11.1
)
 
(28.8
)
 
(28.9
)
Allowance for funds used during construction
(15.8
)
 
(9.7
)
 
(44.3
)
 
(25.1
)
Interest income and other
(0.1
)
 
(0.1
)
 
(0.3
)
 
(0.4
)
Total interest expense and other
23.7

 
25.5

 
71.4

 
85.1

Income from continuing operations before income taxes
138.9

 
210.4

 
365.7

 
412.7

Income taxes
7.5

 
27.8

 
47.2

 
59.5

Income from continuing operations, net of tax
131.4

 
182.6

 
318.5

 
353.2

Loss from discontinued operations, net of tax
(0.4
)
 
(0.1
)
 
(2.0
)
 
(1.4
)
Net income
131.0

 
182.5

 
316.5

 
351.8

Preferred dividend requirements of Interstate Power and Light Company
2.6

 
2.6

 
7.7

 
7.7

Net income attributable to Alliant Energy common shareowners

$128.4

 

$179.9

 

$308.8

 

$344.1

Weighted average number of common shares outstanding (basic and diluted) (a)
227.2

 
226.4

 
227.0

 
225.0

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

$0.57

 

$0.79

 

$1.37

 

$1.54

Loss from discontinued operations, net of tax

 

 
(0.01
)
 
(0.01
)
Net income

$0.57

 

$0.79

 

$1.36

 

$1.53

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

$128.8

 

$180.0

 

$310.8

 

$345.5

Loss from discontinued operations, net of tax
(0.4
)
 
(0.1
)
 
(2.0
)
 
(1.4
)
Net income

$128.4

 

$179.9

 

$308.8

 

$344.1

Dividends declared per common share (a)

$0.29375

 

$0.275

 

$0.88125

 

$0.825


(a)
Amounts reflect the effects of a two-for-one common stock split distributed in May 2016. Refer to Note 6 for additional details.

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

 
4
 


ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2016
 
December 31,
2015
 
(in millions, except per
share and share amounts)
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents

$84.7

 

$5.8

Accounts receivable, less allowance for doubtful accounts
491.5

 
397.6

Production fuel, at weighted average cost
92.6

 
98.8

Gas stored underground, at weighted average cost
37.8

 
43.3

Materials and supplies, at weighted average cost
89.5

 
81.4

Regulatory assets
63.1

 
120.2

Other
98.9

 
79.7

Total current assets
958.1

 
826.8

Property, plant and equipment, net
9,920.4

 
9,519.1

Investments:
 
 
 
Investment in American Transmission Company LLC
309.9

 
293.3

Other
19.7

 
53.0

Total investments
329.6

 
346.3

Other assets:
 
 
 
Regulatory assets
1,811.7

 
1,788.4

Deferred charges and other
9.4

 
14.6

Total other assets
1,821.1

 
1,803.0

Total assets

$13,029.2

 

$12,495.2

LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current maturities of long-term debt

$314.0

 

$313.4

Commercial paper
238.3

 
159.8

Accounts payable
365.1

 
402.4

Regulatory liabilities
178.4

 
187.1

Other
273.9

 
296.6

Total current liabilities
1,369.7

 
1,359.3

Long-term debt, net (excluding current portion)
3,816.9

 
3,522.2

Other liabilities:
 
 
 
Deferred tax liabilities
2,530.6

 
2,381.2

Regulatory liabilities
497.4

 
550.6

Pension and other benefit obligations
455.3

 
451.8

Other
300.2

 
306.0

Total other liabilities
3,783.5

 
3,689.6

Commitments and contingencies (Note 13)


 


Equity:
 
 
 
Alliant Energy Corporation common equity:
 
 
 
Common stock - $0.01 par value - 480,000,000 shares authorized; 227,500,428 and 226,918,432 shares outstanding (a)
2.3

 
2.3

Additional paid-in capital
1,686.0

 
1,661.8

Retained earnings
2,181.0

 
2,068.9

Accumulated other comprehensive loss
(0.4
)
 
(0.4
)
Shares in deferred compensation trust - 432,619 and 430,186 shares at a weighted average cost of $22.54 and $19.84 per share (a)
(9.8
)
 
(8.5
)
Total Alliant Energy Corporation common equity
3,859.1

 
3,724.1

Cumulative preferred stock of Interstate Power and Light Company
200.0

 
200.0

Total equity
4,059.1

 
3,924.1

Total liabilities and equity

$13,029.2

 

$12,495.2

(a)
Share and per share amounts reflect the effects of a two-for-one common stock split distributed in May 2016. Refer to Note 6 for additional details.

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

 
5
 


ALLIANT ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2016
 
2015
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$316.5

 

$351.8

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
308.7

 
299.9

Deferred tax expense and investment tax credits
76.7

 
101.0

Asset valuation charges for Franklin County wind farm
86.4

 

Other
(44.0
)
 
(2.5
)
Other changes in assets and liabilities:
 
 
 
Accounts receivable
(101.0
)
 
11.7

Sales of accounts receivable
(4.0
)
 
(21.0
)
Regulatory assets
36.6

 
(51.3
)
Regulatory liabilities
(66.5
)
 
(61.5
)
Deferred income taxes
71.8

 
74.1

Other
(27.2
)
 
(6.9
)
Net cash flows from operating activities
654.0

 
695.3

Cash flows used for investing activities:
 
 
 
Construction and acquisition expenditures:
 
 
 
Utility business
(743.6
)
 
(678.9
)
Alliant Energy Corporate Services, Inc. and non-regulated businesses
(43.3
)
 
(47.5
)
Proceeds from Minnesota electric and natural gas distribution asset sales

 
138.1

Other
15.1

 
(24.7
)
Net cash flows used for investing activities
(771.8
)
 
(613.0
)
Cash flows from financing activities:
 
 
 
Common stock dividends
(199.8
)
 
(185.1
)
Proceeds from issuance of common stock, net
20.4

 
145.4

Proceeds from issuance of long-term debt
300.0

 
250.7

Payments to retire long-term debt
(1.9
)
 
(182.0
)
Net change in commercial paper
78.5

 
(32.2
)
Other
(0.5
)
 
3.2

Net cash flows from financing activities
196.7

 

Net increase in cash and cash equivalents
78.9

 
82.3

Cash and cash equivalents at beginning of period
5.8

 
56.9

Cash and cash equivalents at end of period

$84.7

 

$139.2

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

($140.7
)
 

($133.9
)
Income taxes, net

($8.3
)
 

$—

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

$99.9

 

$180.0


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

 
6
 


INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Operating revenues:
 
 
 
 
 
 
 
Electric utility

$483.2

 

$468.6

 

$1,209.2

 

$1,170.6

Gas utility
23.9

 
23.1

 
142.6

 
164.1

Steam and other
9.1

 
12.9

 
34.1

 
41.1

Total operating revenues
516.2

 
504.6

 
1,385.9

 
1,375.8

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and purchased power
125.0

 
131.4

 
324.8

 
332.0

Electric transmission service
95.9

 
87.5

 
270.7

 
249.3

Cost of gas sold
8.0

 
9.4

 
76.3

 
93.4

Other operation and maintenance
94.8

 
94.3

 
279.8

 
287.5

Depreciation and amortization
52.7

 
51.2

 
157.8

 
155.1

Taxes other than income taxes
13.9

 
13.8

 
40.6

 
42.2

Total operating expenses
390.3

 
387.6

 
1,150.0

 
1,159.5

Operating income
125.9

 
117.0

 
235.9

 
216.3

Interest expense and other:
 
 
 
 
 
 
 
Interest expense
25.5

 
23.8

 
75.4

 
71.8

Allowance for funds used during construction
(13.8
)
 
(7.3
)
 
(36.2
)
 
(19.3
)
Interest income and other

 
0.1

 
(0.1
)
 

Total interest expense and other
11.7

 
16.6

 
39.1

 
52.5

Income before income taxes
114.2

 
100.4

 
196.8

 
163.8

Income tax benefit
(2.5
)
 
(18.7
)
 
(2.5
)
 
(24.4
)
Net income
116.7

 
119.1

 
199.3

 
188.2

Preferred dividend requirements
2.6

 
2.6

 
7.7

 
7.7

Earnings available for common stock

$114.1

 

$116.5

 

$191.6

 

$180.5

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

 
7
 


INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2016
 
December 31,
2015
 
(in millions, except per
share and share amounts)
ASSETS
 
Current assets:
 
 
 
Cash and cash equivalents

$77.7

 

$4.5

Accounts receivable, less allowance for doubtful accounts
266.8

 
200.0

Production fuel, at weighted average cost
70.0

 
60.2

Gas stored underground, at weighted average cost
17.4

 
18.2

Materials and supplies, at weighted average cost
50.0

 
45.7

Regulatory assets
15.0

 
39.6

Other
37.2

 
28.2

Total current assets
534.1

 
396.4

Property, plant and equipment, net
5,220.1

 
4,925.1

Investments
0.8

 
19.6

Other assets:
 
 
 
Regulatory assets
1,402.2

 
1,363.0

Deferred charges and other
3.8

 
5.0

Total other assets
1,406.0

 
1,368.0

Total assets

$7,161.0

 

$6,709.1

LIABILITIES AND EQUITY
 
Current liabilities:
 
 
 
Accounts payable

$172.6

 

$197.2

Accounts payable to associated companies
55.0

 
37.7

Regulatory liabilities
132.5

 
130.9

Accrued taxes
41.2

 
67.6

Other
85.9

 
97.7

Total current liabilities
487.2

 
531.1

Long-term debt, net (excluding current portion)
2,153.1

 
1,856.9

Other liabilities:
 
 
 
Deferred tax liabilities
1,493.6

 
1,378.0

Regulatory liabilities
298.9

 
358.3

Pension and other benefit obligations
161.2

 
160.2

Other
229.1

 
229.3

Total other liabilities
2,182.8

 
2,125.8

Commitments and contingencies (Note 13)


 


Equity:
 
 
 
Interstate Power and Light Company common equity:
 
 
 
Common stock - $2.50 par value - 24,000,000 shares authorized; 13,370,788 shares outstanding
33.4

 
33.4

Additional paid-in capital
1,472.8

 
1,407.8

Retained earnings
631.7

 
554.1

Total Interstate Power and Light Company common equity
2,137.9

 
1,995.3

Cumulative preferred stock
200.0

 
200.0

Total equity
2,337.9

 
2,195.3

Total liabilities and equity

$7,161.0

 

$6,709.1


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

 
8
 


INTERSTATE POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2016
 
2015
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$199.3

 

$188.2

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
157.8

 
155.1

Other
24.3

 
32.3

Other changes in assets and liabilities:
 
 
 
Accounts receivable
(66.5
)
 
(8.3
)
Sales of accounts receivable
(4.0
)
 
(21.0
)
Regulatory assets
(14.1
)
 
(38.1
)
Regulatory liabilities
(64.5
)
 
(63.1
)
Deferred income taxes
67.7

 
72.0

Other
(43.5
)
 
0.9

Net cash flows from operating activities
256.5

 
318.0

Cash flows used for investing activities:
 
 
 
Utility construction and acquisition expenditures
(436.5
)
 
(432.6
)
Proceeds from Minnesota electric and natural gas distribution asset sales

 
138.1

Other
1.1

 
(24.9
)
Net cash flows used for investing activities
(435.4
)
 
(319.4
)
Cash flows from financing activities:
 
 
 
Common stock dividends
(114.0
)
 
(105.0
)
Capital contributions from parent
65.0

 
100.0

Proceeds from issuance of long-term debt
300.0

 
250.0

Payments to retire long-term debt

 
(150.0
)
Other
1.1

 
0.5

Net cash flows from financing activities
252.1

 
95.5

Net increase in cash and cash equivalents
73.2

 
94.1

Cash and cash equivalents at beginning of period
4.5

 
5.3

Cash and cash equivalents at end of period

$77.7

 

$99.4

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

($72.5
)
 

($66.7
)
Income taxes, net

$0.7

 

$31.1

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

$44.5

 

$115.5


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



 
9
 


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
 
For the Three Months
 
For the Nine Months
 
Ended September 30,
 
Ended September 30,
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Operating revenues:
 
 
 
 
 
 
 
Electric utility

$381.1

 

$367.2

 

$999.9

 

$976.9

Gas utility
15.6

 
14.9

 
106.1

 
124.0

Other
0.3

 
0.5

 
0.9

 
3.5

Total operating revenues
397.0

 
382.6

 
1,106.9

 
1,104.4

Operating expenses:
 
 
 
 
 
 
 
Electric production fuel and purchased power
120.9

 
114.4

 
321.5

 
314.9

Electric transmission service
42.7

 
40.1

 
126.1

 
118.4

Cost of gas sold
4.5

 
4.2

 
56.0

 
72.9

Other operation and maintenance
54.2

 
57.0

 
157.2

 
167.7

Depreciation and amortization
48.7

 
45.7

 
143.5

 
137.5

Taxes other than income taxes
11.0

 
10.9

 
33.8

 
33.6

Total operating expenses
282.0

 
272.3

 
838.1

 
845.0

Operating income
115.0

 
110.3

 
268.8

 
259.4

Interest expense and other:
 
 
 
 
 
 
 
Interest expense
22.9

 
23.1

 
68.7

 
69.5

Equity income from unconsolidated investments
(9.3
)
 
(11.1
)
 
(29.0
)
 
(30.2
)
Allowance for funds used during construction
(2.0
)
 
(2.4
)
 
(8.1
)
 
(5.8
)
Interest income and other
0.1

 
(0.3
)
 
(0.2
)
 
(0.3
)
Total interest expense and other
11.7

 
9.3

 
31.4

 
33.2

Income before income taxes
103.3

 
101.0

 
237.4

 
226.2

Income taxes
33.7

 
32.6

 
77.1

 
73.0

Net income
69.6

 
68.4

 
160.3

 
153.2

Net income attributable to noncontrolling interest
0.6

 
0.4

 
1.6

 
1.1

Earnings available for common stock

$69.0

 

$68.0

 

$158.7

 

$152.1

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

 
10
 


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
 
September 30,
2016
 
December 31,
2015
 
(in millions, except per
share and share amounts)
ASSETS
 
Current assets:
 
 
 
Cash and cash equivalents

$5.6

 

$0.4

Accounts receivable, less allowance for doubtful accounts
190.7

 
185.4

Production fuel, at weighted average cost
22.6

 
38.6

Gas stored underground, at weighted average cost
20.4

 
25.1

Materials and supplies, at weighted average cost
35.7

 
33.5

Regulatory assets
48.1

 
80.6

Other
53.9

 
59.9

Total current assets
377.0

 
423.5

Property, plant and equipment, net
4,289.1

 
4,103.7

Investments:
 
 
 
Investment in American Transmission Company LLC
309.9

 
293.3

Other
13.4

 
15.4

Total investments
323.3

 
308.7

Other assets:
 
 
 
Regulatory assets
409.5

 
425.4

Deferred charges and other
6.9

 
9.1

Total other assets
416.4

 
434.5

Total assets

$5,405.8

 

$5,270.4

LIABILITIES AND EQUITY
 
Current liabilities:
 
 
 
Commercial paper

$11.8

 

$19.9

Accounts payable
122.3

 
136.0

Accounts payable to associated companies
32.8

 
21.6

Regulatory liabilities
45.9

 
56.2

Other
91.0

 
103.2

Total current liabilities
303.8

 
336.9

Long-term debt, net (excluding current portion)
1,534.9

 
1,533.9

Other liabilities:
 
 
 
Deferred tax liabilities
1,108.8

 
1,005.4

Regulatory liabilities
198.5

 
192.3

Capital lease obligations - Sheboygan Falls Energy Facility
78.9

 
83.6

Pension and other benefit obligations
186.2

 
188.7

Other
162.4

 
162.0

Total other liabilities
1,734.8

 
1,632.0

Commitments and contingencies (Note 13)

 

Equity:
 
 
 
Wisconsin Power and Light Company common equity:
 
 
 
Common stock - $5 par value - 18,000,000 shares authorized; 13,236,601 shares outstanding
66.2

 
66.2

Additional paid-in capital
959.0

 
959.0

Retained earnings
788.6

 
731.1

Total Wisconsin Power and Light Company common equity
1,813.8

 
1,756.3

Noncontrolling interest
18.5

 
11.3

Total equity
1,832.3

 
1,767.6

Total liabilities and equity

$5,405.8

 

$5,270.4

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

 
11
 


WISCONSIN POWER AND LIGHT COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 
For the Nine Months
 
Ended September 30,
 
2016
 
2015
 
(in millions)
Cash flows from operating activities:
 
 
 
Net income

$160.3

 

$153.2

Adjustments to reconcile net income to net cash flows from operating activities:
 
 
 
Depreciation and amortization
143.5

 
137.5

Deferred tax expense and investment tax credits
97.9

 
60.0

Other
(20.3
)
 
(8.3
)
Other changes in assets and liabilities:
 
 
 
Regulatory assets
50.7

 
(13.2
)
Derivative liabilities
(13.3
)
 
19.0

Other
20.5

 
27.7

Net cash flows from operating activities
439.3

 
375.9

Cash flows used for investing activities:
 
 
 
Utility construction and acquisition expenditures
(307.1
)
 
(246.3
)
Other
(19.6
)
 
(13.3
)
Net cash flows used for investing activities
(326.7
)
 
(259.6
)
Cash flows used for financing activities:
 
 
 
Common stock dividends
(101.2
)
 
(95.3
)
Payments to retire long-term debt

 
(30.6
)
Other
(6.2
)
 
(1.4
)
Net cash flows used for financing activities
(107.4
)
 
(127.3
)
Net increase (decrease) in cash and cash equivalents
5.2

 
(11.0
)
Cash and cash equivalents at beginning of period
0.4

 
46.7

Cash and cash equivalents at end of period

$5.6

 

$35.7

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

($67.7
)
 

($69.2
)
Income taxes, net

$19.6

 

($10.0
)
Significant non-cash investing and financing activities:
 
 
 
Accrued capital expenditures

$50.8

 

$57.2


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

 
12
 


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

COMBINED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

In the opinion of management, all adjustments, which unless otherwise noted are normal and recurring in nature, necessary for a fair presentation of the results of operations, financial position and cash flows have been made. Results for the nine months ended September 30, 2016 are not necessarily indicative of results that may be expected for the year ending December 31, 2016. A change in management’s estimates or assumptions could have a material impact on financial condition and results of operations during the period in which such change occurred. Certain prior period amounts in the Financial Statements and Notes have been reclassified to conform to the current period presentation for comparative purposes. Unless otherwise noted, the Notes herein exclude discontinued operations for all periods presented. In the fourth quarter of 2015, IPL and WPL implemented a change in method of recording income taxes that impacts the separate financial statements of IPL and WPL. As discussed in Note 6, all Alliant Energy share and per share amounts have been adjusted to reflect a two-for-one common stock split distributed in May 2016. As required by GAAP, all prior period financial statements and disclosures presented herein have been restated to reflect the tax method change and common stock split.

NOTE 1(b) New Accounting Standards -
Revenue Recognition - In May 2014, the Financial Accounting Standards Board issued an accounting standard providing principles for recognizing revenue for the transfer of promised goods or services to customers with the consideration to which the entity expects to be entitled in exchange for those goods or services. This standard also requires disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. Alliant Energy, IPL and WPL currently expect to adopt this standard on January 1, 2018 and are evaluating the impact of this standard on their financial condition and results of operations.

Leases - In February 2016, the Financial Accounting Standards Board issued an accounting standard requiring lease assets and lease liabilities, including operating leases, to be recognized on the balance sheet for all leases with terms longer than 12 months. The standard also requires disclosure of key information about leasing arrangements. Alliant Energy, IPL and WPL are required to adopt this standard on January 1, 2019 and are currently evaluating the impact of this standard on their financial condition and results of operations. Early adoption of this standard is permitted.

NOTE 1(c) Property, Plant and Equipment -
Utility Plant -
Depreciation - In September 2016, the PSCW issued an order approving the implementation of updated depreciation rates for WPL effective January 1, 2017 as a result of a recently completed depreciation study. WPL estimates the new average rates of depreciation for its electric generation, electric distribution and gas properties will be approximately 3.2%, 2.6% and 2.3%, respectively, during 2017.


 
13
 


NOTE 2. REGULATORY MATTERS
Regulatory Assets and Regulatory Liabilities -
Regulatory assets were comprised of the following items (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2016
 
December 31,
2015
 
September 30,
2016
 
December 31,
2015
 
September 30,
2016
 
December 31,
2015
Tax-related

$1,033.5

 

$987.7

 

$1,000.7

 

$958.2

 

$32.8

 

$29.5

Pension and OPEB costs
551.0

 
579.5

 
284.7

 
298.1

 
266.3

 
281.4

AROs
103.9

 
92.4

 
61.5

 
50.8

 
42.4

 
41.6

WPL’s EGUs retired early
43.1

 
45.0

 

 

 
43.1

 
45.0

Derivatives
39.0

 
70.6

 
10.6

 
28.2

 
28.4

 
42.4

Emission allowances
26.3

 
26.9

 
26.3

 
26.9

 

 

Commodity cost recovery
10.1

 
35.9

 
0.4

 
2.8

 
9.7

 
33.1

Other
67.9

 
70.6

 
33.0

 
37.6

 
34.9

 
33.0

 

$1,874.8

 

$1,908.6

 

$1,417.2

 

$1,402.6

 

$457.6

 

$506.0


Regulatory liabilities were comprised of the following items (in millions):
 
Alliant Energy
 
IPL
 
WPL
 
September 30,
2016
 
December 31,
2015
 
September 30,
2016
 
December 31,
2015
 
September 30,
2016
 
December 31,
2015
Cost of removal obligations

$410.6

 

$406.0

 

$267.2

 

$260.4

 

$143.4

 

$145.6

IPL’s tax benefit riders
103.1

 
159.2

 
103.1

 
159.2

 

 

Electric transmission cost recovery
54.5

 
43.5

 
25.0

 
21.9

 
29.5

 
21.6

Commodity cost recovery
39.1

 
37.6

 
15.1

 
23.5

 
24.0

 
14.1

Energy efficiency cost recovery
28.0

 
48.3

 

 

 
28.0

 
48.3

Other
40.5

 
43.1

 
21.0

 
24.2

 
19.5

 
18.9

 

$675.8

 

$737.7

 

$431.4

 

$489.2

 

$244.4

 

$248.5


Tax-related - Alliant Energy’s and IPL’s tax-related regulatory assets are generally impacted by certain property-related differences at IPL for which deferred tax is not recorded in the income statement pursuant to Iowa rate-making principles. Deferred tax amounts for such property-related differences at IPL are recorded to regulatory assets, along with the necessary revenue requirement tax gross-ups. During the nine months ended September 30, 2016, Alliant Energy’s and IPL’s tax-related regulatory assets increased primarily due to property-related differences for qualifying repair expenditures.

Derivatives - Refer to Note 12 for discussion of derivative assets and derivative liabilities.

IPL’s tax benefit riders - IPL’s tax benefit riders utilize regulatory liabilities to credit bills of IPL’s Iowa retail electric and gas customers to help offset the impact of rate increases on such customers. These regulatory liabilities are related to tax benefits from tax accounting method changes for repairs expenditures, allocation of mixed service costs, allocation of insurance proceeds from floods in 2008, and cost of removal expenditures. For the nine months ended September 30, 2016, Alliant Energy’s and IPL’s “IPL’s tax benefit riders” regulatory liabilities decreased by $56 million as follows (in millions):
Electric tax benefit rider credits

$47

Gas tax benefit rider credits
9

 

$56


Refer to Note 8 for additional details regarding IPL’s tax benefit riders.

Utility Rate Cases -
WPL’s Wisconsin Retail Electric and Gas Rate Case (2017/2018 Test Period) - In May 2016, WPL filed a retail base rate case with the PSCW based on a forward-looking test period that includes 2017 and 2018. WPL’s filing was based on a stipulated agreement reached between PSCW staff, intervener groups and WPL. The filing requested approval for WPL to implement a $13 million, or approximately 1%, increase in annual rates for WPL’s retail electric customers. The net requested increase for 2017 compared to WPL’s retail electric rate case for the 2015/2016 Test Period reflected a $65 million increase in base rates, partially offset by a $52 million reduction in fuel-related costs, using a preliminary estimate for 2017 fuel-related costs. The filing also requested approval for WPL to implement a $9 million, or approximately 13%, increase in

 
14
 


annual base rates for WPL’s retail gas customers. Any rate changes granted from this request are expected to be effective January 1, 2017 and extend through the end of 2018. WPL currently expects a decision from the PSCW regarding this base rate case filing in the fourth quarter of 2016.

IPL’s Iowa Retail Electric Rate Settlement Agreement - The IUB approved a settlement agreement in 2014 related to rates charged to IPL’s Iowa retail electric customers. The settlement agreement extends IPL’s Iowa retail electric base rates authorized in its 2009 Test Year rate case through 2016 and provides targeted retail electric customer billing credits. For the three and nine months ended September 30, IPL recorded billing credits to reduce retail electric customers’ bills as follows (in millions):
 
Three Months
 
Nine Months
 
2016
 
2015
 
2016
 
2015
Billing credits to reduce retail electric customers’ bills
$3
 

$7

 

$7

 

$19


WPL’s Retail Fuel-related Rate Filing (2016 Test Year) - Pursuant to a 2015 PSCW order, WPL’s 2016 fuel-related costs will be subject to deferral if they are outside an annual bandwidth of plus or minus 2% of the approved annual forecasted fuel-related costs. Retail fuel-related costs incurred by WPL through September 30, 2016 were lower than fuel-related costs used to determine rates for such period resulting in an over-collection of fuel-related costs. As of September 30, 2016, fuel-related costs outside of the approved range were $9 million and are included in “Commodity cost recovery” in Alliant Energy’s and WPL’s regulatory liabilities table above.

WPL’s Retail Fuel-related Rate Filing (2015 Test Year) - Pursuant to a 2014 PSCW order, WPL’s 2015 fuel-related costs were subject to deferral since they were outside an annual bandwidth of plus or minus 2% of the approved annual forecasted fuel-related costs. Retail fuel-related costs incurred by WPL in 2015 were lower than fuel-related costs used to determine rates for such period resulting in an over-collection of fuel-related costs. Pursuant to an August 2016 PSCW order, WPL will refund $10 million, including interest, to its retail electric customers in the fourth quarter of 2016 for these over-collections.

NOTE 3. PROPERTY, PLANT AND EQUIPMENT
Utility -
Emission Controls Project -
WPL’s Edgewater Unit 5 - Construction of the scrubber and baghouse at Edgewater Unit 5 was completed in July 2016. As of September 30, 2016, Alliant Energy and WPL recorded capitalized expenditures of $223 million and AFUDC of $12 million for the scrubber and baghouse in “Property, plant and equipment, net” on their balance sheets.

Natural Gas-Fired Generation Project -
IPL’s Marshalltown Generating Station - IPL is currently constructing Marshalltown, an approximate 650 MW natural gas-fired combined-cycle EGU. Construction began in 2014 and is expected to be completed in the second quarter of 2017. As of September 30, 2016, Alliant Energy and IPL recorded capitalized expenditures for construction work in progress of $600 million and AFUDC of $56 million for Marshalltown in “Property, plant and equipment, net” on their balance sheets.

Sales of IPL’s Minnesota Electric and Natural Gas Distribution Assets - In 2015, IPL completed the sale of its Minnesota natural gas distribution assets and received proceeds of $11 million and a promissory note of $2 million. In 2015, IPL completed the sale of its Minnesota electric distribution assets and received proceeds of $129 million. The proceeds from the natural gas distribution assets were used for general corporate purposes and the proceeds from the electric distribution assets were used to reduce cash amounts received from IPL’s sales of accounts receivable program. The premium received over the book value of the property, plant and equipment sold was more than offset by a reduction in tax-related regulatory assets associated with the distribution assets. As a result, Alliant Energy and IPL recorded pre-tax charges of $9 million and $3 million for the Minnesota electric and natural gas distribution asset transactions, respectively, in “Other operation and maintenance” in their income statements for the nine months ended September 30, 2015.

Non-regulated and Other -
Non-regulated Generation -
Franklin County Wind Farm - Based on an evaluation of the strategic options for the Franklin County wind farm performed in the third quarter of 2016, Alliant Energy concluded, as of September 30, 2016, it was probable the Franklin County wind farm will be transferred to IPL. As a result, Alliant Energy performed an impairment analysis of such assets in the third quarter of 2016. The impairment analysis evaluated the value of the assets and a reasonable estimate of the amount of costs associated with the Franklin County wind farm that would be allowed for recovery for IPL’s electric rate-making purposes. Based on various analyses, including discounted cash flows projected from the Franklin County wind farm, recently executed purchased power agreements associated with wind generating facilities located near the Franklin County wind farm, and the

 
15
 


cost of new wind farms identified through IPL’s planned wind expansion, the current value of the Franklin County wind farm assets as of September 30, 2016 was determined to be approximately $33 million, subject to working capital adjustments. Alliant Energy concluded such value represents a reasonable estimate of the amount IPL will be allowed for recovery for IPL’s electric rate-making purposes. As a result, the carrying amount of the Franklin County wind farm was reduced to its current value, resulting in non-cash, pre-tax asset valuation charges of $86 million (after-tax charges of $51 million, or $0.23 per share) in the third quarter of 2016. Alliant Energy recorded such charges as a reduction to “Property, plant and equipment, net” on its balance sheet in 2016 and charges to “Asset valuation charges for Franklin County wind farm” in its income statements for the three and nine months ended September 30, 2016.

IPL currently anticipates requesting approval from FERC in the fourth quarter of 2016 to transfer the Franklin County wind farm to IPL and expects to complete such transfer in the first quarter of 2017. The final amount to be recovered for IPL’s electric rate-making purposes will be determined by the IUB as part of IPL’s Iowa retail electric rate case for the 2016 Test Year, currently anticipated to be filed in the second quarter of 2017, and therefore the final asset valuation charges are subject to change.

NOTE 4. RECEIVABLES
Sales of Accounts Receivable - IPL maintains a Receivables Agreement whereby it may sell its customer accounts receivables, unbilled revenues and certain other accounts receivables to a third party through wholly-owned and consolidated special purpose entities. In March 2016, IPL extended through March 2018 the purchase commitment from the third party to which it sells its receivables. The transfers of receivables meet the criteria for sale accounting established by the transfer of financial assets accounting rules. As of September 30, 2016, IPL sold $252.9 million of receivables to the third party, received $1.0 million in cash proceeds and recorded deferred proceeds of $239.7 million.

IPL’s maximum and average outstanding cash proceeds related to the sales of accounts receivable program for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2016
 
2015
 
2016
 
2015
Maximum outstanding aggregate cash proceeds (based on daily outstanding balances)

$172.0

 

$137.0

 

$172.0

 

$137.0

Average outstanding aggregate cash proceeds (based on daily outstanding balances)
112.3

 
41.2

 
91.5

 
62.1


For the three and nine months ended September 30, 2016 and 2015, IPL’s costs incurred related to the sales of accounts receivable program were not material.

The attributes of IPL’s receivables sold under the Receivables Agreement were as follows (in millions):
 
September 30, 2016
 
December 31, 2015
Customer accounts receivable

$172.9

 

$109.7

Unbilled utility revenues
79.8

 
71.3

Other receivables
0.2

 
0.1

Receivables sold to third party
252.9

 
181.1

Less: cash proceeds (a)
1.0

 
5.0

Deferred proceeds
251.9

 
176.1

Less: allowance for doubtful accounts
12.2

 
4.1

Fair value of deferred proceeds

$239.7

 

$172.0


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

As of September 30, 2016, outstanding receivables past due under the Receivables Agreement were $64.5 million. Additional attributes of IPL’s receivables sold under the Receivables Agreement for the three and nine months ended September 30 were as follows (in millions):
 
Three Months
 
Nine Months
 
2016
 
2015
 
2016
 
2015
Collections reinvested in receivables

$499.7

 

$480.1

 

$1,362.1

 

$1,403.1

Write-offs (recoveries), net
(0.3
)
 
3.3

 
(0.6
)
 
6.8


 
16
 



In connection with the implementation of IPL’s new customer billing and information system in the first quarter of 2016, IPL postponed the write-off of customer bills, resulting in lower write-offs for the three and nine months ended September 30, 2016.

NOTE 5. INVESTMENTS
NOTE 5(a) Unconsolidated Equity Investments - Equity (income) loss from unconsolidated investments accounted for under the equity method of accounting for the three and nine months ended September 30 was as follows (in millions):
 
Alliant Energy
 
WPL
 
Three Months
 
Nine Months
 
Three Months
 
Nine Months
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
ATC

($9.1
)
 

($10.9
)
 

($28.6
)
 

($29.6
)
 

($9.1
)
 

($10.9
)
 

($28.6
)
 

($29.6
)
Other
(0.1
)
 
(0.2
)
 
(0.2
)
 
0.7

 
(0.2
)
 
(0.2
)
 
(0.4
)
 
(0.6
)
 

($9.2
)
 

($11.1
)
 

($28.8
)
 

($28.9
)
 

($9.3
)
 

($11.1
)
 

($29.0
)
 

($30.2
)

MISO Transmission Owner Return on Equity Complaints - A group of MISO cooperative and municipal utilities previously filed two complaints with FERC requesting a reduction of the base return on equity used by MISO transmission owners, including ATC. In September 2016, FERC issued an order on the first complaint to reduce the base return on equity for the refund period from November 12, 2013 through February 11, 2015. In June 2016, a FERC administrative law judge issued an initial decision regarding the second complaint recommending a reduction of the base return on equity for the refund period from February 12, 2015 through May 11, 2016. A final decision on the second complaint from FERC is currently expected in the first half of 2017. Alliant Energy and WPL have realized a cumulative $24 million of reductions in the amount of equity income from ATC as a result of the two complaints through September 30, 2016, including $9 million during the nine months ended September 30, 2016.

NOTE 5(b) Cash Surrender Value of Life Insurance Policies - During the nine months ended September 30, 2016, certain of Alliant Energy’s and IPL’s company-owned life insurance policies were liquidated. The related proceeds of $31 million and $19 million were recorded in investing activities in Alliant Energy’s and IPL’s cash flows statements, respectively.

NOTE 6. COMMON EQUITY
Common Share Activity - A summary of Alliant Energy’s common stock activity was as follows:
Shares outstanding, January 1, 2016
226,918,432

Shareowner Direct Plan issuances
559,588

Equity-based compensation plans (Note 9(b))
22,408

Shares outstanding, September 30, 2016
227,500,428


At-the-Market Offering Program - During the nine months ended September 30, 2015, Alliant Energy issued 4,373,234 shares of common stock through an at-the-market offering program and received cash proceeds of $133 million, net of $2 million in fees and commissions. The proceeds from the issuances of common stock were used for general corporate purposes.

Common Stock Split - On April 20, 2016, Alliant Energy’s Board of Directors approved a two-for-one common stock split and a proportionate increase in the number of authorized shares of common stock of Alliant Energy from 240 million shares to 480 million shares to implement the stock split. Alliant Energy shareowners of record at the close of business on May 4, 2016 received one additional share of Alliant Energy common stock for each share held on that date. The proportionate interest that a shareowner owns in Alliant Energy did not change as a result of the stock split. The additional shares were distributed on May 19, 2016 and post-split trading began on May 20, 2016. All Alliant Energy share and per share amounts in this report have been reflected on a post-split basis.

Dividend Restrictions - As of September 30, 2016, IPL’s amount of retained earnings that were free of dividend restrictions was $632 million. As of September 30, 2016, WPL’s amount of retained earnings that were free of dividend restrictions was $34 million for the remainder of 2016.

Restricted Net Assets of Subsidiaries - As of September 30, 2016, 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 $1.5 billion and $1.8 billion, respectively.

 
17
 



Capital Transactions with Subsidiaries - For the nine months ended September 30, 2016, IPL received capital contributions of $65.0 million from its parent company. For the nine months ended September 30, 2016, IPL and WPL paid common stock dividends of $114.0 million and $101.2 million, respectively, to their parent company.

Comprehensive Income - For the three and nine months ended September 30, 2016 and 2015, 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 nine months ended September 30, 2016 and 2015, 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.

NOTE 7. DEBT
NOTE 7(a) Short-term Debt - Information regarding commercial paper classified as short-term debt was as follows (dollars in millions):
 
Alliant Energy
 
Parent
 
 
 
 
September 30, 2016
(Consolidated)
 
Company
 
IPL
 
WPL
Commercial paper:
 
 
 
 
 
 
 
Amount outstanding
$238.3
 
$226.5
 
$—
 
$11.8
Weighted average remaining maturity
4 days
 
4 days
 
N/A
 
3 days
Weighted average interest rates
0.6%
 
0.7%
 
N/A
 
0.4%
Available credit facility capacity
$761.7
 
$73.5
 
$300.0
 
$388.2
 
Alliant Energy
 
IPL
 
WPL
Three Months Ended September 30
2016
 
2015
 
2016
 
2015
 
2016
 
2015
Maximum amount outstanding
(based on daily outstanding balances)

$248.0

 

$181.2

 

$3.1

 

$18.4

 
$55.4
 
$—
Average amount outstanding
(based on daily outstanding balances)

$220.1

 

$122.4

 

$0.1

 

$0.5

 
$36.4
 
$—
Weighted average interest rates
0.6
%
 
0.4
%
 
0.6
%
 
0.4
%
 
0.4%
 
N/A
Nine Months Ended September 30
 
 
 
 
 
 
 
 
 
 
 
Maximum amount outstanding
(based on daily outstanding balances)

$248.0

 

$181.2

 

$3.1

 

$18.4

 
$62.9
 
$—
Average amount outstanding
(based on daily outstanding balances)

$210.7

 

$114.5

 

$—

 

$0.2

 
$33.2
 
$—
Weighted average interest rates
0.6
%
 
0.4
%
 
0.6
%
 
0.4
%
 
0.4%
 
N/A

NOTE 7(b) Long-term Debt - In September 2016, IPL issued $300 million of 3.7% senior debentures due 2046. The proceeds from the issuance were used by IPL to reduce cash amounts received from its sales of accounts receivable program, reduce commercial paper classified as long-term debt by $100 million and for general corporate purposes.

In October 2016, AEF entered into a $500 million variable-rate (1.3% at October 31, 2016) term loan credit agreement and used the proceeds from borrowings under this agreement to retire borrowings under Alliant Energy’s and Franklin County Holdings LLC’s variable-rate term loan credit agreements that matured in 2016, reduce outstanding commercial paper and for general corporate purposes. AEF’s term loan credit agreement expires in October 2018 and includes substantially the same financial covenants that are included in Alliant Energy’s credit facility agreement.


 
18
 


NOTE 8. INCOME TAXES
Income Tax Rates - The overall income tax rates shown in the following table were computed by dividing income tax expense (benefit) by income from continuing operations before income taxes.
 
Alliant Energy
 
IPL