10-K 1 lnt1231201710-k.htm 10-K Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
 
 
FORM 10-K
 
 
 
 
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017

or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                    to                    

alliantenergylogo201710k.jpg
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-K is separately filed by Alliant Energy Corporation, Interstate Power and Light Company and Wisconsin Power and Light Company. Information contained in the Form 10-K 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.

Securities registered pursuant to Section 12(b) of the Act:
 
Title of Class
Name of Each Exchange on Which Registered
Alliant Energy Corporation
Common Stock, $0.01 Par Value
New York Stock Exchange
Interstate Power and Light Company
5.100% Series D Cumulative Perpetual Preferred Stock, $0.01 Par Value
New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrants are well-known seasoned issuers, as defined in Rule 405 of the Securities Act.
Yes   No  

Indicate by check mark if the registrants are not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes   No  
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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrants’ knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrants are large accelerated filers, accelerated filers, non-accelerated filers, smaller reporting companies, or emerging growth companies. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large Accelerated Filer
 
Accelerated Filer
 
Non-accelerated Filer
 
Smaller Reporting Company
 
Emerging Growth Company
Alliant Energy Corporation
 
 
 
 
 
 
 
 
Interstate Power and Light Company
 
 
 
 
 
 
 
 
Wisconsin Power and Light Company
 
 
 
 
 
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrants are shell companies (as defined in Rule 12b-2 of the Exchange Act).    Yes   No  

The aggregate market value of the voting and non-voting common equity held by nonaffiliates as of June 30, 2017:
Alliant Energy Corporation
$9.3 billion
Interstate Power and Light Company
$—
Wisconsin Power and Light Company
$—
Number of shares outstanding of each class of common stock as of January 31, 2018:
Alliant Energy Corporation
Common stock, $0.01 par value, 231,356,336 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)

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement relating to Alliant Energy Corporation’s 2018 Annual Meeting of Shareowners are, or will be upon filing with the Securities and Exchange Commission, incorporated by reference into Part III hereof.




TABLE OF CONTENTS
 
Page Number
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




DEFINITIONS

The following abbreviations or acronyms used in this Form 10-K are defined below:
Abbreviation or Acronym
Definition
Abbreviation or Acronym
Definition
2018 Alliant Energy Proxy Statement
Alliant Energy’s Proxy Statement for the 2018 Annual Meeting of Shareowners
GHG
Greenhouse gases
AEF
Alliant Energy Finance, LLC
IPL
Interstate Power and Light Company
AFUDC
Allowance for funds used during construction
IRS
Internal Revenue Service
Alliant Energy
Alliant Energy Corporation
ITC
ITC Midwest LLC
AOCL
Accumulated other comprehensive loss
IUB
Iowa Utilities Board
ARO
Asset retirement obligation
KWh
Kilowatt-hour
ATC
American Transmission Company LLC
Marshalltown
Marshalltown Generating Station
ATC Investment
Investment in American Transmission Company LLC and ATC Holdco LLC
MDA
Management’s Discussion and Analysis of Financial Condition and Results of Operations
ATI
AE Transco Investments, LLC
MGP
Manufactured gas plant
CA
Certificate of authority
MISO
Midcontinent Independent System Operator, Inc.
CAA
Clean Air Act
MW
Megawatt
CCR
Coal combustion residuals
MWh
Megawatt-hour
CO2
Carbon dioxide
N/A
Not applicable
Corporate Services
Alliant Energy Corporate Services, Inc.
NAAQS
National Ambient Air Quality Standards
CPCN
Certificate of Public Convenience and Necessity
Note(s)
Combined Notes to Consolidated Financial Statements
CRANDIC
Cedar Rapids and Iowa City Railway Company
NOx
Nitrogen oxide
CSAPR
Cross-State Air Pollution Rule
OIP
Alliant Energy 2010 Omnibus Incentive Plan
CWIP
Construction work in progress
OPEB
Other postretirement benefits
DAEC
Duane Arnold Energy Center
PPA
Purchased power agreement
DATC
Duke-American Transmission Company, LLC
PSCW
Public Service Commission of Wisconsin
DCP
Alliant Energy Deferred Compensation Plan
Receivables Agreement
Receivables Purchase and Sale Agreement
DLIP
Alliant Energy Director Long Term Incentive Plan
RES
Renewable energy standards
Dth
Dekatherm
Riverside
Riverside Energy Center
EEP
Energy efficiency plan
SCR
Selective catalytic reduction
EGU
Electric generating unit
SEC
Securities and Exchange Commission
EPA
U.S. Environmental Protection Agency
SO2
Sulfur dioxide
EPB
Emissions plan and budget
Tax Reform
Tax Cuts and Jobs Act
EPS
Earnings per weighted average common share
U.S.
United States of America
FERC
Federal Energy Regulatory Commission
VEBA
Voluntary Employees’ Beneficiary Association
Financial Statements
Consolidated Financial Statements
VIE
Variable interest entity
FTR
Financial transmission right
WACC
Weighted-average cost of capital
Fuel-related
Electric production fuel and purchased power
Whiting Petroleum
Whiting Petroleum Corporation
FWEC
Forward Wind Energy Center
WPL
Wisconsin Power and Light Company
GAAP
U.S. generally accepted accounting principles
WPL Transco
WPL Transco, LLC

 
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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:

IPL’s and WPL’s ability to obtain adequate and timely rate relief to allow for, among other things, earning a return on rate base additions and the recovery of costs, including fuel costs, operating costs, transmission costs, environmental compliance and remediation costs, deferred expenditures, deferred tax assets, 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;
federal and state regulatory or governmental actions, including the impact of energy, tax, financial and health care legislation, and regulatory agency orders;
ability to obtain regulatory approval for wind projects with acceptable conditions, to acquire sufficient transmission-ready wind sites, to complete construction within the cost caps set by regulators and to meet all requirements to qualify for the full level of production tax credits;
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 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;
the impact of adjustments made to deferred tax assets and liabilities from changes in the tax laws;
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;
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;
employee workforce factors, including changes in key executives, ability to hire and retain employees with specialized skills, ability to create desired corporate culture, collective bargaining agreements and negotiations, work stoppages or restructurings;
weather effects on results of utility operations;
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 CO2 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;
continued access to the capital markets on competitive terms and rates, and the actions of credit rating agencies;
inflation and interest rates;
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;
changes in the price of delivered natural gas, purchased electricity and coal due to shifts in supply and demand caused by market conditions and regulations;
disruptions in the supply and delivery of natural gas, purchased electricity and coal;
changes in the price of transmission services and the ability to recover the cost of transmission services in a timely manner;
developments that adversely impact the ability to implement the strategic plan;
the direct or indirect effects resulting from breakdown or failure of equipment in the operation of electric and gas distribution systems, such as mechanical problems and explosions or fires, and compliance with electric and gas transmission and distribution safety regulations;

 
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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;
impacts that storms or natural disasters in IPL’s and WPL’s service territories may have on their operations and recovery of costs associated with restoration activities;
any material post-closing adjustments related to any past asset divestitures, including the sales of IPL’s Minnesota electric and natural gas assets, and Whiting Petroleum, which could result from, among other things, indemnification agreements, warranties, parental guarantees or litigation;
Alliant Energy’s ability to sustain its dividend payout ratio goal;
changes to costs of providing benefits and related funding requirements of pension and OPEB plans due to the market value of the assets that fund the plans, economic conditions, financial market performance, interest rates, life expectancies and demographics;
material changes in employee-related benefit and compensation costs;
risks associated with operation and ownership of non-utility investments;
changes in technology that alter the channels through which customers buy or utilize Alliant Energy’s, IPL’s or WPL’s products and services;
impacts on equity income from unconsolidated investments due to further potential changes to ATC’s authorized return on equity;
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;
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;
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;
the effect of accounting standards issued periodically by standard-setting bodies;
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 Item 1A Risk Factors.

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.

WEBSITE ACCESS TO REPORTS
Alliant Energy, IPL and WPL make their periodic and current reports, and amendments to those reports, available, free of charge, on Alliant Energy’s website at www.alliantenergy.com/investors on the same day as such material is electronically filed with, or furnished to, the SEC. Alliant Energy, IPL and WPL are not including the information contained on Alliant Energy’s website as a part of, or incorporating it by reference into, this report.

PART I

This report includes information relating to Alliant Energy, IPL and WPL (as well as AEF and Corporate Services). Where appropriate, information relating to a specific entity has been segregated and labeled as such. Unless otherwise noted, the information herein excludes discontinued operations for all periods presented.

ITEM 1. BUSINESS

A. GENERAL
Alliant Energy was incorporated in Wisconsin in 1981 and maintains its principal executive offices in Madison, Wisconsin. Alliant Energy operates as a regulated investor-owned public utility holding company. Alliant Energy’s primary focus is to provide regulated electric and natural gas service to approximately 960,000 electric and approximately 410,000 natural gas customers in the Midwest through its two public utility subsidiaries, IPL and WPL. The primary first tier wholly-owned subsidiaries of Alliant Energy are as follows:


 
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1) IPL - was incorporated in 1925 in Iowa as Iowa Railway and Light Corporation. IPL is a public utility engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Iowa. IPL provides utility services to incorporated communities as directed by the IUB and utilizes non-exclusive franchises, which cover the use of public right-of-ways for utility facilities in incorporated communities for a maximum term of 25 years. At December 31, 2017, IPL supplied electric and natural gas service to approximately 490,000 and 220,000 retail customers, respectively, in Iowa. IPL also sells electricity to wholesale customers in Minnesota, Illinois and Iowa. IPL is also engaged in the generation and distribution of steam for two customers in Cedar Rapids, Iowa. In 2017, 2016 and 2015, IPL had no single customer for which electric, gas, steam and/or other sales accounted for 10% or more of IPL’s consolidated revenues.

2) WPL - was incorporated in 1917 in Wisconsin as Eastern Wisconsin Electric Company. WPL is a public utility engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Wisconsin. WPL operates in municipalities pursuant to permits of indefinite duration and state statutes authorizing utility operation in areas annexed by a municipality. At December 31, 2017, WPL supplied electric and natural gas service to approximately 470,000 and 190,000 retail customers, respectively. WPL also sells electricity to wholesale customers in Wisconsin. In 2017, 2016 and 2015, WPL had no single customer for which electric, gas and/or other sales accounted for 10% or more of WPL’s consolidated revenues.

3) AEF - was created in 2016 in Wisconsin as a limited liability company. Alliant Energy’s non-utility investments are organized under AEF. Refer to “Information Relating to Non-utility Operations” for additional details.

4) CORPORATE SERVICES - was incorporated in 1997 in Iowa. Corporate Services provides administrative services to Alliant Energy, IPL, WPL and AEF.

Refer to Note 17 for further discussion of business segments, which information is incorporated herein by reference.

B. INFORMATION RELATING TO ALLIANT ENERGY ON A CONSOLIDATED BASIS

1) EMPLOYEES - At December 31, 2017, Alliant Energy, IPL and WPL had the following full- and part-time employees:
 
Total
 
Number of
 
Percentage of Employees
 
Number of
 
Bargaining Unit
 
Covered by Collective
 
Employees
 
Employees
 
Bargaining Agreements
Alliant Energy
3,989
 
2,222
 
56%
IPL
1,670
 
1,074
 
64%
WPL
1,278
 
1,038
 
81%

The majority of IPL’s bargaining unit employees are covered by the International Brotherhood of Electrical Workers Local 204 (Cedar Rapids) collective bargaining agreement, which expires on August 31, 2020. All of WPL’s bargaining unit employees are covered by the International Brotherhood of Electrical Workers Local 965 collective bargaining agreement, which expires on May 31, 2019.

2) CAPITAL EXPENDITURE AND INVESTMENT PLANS - Refer to “Liquidity and Capital Resources” in MDA for discussion of anticipated construction and acquisition expenditures for 2018 through 2021.

3) REGULATION - Alliant Energy, IPL and WPL are subject to regulation by various federal, state and local agencies. The following includes the primary regulations impacting Alliant Energy’s, IPL’s and WPL’s businesses.

FERC -
Public Utility Holding Company Act of 2005 - Alliant Energy is registered with FERC as a public utility holding company, pursuant to the Public Utility Holding Company Act of 2005, and is required to maintain certain records and to report certain transactions involving its public utilities, service company and other entities regulated by FERC. Corporate Services, IPL and WPL are subject to regulation by FERC under the Public Utility Holding Company Act of 2005 for various matters including, but not limited to, affiliate transactions, public utility mergers, acquisitions and dispositions, and books, records and accounting requirements.


 
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Energy Policy Act - The Energy Policy Act requires creation of an Electric Reliability Organization to provide oversight by FERC. FERC designated North American Electric Reliability Corporation as the overarching Electric Reliability Organization. Midwest Reliability Organization, which is a regional member of North American Electric Reliability Corporation, has direct responsibility for mandatory electric reliability standards for IPL and WPL.

Federal Power Act - FERC also has jurisdiction, under the Federal Power Act, over certain electric utility facilities and operations, electric wholesale and transmission rates, dividend payments, issuance of IPL’s securities, and accounting practices of Corporate Services, IPL and WPL.

Electric Wholesale Rates - IPL and WPL receive wholesale electric market-based rate authority from FERC. Market-based rate authorization allows for wholesale sales of electricity within the MISO market and in transactions directly with third parties, based on the market value of the transactions. IPL and WPL also have FERC-approved cost of service formula based rates related to the provision of firm full- and partial-requirement wholesale electric sales, which allow for true-ups to actual costs, including fuel costs.

Electric Transmission Rates - FERC regulates the rates charged for electric transmission facilities used in interstate commerce. Neither IPL nor WPL own or operate electric transmission facilities; however, both IPL and WPL pay for the use of the interstate electric transmission system based upon FERC-regulated rates. IPL and WPL rely primarily on the use of the ITC and ATC transmission systems, respectively. Due to the formula rates used by ITC and ATC to charge their customers and possible future changes to these rates, there is uncertainty regarding IPL’s and WPL’s future electric transmission service expense. Refer to “Other Future Considerations” in MDA for further discussion of electric transmission service expense.

Natural Gas Act - FERC regulates the transportation and sale for resale of natural gas in interstate commerce under the Natural Gas Act. Under the Natural Gas Act, FERC has authority over certain natural gas facilities and operations of IPL and WPL.

IUB - IPL is subject to regulation by the IUB for various matters including, but not limited to, retail utility rates and standards of service, accounting requirements, sales of assets with values that exceed 3% of IPL’s revenues, and approval of the location and construction of EGUs.

Retail Utility Base Rates - IPL files periodic requests with the IUB for retail rate changes, which are based on historical test periods. The historical test periods may be adjusted for certain known and measurable changes to capital investments, cost of capital and operating and maintenance expenses consistent with IUB rules and regulations. Interim retail rates can be placed in effect 10 days after the rate application filing, subject to refund, and must be based on previously established regulatory principles. The IUB must decide on requests for retail rate changes within 10 months of the date of the application for which changes are filed, or the interim rates granted become permanent.

Cost Recovery - In accordance with Iowa law, IPL is required to file an EEP every five years with the IUB. An EEP provides a utility’s plan and related budget to achieve specified levels of electric and gas energy savings. IUB approval demonstrates that IPL’s EEP is reasonably expected to achieve cost-effective delivery of the energy efficiency programs. IPL recovers energy efficiency costs from its retail electric and gas customers. Refer to Note 1(g) for further discussion of IPL’s cost recovery mechanisms, including retail commodity costs and retail electric transmission costs.

Electric Generating Units - IPL must obtain a certificate of public convenience, use and necessity (GCU Certificate) from the IUB in order to construct a new, or significantly alter (including fuel switching) an existing, EGU located in Iowa with 25 MW or more of capacity. IPL’s ownership and operation of EGUs (including those located outside the state of Iowa) to serve Iowa customers is subject to retail utility rate regulation by the IUB.

Gas Pipeline Projects - IPL must obtain a pipeline permit from the IUB related to the siting of utility gas pipelines in Iowa that will be operated at a pressure over 150 pounds per square inch and will transport gas from a gathering or storage facility to a distribution system or single, large volume customer.

Advance Rate-making Principles - Iowa law provides Iowa utilities with rate-making principles prior to making certain generation investments in Iowa. As a result, IPL may file for, and the IUB must render a decision on, rate-making principles for EGUs located in Iowa, including any new combined-cycle natural gas-fired EGU, any renewable generating resource such as a wind facility, and base-load (nuclear or coal-fired generation) EGUs with a nameplate generating capacity of 300 MW or more. Upon approval of rate-making principles by the IUB, IPL must either build the EGU under the approved rate-making principles, or not at all.

 
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Electric Generating Unit Environmental Controls Projects - IPL is required to submit an updated EPB biennially to the IUB setting out a multi-year plan and budget for managing regulated emissions from its coal-fired EGUs in a cost-effective manner. IPL must simultaneously submit this plan and budget to the Iowa Department of Natural Resources for a determination of whether the plan and budget meet state environmental requirements for regulated emissions. The reasonable and prudent costs associated with implementing the approved plan are expected to be included in IPL’s future retail electric rates.

PSCW - Alliant Energy is subject to regulation by the PSCW for the type and amount of Alliant Energy’s investments in non-utility businesses and other affiliated interest activities, among other matters. WPL is also subject to regulation by the PSCW related to its operations in Wisconsin for various matters including, but not limited to, retail utility rates and standards of service, accounting requirements, issuance and use of proceeds of securities, affiliate transactions, approval of the location and construction of EGUs and certain other additions and extensions to facilities.

Retail Utility Base Rates - WPL files periodic requests with the PSCW for retail rate changes. These filings are required to be based on forward-looking test periods. There is no statutory time limit for the PSCW to decide retail base rate requests. However, the PSCW attempts to process retail base rate reviews in approximately 10 months and has the ability to approve interim retail rate relief, subject to refund, if necessary. Currently, WPL is required to defer a portion of its earnings if its annual regulatory return on common equity exceeds certain levels.

Cost Recovery - WPL contributes 1.2% of its annual retail utility revenues to help fund Focus on Energy, Wisconsin’s state-wide energy efficiency and renewable energy resource program. These costs are recovered from WPL’s retail electric and gas customers. Refer to Note 1(g) for further discussion of WPL’s cost recovery mechanisms, including retail commodity costs and retail electric transmission costs.

New Electric Generating Units - A CA application is required to be filed with the PSCW for construction approval of any new EGU with a capacity of less than 100 MW and a project cost of $10.7 million or more. WPL must obtain a CPCN from the PSCW in order to construct a new EGU in Wisconsin with a capacity of 100 MW or more. In addition, WPL’s ownership and operation of EGUs (including those located outside the state of Wisconsin) to serve Wisconsin customers are subject to retail utility rate regulation by the PSCW.

Electric Generating Unit Upgrades and Electric Distribution Projects - A CA application is required to be filed with the PSCW for construction approval of any additions to EGUs, including environmental controls projects, as well as electric distribution projects, with estimated project costs of $10.7 million or more.

Gas Distribution Projects - A CA application is required to be filed with the PSCW for construction approval of gas projects with an estimated project cost of $2.5 million or more and at any time that WPL requests to extend gas service to a new portion of its service territory.

Advance Rate-making Principles - Wisconsin law provides Wisconsin utilities with the opportunity to request rate-making principles prior to the purchase or construction of any EGU utilized to serve Wisconsin customers. WPL is not obligated to file for or accept authorized rate-making principles under Wisconsin law. WPL can proceed with an approved project under traditional rate-making terms or accept authorized rate-making principles under Wisconsin law.

Environmental - Extensive environmental laws and regulations are applicable as a result of current and past operations. The environmental laws and regulations relate to the protection of the environment and health and safety matters, including those governing air emissions; water discharges; protection of habitat for potentially threatened and endangered species; the management, storage and disposal of hazardous materials; and the clean-up of contaminated sites, including former MGP sites. Refer to “Environmental Matters” in MDA and Note 16(e) for further discussion of electric and gas environmental matters, including current or proposed environmental regulations. Refer to “Strategic Overview” in MDA for details of future environmental compliance plans to adhere to applicable environmental requirements.

4) STRATEGIC OVERVIEW - Refer to “Strategic Overview” in MDA for discussion of various strategic actions by Alliant Energy, IPL and WPL.


 
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C. INFORMATION RELATING TO UTILITY OPERATIONS
Alliant Energy’s utility business (IPL and WPL) has three segments: a) electric operations; b) gas operations; and c) other, which includes IPL’s steam operations and the unallocated portions of the utility business. IPL’s and WPL’s operating revenues as a percentage of total revenues for these utility business segments were as follows:
IPL
 
WPL
chart-77f10a42f21a5d1085ea04.jpgchart-f0d0374159b95e64b08.jpgchart-8d8de4fe5a005597868a04.jpgchart-6044a3584dbd586c907a04.jpg
1) ELECTRIC UTILITY OPERATIONS
General - Electric utility operations represent the largest operating segment for Alliant Energy, IPL and WPL. Alliant Energy’s electric utility operations are located in the Midwest with IPL providing retail electric service in Iowa and WPL providing retail and wholesale electric service in Wisconsin. IPL also sells electricity to wholesale customers in Minnesota, Illinois and Iowa. Refer to the “Electric Operating Information” tables for additional details regarding electric utility operations.

Customers - IPL and WPL provide electric utility service to a diversified base of retail customers in several industries, with the largest concentrations in the farming, agriculture, industrial manufacturing, chemical (including ethanol) and paper industries. IPL and WPL also sell electricity to wholesale customers, which primarily consist of municipalities and rural electric cooperatives. Refer to “Strategic Overview” in MDA for discussion of recent agreements with certain of WPL’s electric wholesale customers related to WPL’s West Riverside facility. Refer to “Other Future Considerations” in MDA for discussion of notifications provided to each of IPL and WPL to terminate certain of their wholesale power supply agreements.

Seasonality - Electric sales are seasonal to some extent with the annual peak normally occurring in the summer months due to air conditioning requirements. Electric sales are also impacted to a certain extent in the winter months due to heating requirements. Refer to the “Electric Operating Information” tables for additional details regarding maximum summer and winter peak hour demands.

Competition - Retail electric customers in Iowa and Wisconsin currently do not have the ability to choose their electric supplier, and IPL and WPL have obligations to serve all their retail electric customers. Although electric service in Iowa and Wisconsin is regulated, IPL and WPL still face competition from self-generation by large industrial customers, customer- and third party-owned generation (e.g. solar panels), alternative energy sources, and petitions to municipalize (Iowa) as well as service territory expansions by municipal utilities through annexations (Wisconsin). In addition, IPL’s and WPL’s wholesale customers may choose to purchase their electric energy and capacity needs from the MISO market, independent power producers or other utilities. Alliant Energy’s strategic plan includes actions to retain current customers and attract new customers into IPL’s and WPL’s service territories in an effort to keep energy rates low for all of their customers. Refer to “Strategic Overview” in MDA for discussion of the growth element of the strategic plan, which includes accelerating the growth of customers’ electric usage.

Renewable Energy Standards - Iowa and Wisconsin have RES, which establish the minimum amount of energy IPL and WPL must supply from renewable resources. IPL primarily relies upon renewable energy generated from the wind projects it owns and renewable energy acquired under PPAs to meet these requirements. WPL utilizes its current renewable portfolio, which primarily consists of wind and hydro energy, both owned and acquired under PPAs, to meet these requirements. IPL and WPL currently exceed their respective RES requirements.


 
7
 


Energy Efficiency Programs - Several energy efficiency programs and initiatives help customers reduce their energy usage and related costs through the use of new energy efficient equipment, products and practices. The following are current key energy efficiency programs:

IPL Energy Efficiency Plan - In 2013, IPL received an order from the IUB approving IPL’s EEP for 2014 through 2018. The EEP includes IPL spending approximately $400 million for electric and natural gas energy efficiency programs in Iowa from 2014 through 2018. In February 2018, IPL filed an EEP for 2019 through 2023 with the IUB. This EEP includes IPL spending approximately $290 million for electric and natural gas energy efficiency programs in Iowa from 2019 through 2023. The amount of spending requested for the EEP for 2019 through 2023 is lower than the EEP for 2014 through 2018 primarily to reflect historical customer usage of the energy efficiency programs. A decision from the IUB on IPL’s EEP for 2019 through 2023 is currently expected in 2018.

WPL Focus on Energy Program - In 2017, WPL contributed 1.2% of its annual retail utility revenues to help fund Focus on Energy, Wisconsin’s state-wide energy efficiency and renewable energy resource program.

Electric Supply - Alliant Energy, IPL and WPL have met, and expect to continue meeting, customer demand of electricity through a mix of electric supply including owned EGUs, PPAs and additional purchases from wholesale energy markets. Alliant Energy expects its mix of electric supply to change in the next several years with WPL’s construction of West Riverside, IPL’s planned up to 1,000 MW of additional wind generation, WPL’s planned up to 200 MW of additional wind generation and the proposed retirement and/or fuel switching of various EGUs. Long-term generation plans are intended to meet customer demand, reduce CO2 emissions, reduce reliance on wholesale market purchases and mitigate the impacts of future EGU retirements while maintaining compliance with long-term electric demand planning reserve margins, environmental requirements and RES established by regulators. Alliant Energy, IPL and WPL currently expect to meet utility customer demand in the future. However, unanticipated regional or local reliability issues could still arise in the event of outages or unexpected delays in the construction of new generating and/or transmission facilities, EGU retirements, EGU outages, transmission system outages or extended periods of extreme weather conditions. Refer to the “Electric Operating Information” tables for a profile of the sources of electric supply used to meet customer demand from 2015 to 2017. Refer to “Strategic Overview” in MDA for details of recent changes in the mix of electric supply, as well as future generation plans.

Electric Demand Planning Reserve Margin - IPL and WPL are required to maintain a planning reserve margin above their load at the time of the MISO-wide peak to ensure reliability of electric service to their customers. The required installed capacity reserve margin is 17.1% and the required unforced capacity reserve margin is 8.4% for the June 1, 2018 through May 31, 2019 MISO planning year. IPL and WPL currently have adequate capacity to meet such MISO planning reserve margin requirements.

Generation - IPL and WPL own a portfolio of EGUs located in Iowa, Wisconsin and Minnesota with a diversified fuel mix that includes natural gas, renewable resources and coal. Refer to “Properties” in Item 2 for details of IPL’s and WPL’s EGUs.

Fuel Costs - The average cost of delivered fuel per million British Thermal Units used for electric generation was as follows:
 
IPL
 
WPL
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
All fuels

$2.22

 

$2.17

 

$2.21

 

$2.53

 

$2.61

 

$2.67

Natural gas (a)
2.72

 
2.86

 
3.37

 
3.28

 
3.25

 
3.68

Coal
2.00

 
1.98

 
1.94

 
2.38

 
2.47

 
2.49


(a)
The average cost of natural gas includes commodity and transportation costs, as well as realized gains and losses from swap and option contracts used to hedge the price of natural gas volumes expected to be used by IPL’s and WPL’s natural gas-fired EGUs.

Natural Gas - Alliant Energy, IPL and WPL own several natural gas-fired EGUs, and WPL also has exclusive rights to the output of AEF’s Sheboygan Falls Energy Facility under an affiliated lease agreement. These facilities help meet customer demand for electricity generally during peak hour demands and when natural gas prices are low enough to make natural gas-fired generation economical compared to other fuel sources. Alliant Energy manages the gas supply to these gas-fired EGUs and helps ensure an adequate supply is available at known prices through a combination of gas commodity, pipeline transportation and storage agreements held by IPL and WPL for 2018 through 2034. Alliant Energy, IPL and WPL believe they are reasonably insulated against gas price volatility for these EGUs given their use of forward contracts and hedging practices, as well as their regulatory cost-recovery mechanisms.


 
8
 


Wind - IPL owns the Whispering Willow - East and Franklin County wind farms, and WPL owns the Cedar Ridge and Bent Tree wind farms. All or some of the renewable energy attributes associated with generation from these sources may be used in future years to comply with RES or other regulatory requirements, or sold to third parties in the form of renewable energy credits or other environmental commodities.

Coal - Coal is one of the fuel sources for owned EGUs. Coal contracts entered into with different suppliers help ensure that a specified supply of coal is available, and delivered, at known prices for IPL’s and WPL’s coal-fired EGUs for 2018 through 2020. Alliant Energy, IPL and WPL believe their coal supply portfolio represents a reasonable balance between the risks of insufficient supplies and those associated with being unable to respond to future coal market changes. Remaining coal requirements are expected to be met from either future term contracts or purchases in the spot market. Nearly all of the coal utilized by IPL and WPL is from the Wyoming Powder River Basin.

Alliant Energy, IPL and WPL believe they are reasonably insulated against coal price volatility given their current coal procurement process, the specific coal market in their primary purchase region and regulatory cost-recovery mechanisms. The coal procurement process supports periodic purchases, staggering of contract terms, stair-stepped levels of supply going forward and supplier diversity. Similarly, given the term lengths of their transportation agreements and strategic alignment of agreement expirations for negotiation purposes, Alliant Energy, IPL and WPL believe they are reasonably insulated against future higher coal transportation rates from the major railroads.

Purchased Power - IPL and WPL periodically enter into PPAs and purchase electricity from wholesale energy markets to meet a portion of their customer demand for electricity. IPL’s most significant PPA is for the purchase of up to 431 MWs of capacity and the resulting energy from DAEC for a term from February 2014 through December 2025. WPL’s most significant PPA is for the purchase of 150 MWs of energy for a term from January 2014 through December 2018.

IPL’s DAEC PPA - In 2013, the IUB issued an order allowing IPL to proceed with a PPA for the purchase of capacity and energy generated by DAEC located near Palo, Iowa. The IUB also authorized IPL to recover the Iowa retail portion of the cost of the DAEC PPA from Iowa retail electric customers through the energy adjustment clause. The terms of the PPA provide IPL the right to the counterparty’s entire output quantities (70% of the total plant output) in exchange for payment from IPL to the counterparty based on the amount of MWhs received by IPL. Among the terms and conditions of the PPA are guarantees by the counterparty to provide minimum amounts of capacity and energy. The PPA also contains provisions for the replacement of energy from alternative sources under certain conditions as well as provisions that convey to IPL the potential environmental attributes associated with its portion of the output from DAEC.

Electric Transmission - IPL and WPL do not own electric transmission assets and currently receive substantially all their electric transmission services from ITC and ATC, respectively. ITC and ATC are independent, for-profit, transmission-only companies and are transmission-owning members of the MISO Regional Transmission Organization, Midwest Reliability Organization and Reliability First Corporation Regional Entities. The annual transmission service rates that ITC or ATC charges their customers are calculated each calendar year using a FERC-approved cost of service formula rate. As a result, ITC and ATC can implement new rates each calendar year without filing a request with FERC. However, new rates are subject to challenge by either FERC or customers. If the rates proposed by ITC or ATC are determined by FERC to be unjust or unreasonable, or another mechanism is determined by FERC to be just and reasonable, ITC’s or ATC’s rates would change accordingly.

Refer to Note 1(g) for discussion of a transmission cost rider utilized by IPL for recovery of its electric transmission service expense, and discussion of WPL’s electric transmission service expense, which is recovered from its retail electric customers through changes in base rates determined during periodic rate proceedings. Refer to Note 18 for details of agreements between ATC and WPL.


 
9
 


MISO Markets - IPL and WPL are members of MISO, a FERC-approved Regional Transmission Organization, which is responsible for monitoring and ensuring equal access to the transmission system in their footprint. IPL and WPL participate in the wholesale energy and ancillary services markets operated by MISO, which are discussed in more detail below. As agent for IPL and WPL, Corporate Services enters into energy, capacity, ancillary services, and transmission sale and purchase transactions within MISO. Corporate Services assigns such sales and purchases between IPL and WPL based on statements received from MISO. Refer to Note 18 for additional discussion of these assigned amounts.

Wholesale Energy Market - IPL and WPL sell and purchase power in the day-ahead and real-time wholesale energy markets operated by MISO. MISO’s bid-based markets compare the cost of IPL and WPL generation against other generators, which affects IPL and WPL generation operations, energy purchases and energy sales. MISO generally dispatches the lowest cost generators, while recognizing current system constraints, to reduce costs for purchasers in the wholesale energy market. In addition, MISO may dispatch generators that support reliability needs, but that would not have operated based on economic needs. In these cases, MISO’s settlement assures that these generators are made whole financially for their variable costs.

Ancillary Services Market - IPL and WPL also participate in MISO’s ancillary services market, which integrates the procurement and use of regulation and contingency reserves with the existing wholesale energy market to ensure reliability of electricity supply. Regulation reserves refer to generation available to meet the moment-to-moment changes in generation that are necessary to meet changes in electricity demand. Contingency reserves refer to additional generation or demand response resources, either on-line or that can be brought on-line within 10 minutes, to meet certain major events such as the loss of a large EGU or transmission line. MISO’s ancillary services market has had the overall impact of lowering ancillary services costs in the MISO footprint.

Financial Transmission Rights and Auction Revenue Rights - In areas of constrained transmission capacity, energy costs could be higher due to congestion and its impact on locational marginal prices. FTRs provide a hedge for certain congestion costs that occur in the MISO energy market. MISO allocates auction revenue rights to IPL and WPL annually based on a fiscal year from June 1 through May 31 and historical use of the transmission system. The allocated auction revenue rights are used by IPL and WPL to acquire FTRs through the FTR auctions operated by MISO.

Resource Adequacy - MISO conducts various studies regarding reliability of electric service to ensure its market participants have adequate resources to meet MISO’s forecasted peak load obligations plus a reserve margin. Only accredited capacity assigned to EGUs is available to meet these requirements. To connect to the transmission system, MISO requires an EGU to obtain an interconnection agreement. In order for an EGU to receive accredited capacity, it must meet MISO capacity accreditation requirements, which can include satisfying transmission requirements identified in its interconnection agreement prior to the MISO planning year. New EGUs like West Riverside, or IPL’s and WPL’s planned additional wind generation, may not initially receive full accredited capacity based on the inability to satisfy all identified transmission requirements. Therefore, full accredited capacity may not be granted to such EGUs until all identified transmission requirements are resolved.

Electric Environmental Matters - Refer to Note 16(e) and “Environmental Matters” in MDA for discussion of electric environmental matters, including current or proposed environmental regulations.


 
10
 


Electric Operating Information - Alliant Energy
2017
 
2016
 
2015
Operating Revenues (in millions):
 
 
 
 
 
Retail

$2,569.6

 

$2,564.8

 

$2,474.1

Sales for resale
268.8

 
266.7

 
249.5

Other
56.3

 
44.0

 
46.9

Total

$2,894.7

 

$2,875.5

 

$2,770.5

Electric Sales (000s MWh):
 
 
 
 
 
Retail
25,095

 
25,339

 
25,380

Sales for resale
5,003

 
4,399

 
4,842

Other
94

 
100

 
129

Total
30,192

 
29,838

 
30,351

Customers (End of Period):
 
 
 
 
 
Retail
959,295

 
955,533

 
950,048

Other
2,826

 
2,785

 
2,930

Total
962,121

 
958,318

 
952,978

Other Selected Electric Data:
 
 
 
 
 
Maximum summer peak hour demand (MW)
5,375

 
5,615

 
5,385

Maximum winter peak hour demand (MW)
4,504

 
4,559

 
4,668

Cooling degree days (a):
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 748)
747

 
971

 
732

Madison, Wisconsin (WPL) (normal - 646)
578

 
780

 
665

Sources of electric energy (000s MWh):
 
 
 
 
 
Gas
5,315

 
4,505

 
4,738

Purchased power:
 
 
 
 
 
Nuclear
3,727

 
3,444

 
3,741

Wind (b)
1,268

 
1,079

 
1,190

Other (b)
6,242

 
8,912

 
6,675

Wind (b)
1,591

 
1,382

 
1,441

Coal
12,380

 
11,019

 
13,040

Other (b)
239

 
228

 
189

Total
30,762

 
30,569

 
31,014

Revenue per KWh sold to retail customers (cents)
10.24

 
10.12

 
9.75

(a)
Cooling degree days are calculated using a simple average of the high and low temperatures each day compared to a 65 degree base. Normal degree days are calculated using a rolling 20-year average of historical cooling degree days. Refer to “Gas Utility Operations” below for details of heating degree days.
(b)
All or some of the renewable energy attributes associated with generation from these sources may be used in future years to comply with renewable energy standards or other regulatory requirements, or sold to third parties in the form of renewable energy credits or other environmental commodities.

 
11
 


Electric Operating Information
IPL
 
WPL
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Operating Revenues (in millions):
 
 
 
 
 
 
 
 
 
 
 
Retail

$1,448.0

 

$1,442.5

 

$1,410.2

 

$1,121.6

 

$1,122.3

 

$1,063.9

Sales for resale
114.6

 
97.8

 
61.5

 
154.2

 
168.9

 
188.0

Other
36.3

 
29.4

 
32.1

 
20.0

 
14.6

 
14.8

Total

$1,598.9

 

$1,569.7

 

$1,503.8

 

$1,295.8

 

$1,305.8

 

$1,266.7

Electric Sales (000s MWh):
 
 
 
 
 
 
 
 
 
 
 
Retail
14,356

 
14,523

 
14,824

 
10,739

 
10,816

 
10,556

Sales for resale
2,169

 
1,406

 
1,023

 
2,834

 
2,993

 
3,819

Other
38

 
41

 
67

 
56

 
59

 
62

Total
16,563

 
15,970

 
15,914

 
13,629

 
13,868

 
14,437

Customers (End of Period):
 
 
 
 
 
 
 
 
 
 
 
Retail
489,717

 
489,005

 
488,582

 
469,578

 
466,528

 
461,466

Other
878

 
862

 
1,050

 
1,948

 
1,923

 
1,880

Total
490,595

 
489,867

 
489,632

 
471,526

 
468,451

 
463,346

Other Selected Electric Data:
 
 
 
 
 
 
 
 
 
 
 
Maximum summer peak hour demand (MW)
2,968

 
2,996

 
3,005

 
2,476

 
2,681

 
2,564

Maximum winter peak hour demand (MW)
2,421

 
2,479

 
2,531

 
2,100

 
2,131

 
2,153

Cooling degree days (a):
 
 
 
 
 
 
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 748)
747

 
971

 
732

 
N/A

 
N/A

 
N/A

Madison, Wisconsin (WPL) (normal - 646)
N/A

 
N/A

 
N/A

 
578

 
780

 
665

Sources of electric energy (000s MWh):
 
 
 
 
 
 
 
 
 
 
 
Gas
3,342

 
1,838

 
1,874

 
1,973

 
2,667

 
2,864

Purchased power:
 
 
 
 
 
 
 
 
 
 
 
Nuclear
3,727

 
3,444

 
3,741

 
N/A

 
N/A

 
N/A

Wind (b)
613

 
635

 
757

 
655

 
444

 
433

Other (b)
2,456

 
4,267

 
3,015

 
3,786

 
4,645

 
3,660

Wind (b)
851

 
630

 
653

 
740

 
752

 
788

Coal
5,766

 
5,598

 
6,263

 
6,614

 
5,421

 
6,777

Other (b)
22

 
6

 
5

 
217

 
222

 
184

Total
16,777

 
16,418

 
16,308

 
13,985

 
14,151

 
14,706

Revenue per KWh sold to retail customers (cents)
10.09

 
9.93

 
9.51

 
10.44

 
10.38

 
10.08

(a)
Cooling degree days are calculated using a simple average of the high and low temperatures each day compared to a 65 degree base. Normal degree days are calculated using a rolling 20-year average of historical cooling degree days. Refer to “Gas Utility Operations” below for details of heating degree days.
(b)
All or some of the renewable energy attributes associated with generation from these sources may be used in future years to comply with renewable energy standards or other regulatory requirements, or sold to third parties in the form of renewable energy credits or other environmental commodities.

2) GAS UTILITY OPERATIONS
General - Gas utility operations represent the second largest operating segment for Alliant Energy, IPL and WPL. Alliant Energy’s gas utility operations are located in the Midwest with IPL providing gas service in Iowa and WPL providing gas service in Wisconsin. Refer to the “Gas Operating Information” tables for additional details regarding gas utility operations. Refer to Note 1(g) for information relating to utility natural gas cost recovery mechanisms and Note 16(b) for discussion of natural gas commitments.

Customers - IPL and WPL provide gas utility service to a diversified base of retail customers and industries, including research, education, hospitality, manufacturing and chemicals (including ethanol). In addition, IPL and WPL provide transportation service to commercial and industrial customers by moving customer-owned gas through Alliant Energy’s distribution systems to the customers’ meters.

Seasonality - Gas sales follow a seasonal pattern with an annual base-load of gas and a large heating peak occurring during the winter season. Natural gas obtained from producers, marketers and brokers, as well as gas in storage, is utilized to meet the peak heating season requirements. Storage contracts generally allow IPL and WPL to purchase gas in the summer and inject it into underground storage fields, and remove it from storage fields in the winter to deliver to customers. Refer to the “Gas Operating Information” tables for details regarding maximum daily winter peak demands.


 
12
 


Competition - Gas customers in Iowa and Wisconsin currently do not have the ability to choose their gas distributor, and IPL and WPL have obligations to serve all their gas customers. While the gas utility distribution function is expected to remain a regulated function, sales of the natural gas commodity and related services are subject to competition from third-parties who provide alternative fuel sources (e.g. propane). However, when natural gas service is available for a given area, customers in such area have generally selected natural gas over propane as a more cost competitive solution for their fuel needs. Refer to “Strategic Overview” in MDA for discussion of plans to extend gas distribution systems, as well as discussion of the growth element of Alliant Energy’s strategic plan.

Gas Supply - IPL and WPL maintain purchase agreements with over 70 suppliers of natural gas from various gas producing regions of the U.S. and Canada. In providing gas commodity service to retail customers, Corporate Services administers a diversified portfolio of transportation and storage contracts on behalf of IPL and WPL. The tariffs for IPL’s and WPL’s retail gas customers provide for subsequent adjustments to their rates for the cost of gas sold to these customers. As a result, natural gas prices do not have a material impact on IPL’s or WPL’s gas margins.

Gas Demand Planning Reserve Margin - IPL and WPL are required to maintain adequate pipeline capacity to ensure they meet their customers’ maximum daily system demand requirements. IPL and WPL currently have planning reserve margins of 3% and 2%, respectively, above their forecasted maximum daily system demand requirements from November 2017 through March 2018.

Gas Environmental Matters - Refer to Note 16(e) and “Environmental Matters” in MDA for discussion of gas environmental matters.

Gas Operating Information - Alliant Energy
2017
 
2016
 
2015
Operating Revenues (in millions):
 
 
 
 
 
Retail

$364.6

 

$322.4

 

$349.9

Transportation/other
36.3

 
33.0

 
31.3

Total

$400.9

 

$355.4

 

$381.2

Gas Sales (000s Dths):
 
 
 
 
 
Retail
49,250

 
47,743

 
48,635

Transportation/other
76,916

 
77,485

 
74,162

Total
126,166

 
125,228

 
122,797

Retail Customers at End of Period
413,054

 
411,758

 
409,405

Other Selected Gas Data:
 
 
 
 
 
Heating degree days (a):
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 6,769)
6,076

 
5,933

 
6,300

Madison, Wisconsin (WPL) (normal - 7,043)
6,569

 
6,420

 
6,667

Revenue per Dth sold to retail customers

$7.40

 

$6.75

 

$7.19

Purchased gas costs per Dth sold to retail customers

$4.23

 

$3.99

 

$4.40

Gas Operating Information
IPL
 
WPL
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
Operating Revenues (in millions):
 
 
 
 
 
 
 
 
 
 
 
Retail

$202.2

 

$183.1

 

$198.4

 

$162.4

 

$139.3

 

$151.5

Transportation/other
23.8

 
20.9

 
18.9

 
12.5

 
12.1

 
12.4

Total

$226.0

 

$204.0

 

$217.3

 

$174.9

 

$151.4

 

$163.9

Gas Sales (000s Dths):
 
 
 
 
 
 
 
 
 
 
 
Retail
26,580

 
26,230

 
26,877

 
22,670

 
21,513

 
21,758

Transportation/other
39,365

 
37,158

 
34,129

 
37,551

 
40,327

 
40,033

Total
65,945

 
63,388

 
61,006

 
60,221

 
61,840

 
61,791

Retail Customers at End of Period
224,041

 
224,420

 
224,914

 
189,013

 
187,338

 
184,491

Other Selected Gas Data:
 
 
 
 
 
 
 
 
 
 
 
Maximum daily winter peak demand (Dth)
237,203

 
262,409

 
267,314

 
201,947

 
203,655

 
209,289

Heating degree days (a):
 
 
 
 
 
 
 
 
 
 
 
Cedar Rapids, Iowa (IPL) (normal - 6,769)
6,076

 
5,933

 
6,300

 
N/A

 
N/A

 
N/A

Madison, Wisconsin (WPL) (normal - 7,043)
N/A

 
N/A

 
N/A

 
6,569

 
6,420

 
6,667

Revenue per Dth sold to retail customers

$7.61

 

$6.98

 

$7.38

 

$7.16

 

$6.48

 

$6.96

Purchased gas cost per Dth sold to retail customers

$4.34

 

$4.21

 

$4.53

 

$4.11

 

$3.72

 

$4.25

(a)
Heating degree days are calculated using a simple average of the high and low temperatures each day compared to a 65 degree base. Normal degree days are calculated using a rolling 20-year average of historical heating degree days.

 
13
 



3) OTHER UTILITY OPERATIONS - STEAM - IPL’s Prairie Creek facility is the primary source of steam for IPL’s two high-pressure steam customers. These customers are each under contract through 2025 for minimum quantities of annual steam usage, with certain conditions.

D. INFORMATION RELATING TO NON-UTILITY OPERATIONS

AEF manages a portfolio of wholly-owned subsidiaries and additional investments through the following distinct platforms:

ATI - currently holds all of Alliant Energy’s ATC Investment. ATC is an independent, for-profit, transmission-only company. Refer to Note 6(a) for discussion of DATC, joint venture between Duke Energy Corporation and ATC, which is expected to acquire, build, own and operate new electric transmission infrastructure in North America.

Non-utility Wind Investment - includes a 50% cash equity ownership interest in a 225 MW non-utility wind farm located in Oklahoma.

Sheboygan Falls Energy Facility - is a 347 MW, simple-cycle, natural gas-fired EGU near Sheboygan Falls, Wisconsin, which is leased to WPL for an initial period of 20 years ending in 2025.

Transportation - includes a short-line railway that provides freight service between Cedar Rapids, Iowa and Iowa City, Iowa; a barge terminal and hauling services on the Mississippi River; and other transfer and storage services.

ITEM 1A. RISK FACTORS

You should carefully consider each of the risks described below relating to Alliant Energy, IPL and WPL, together with all of the other information contained in this combined report, before making an investment decision with respect to our securities. If any of the following risks develop into actual events, our business, financial condition or results of operations could be materially and adversely affected and you may lose all or part of your investment.

Our utility business is significantly impacted by government legislation, regulation and oversight - Our utility financial condition is influenced by how regulatory authorities, including the IUB, the PSCW and FERC, establish the rates we can charge our customers, our authorized rates of return and common equity levels, and the amount of costs that may be recovered from customers. Our ability to timely obtain rate adjustments to earn authorized rates of return depends upon timely regulatory action under applicable statutes and regulations, and cannot be guaranteed. In future rate reviews, IPL and WPL may not receive an adequate amount of rate relief to recover all costs and earn their authorized rates of return, rates may be reduced, rate refunds may be required, rate adjustments may not be approved on a timely basis, costs may not be otherwise recovered through rates, future rates may be temporarily frozen, and authorized rates of return on capital may be reduced. As a result, we may experience adverse impacts on our financial condition and results of operations.

In addition, our operations are subject to extensive regulation primarily by the IUB, the PSCW and FERC. We are also subject to oversight and monitoring by organizations such as the North American Electric Reliability Corporation, the Pipeline and Hazardous Materials Safety Administration, and the Midcontinent Independent System Operator, Inc. The impacts on our operations include: our ability to site and construct new generating facilities and recover associated costs, such as renewable energy projects; the installation of environmental controls and the recovery of associated costs; our ability to decommission generating facilities and recover related costs and the remaining carrying value of these facilities; our ability to site, construct and recover costs for new natural gas pipelines; our ability to recover costs to upgrade our electric and gas distribution systems; the amount of certain sources of energy we must use, such as renewable sources; our ability to purchase generating facilities and recover the costs associated therewith; our ability to sell utility assets and any conditions placed upon the sale of such assets; the rates paid to transmission operators and how those costs are recovered from customers; our ability to enter into purchased power agreements and recover the costs associated therewith; resource adequacy requirements, energy capacity standards, what forms of energy are considered when determining whether we meet those standards, and when new facilities such as IPL’s Marshalltown Generating Station, WPL’s West Riverside Energy Center, and IPL’s and WPL’s planned additional wind generation may be fully accredited with energy capacity; the allocation of expenditures by transmission companies on transmission network upgrades and our ability to recover costs associated therewith; reliability; safety; the issuance of securities; accounting matters; and transactions between affiliates. These regulatory authorities and organizations are also empowered to impose financial penalties and other sanctions, including requirements to implement new compliance programs. Failure to obtain approvals for any of these matters in a timely manner, or receipt of approvals with uneconomical conditions, may cause us not to pursue the construction of such projects or to record an impairment of our assets and may have a material adverse impact on our financial condition and results of operations.

 
14
 



Provisions of the Wisconsin Utility Holding Company Act limit our ability to invest in or grow our non-utility activities and may deter potential purchasers who might be willing to pay a premium for our stock.

Our strategic plan includes large construction projects, which are subject to risks - Our strategic plan includes constructing renewable generating facilities, constructing a natural gas-fired generating facility, making other large-scale improvements to generating facilities, and large-scale additions and upgrades to our electric and gas distribution systems. These construction projects are subject to various risks. These risks include: the inability to obtain necessary permits in a timely manner; adverse interpretation or enforcement of permit conditions; changes in applicable laws or regulations; changes in costs of materials, equipment, commodities, fuel or labor; delays caused by construction accidents or injuries; shortages in materials, equipment and qualified labor; changes to the scope or timing of the projects; general contractors or subcontractors not performing as required under their contracts; the inability to agree to contract terms or disputes in contract terms; poor initial cost estimates; work stoppages; adverse weather conditions; government actions; legal action; unforeseen engineering or technology issues; limited access to capital; and other adverse economic conditions. We may not be able to recover all costs for the projects in rates and face increased risk of potential impairment of our project investment if a construction project is not completed or is delayed, or final costs exceed expectations or the costs approved by our regulators, for example, if IPL’s expansion of wind generation exceeds the respective cost cap approved by the IUB. Inability to recover costs, or inability to complete the project in a timely manner, could adversely impact our financial condition and results of operations.

Demand for energy may decrease - Our results of operations are affected by the demand for energy in our service territories. Energy demand may decrease due to many things, including economic conditions, proliferation of customer- and third party-owned generation, loss of service territory or franchises, energy efficiency measures, technological advances that increase energy efficiency, and loss of wholesale customers. The loss of sales due to lower demand for energy may increase our rates for remaining customers, as our rates must cover our fixed costs. Rate increases may cause decreased demand for energy as customers move to customer- and third party-owned generation and implement energy efficiency measures to reduce costs. The loss of customers, the inability to replace those customers with new customers, and the decrease in demand for energy could negatively impact our financial condition and results of operations.

Changes to certain tax elections, tax regulations and future taxable income could negatively impact our financial condition and results of operations - We have significantly reduced our federal and state income tax obligations over the past few years through tax planning strategies and the extension of bonus depreciation deductions for certain expenditures for property. These tax planning strategies and extensions of bonus depreciation deductions have generated large annual taxable losses and tax credits over the past few years that have resulted in significant federal net operating losses and tax credit carryforwards. We plan to utilize substantially all of these net operating losses and tax credit carryforwards in the future to reduce our income tax obligations. If we cannot generate enough taxable income in the future to utilize all of the net operating losses and tax credit carryforwards before they expire due to lower than expected financial performance or changes to tax regulations, we may incur material charges to earnings. If the IRS does not agree with the deductions resulting from our tax planning strategies or our position on the qualification of production tax credits from planned and potential wind generating facilities, our financial condition and results of operations may be adversely impacted.

Our utility business currently operates wind generating facilities, which generate production tax credits for us to use to reduce our federal tax obligations. The amount of production tax credits we earn is dependent on the level of electricity output generated by our wind farms and the applicable tax credit rate. A variety of operating and economic parameters, including significant transmission constraints, adverse weather conditions and breakdown or failure of equipment, could significantly reduce the production tax credits generated by our wind farms resulting in a material adverse impact on our financial condition and results of operations.

Also, if corporate tax rates or policies are changed with future federal or state legislation, we may be required to take material charges against earnings. For example, Tax Reform was enacted in December 2017, which included changes in corporate tax rates and tax policies. Tax Reform may result in changes in cash flows, which may have a negative impact on our credit ratings. There may also be further changes or amendments to Tax Reform or state tax policies and we are currently unable to determine what impacts any future changes will have on our financial condition or results of operations, including related impacts to IPL’s and WPL’s retail and wholesale electric and gas rates charged to their customers.


 
15
 


Finally, FERC regulates utility income tax policies, including partnership tax policies, which impact our investment in American Transmission Company LLC and ATC Holdco LLC (ATC Investment). FERC is currently investigating these income tax policies in addition to rate of return policies as a result of a court decision. The results of this investigation may lead to changes in FERC’s income tax policies, which would impact partnership entities, particularly our ATC Investment. We are currently unable to determine what impacts these potential changes will have on our financial condition or results of operations, however, it is possible that a change could reduce Alliant Energy’s equity earnings and distributions from its ATC Investment.

A cyber attack may disrupt our operations or lead to a loss or misuse of confidential and proprietary information or potential liability - We operate in an industry that requires the continuous use and operation of sophisticated information technology systems and network infrastructure. Cyber attacks targeting our electronic control systems used at our generating facilities and for electric and gas distribution systems could result in a full or partial disruption of our electric and/or gas operations. Any disruption of these operations could result in a loss of service to customers and a significant decrease in revenues, as well as significant expense to repair system damage and remedy security breaches. We have instituted certain safeguards to protect our operating systems and information technology assets, but they may not always be effective due to the evolving nature of cyber attacks and cyber security. We cannot guarantee that such protections will be completely successful in the event of a cyber attack. If the technology systems were to fail or be breached by a cyber attack or a computer virus, and not be recovered in a timely fashion, we may be unable to fulfill critical business functions and confidential data could be compromised, adversely impacting our financial condition and results of operation.

In addition, we may collect and retain sensitive information, including personal information about our customers, shareowners and employees. In some cases, we outsource administration of certain functions to vendors that could be targets of cyber attacks. For example, we outsource administration of our employee health insurance to Anthem. Anthem was the target of a cyber attack in 2014. Any theft, loss and/or fraudulent use of customer, shareowner, employee or proprietary data as a result of a cyber attack could subject us to significant litigation, liability and costs, as well as adversely impact our reputation with customers and regulators, among others.

We are subject to employee workforce factors that could affect our businesses - We operate in an industry that requires specialized technical skills. It may be difficult to hire and retain such a skilled workforce due to labor market conditions, the length of time needed to acquire the skills, and general competition for talent. Further, we need a workforce that is innovative, customer-focused and competitive to thrive in the future. To the extent our corporate culture does not support and develop these attributes, we may not be able to successfully implement our future plans. We are also subject to collective bargaining agreements with approximately 2,200 employees. Any work stoppage experienced in connection with negotiations of collective bargaining agreements could adversely affect our financial condition and results of operations as well as our ability to implement our strategic plan.

Our utility business is seasonal and may be adversely affected by the impacts of weather - Electric and gas utility businesses are seasonal businesses. Demand for electricity is greater in the summer months associated with higher air conditioning needs. In addition, market prices for electricity generally peak in the summer due to the higher demand. Conversely, demand for natural gas depends significantly upon temperature patterns in winter months due to heavy use in residential and commercial heating. As a result, our overall operating results in the future may fluctuate substantially on a seasonal basis. In addition, we have historically generated less revenues and income when temperatures are warmer in the winter and/or cooler in the summer. Thus, unusually mild winters and/or summers could have an adverse effect on our financial condition and results of operations.

Our utility businesses are subject to numerous environmental laws and regulations - Our utilities are subject to numerous stringent environmental laws and regulations by many federal, regional, state and local authorities, and international treaties. These laws and regulations generally concern emissions into the air, effluents into the water, use of water, wetlands preservation, remediation of contamination, waste disposal, disposal of coal combustion residuals, hazardous waste disposal, threatened and endangered species, and noise regulation, among others. We are also subject to Consent Decrees, which require construction of specific environmental control equipment, establish emission rate limits, require retirement or fuel switching of certain facilities and completing environmental mitigation projects. Failure to comply with such laws, regulations and Consent Decrees, or to obtain or comply with any necessary environmental permits pursuant to such laws and regulations, could result in injunctions, fines or other sanctions. Environmental laws and regulations affecting power generation and distribution are complex and subject to continued uncertainty, but have tended to become more stringent over time. These laws and regulations have imposed, and proposed laws and regulations could impose in the future, additional costs on the operation of our generating facilities. We have incurred, and will continue to incur, capital and other expenditures to comply with these and other environmental laws and regulations. Changes in, or new development of,

 
16
 


environmental restrictions may force us to incur significant expenses or expenses that may exceed our estimates. There can be no assurance that we would be able to recover all or any increased environmental costs from our customers. Failure to comply with the laws, regulations and Consent Decrees, changes in the laws and regulations and failure to recover costs of compliance may adversely impact our financial condition and results of operations.

Actions related to global climate change and reducing greenhouse gases (GHG) emissions could negatively impact us - Regulators, customers and investors continue to raise concerns about climate change and GHG emissions. National regulatory action is in flux, but international regulatory actions continue. We are focused on executing a long-term strategy to deliver reliable and affordable energy with lower carbon dioxide (CO2) emissions independent of changing policies and political landscape. However, it is unclear how these climate change concerns will ultimately impact us. We could incur costs or other obligations to comply with future GHG regulations, and could become the target of legal claims or challenges, because generating electricity using fossil fuels emits CO2 and other GHG. Further, investors may determine that we are too reliant on fossil fuels and not buy shares of our common stock, or sell shares of our common stock, which may cause our stock price to decrease. We could face additional pressures from customers or investors to more rapidly reduce CO2 on a voluntary-basis, including faster adoption of lower carbon technologies and management of excess renewable energy credits. The EPA’s approach and timing for implementing rules to regulate carbon emissions at fossil-fueled electric generating units remains undecided and subject to litigation. We cannot provide any assurance regarding the potential impacts of climate change policy or GHG regulations on our operations and these could have a material adverse impact on our financial condition and results of operations.

We are dependent on the capital markets and could be negatively impacted by disruptions in the capital markets - Successful implementation of our strategic plan is dependent upon our ability to access the capital markets under competitive terms and rates. We have forecasted capital expenditures of approximately $5 billion over the next four years. Disruption, uncertainty or volatility in those markets could increase our cost of capital or limit the availability of capital. Disruptions could be caused by Federal Reserve policies and actions, currency concerns, economic downturn or uncertainty, monetary policies, a negative view of the utility industry or our company, failures of financial institutions, U.S. debt management concerns, U.S. debt limit and budget debates, including government shutdowns, European and worldwide sovereign debt concerns, other global or geopolitical events, or other factors. Increases in interest rates may cause the price of our equity securities to decline. Any disruptions in capital markets could adversely impact our ability to implement our strategic plan.

We rely on our strong credit ratings to access the credit markets. If our credit ratings are downgraded for any reason, such as Tax Reform impacts or general negative outlook for the utility industry, we could pay higher interest rates in future financings, the pool of potential lenders could be reduced, borrowing costs under existing credit facilities could increase, our access to the commercial paper market could be limited, or we could be required to provide additional credit assurance, including cash collateral, to contract counterparties. If our access to capital were to become significantly constrained or costs of capital increased significantly due to lowered credit ratings, prevailing industry conditions, regulatory constraints, volatility of the capital markets or other factors, our financial condition and results of operations could be adversely affected.

Regional and national economic conditions could have an unfavorable impact on us - Our utility and non-utility businesses follow the economic cycles of the customers we serve and credit risk of counterparties we do business with. Adverse economic conditions in our service territories can adversely affect the financial condition of our customers and reduce their demand for electricity and natural gas. Economic conditions may not create enough growth to replace lost energy demand or to grow energy demand. Reduced volumes of electricity and natural gas sold, or the inability to collect unpaid bills from our customers due to deterioration in national or regional economic conditions, could adversely impact our financial condition and results of operations.

Threats of terrorism and catastrophic events that could result from terrorism may impact our operations in unpredictable ways - We are subject to direct and indirect effects of terrorist threats and activities. Generation, transmission and distribution facilities, in general, have been identified as potential targets of physical or cyber attacks. Physical attacks on transmission and distribution facilities that appeared to be terrorist-style attacks have occurred. The risks posed by such attacks could include, among other things, the inability to generate, purchase or distribute electric energy or obtain fuel sources, the increased cost of security and insurance, the disruption of, volatility in, or other effects on capital markets, and a decline in the economy and/or energy usage within our service territories, all of which could adversely impact our financial condition and results of operations. In addition, the cost of repairing damage to our facilities and infrastructure due to acts of terrorism, and the loss of revenue if such events prevent us from providing utility service to our customers, could adversely impact our financial condition and results of operations.


 
17
 


We may not be able to fully recover costs related to commodity prices - We have natural gas and coal supply and transportation contracts in place for some of the natural gas and coal we require to generate electricity. We also have transportation and supply agreements in place to facilitate delivery of natural gas to our customers. Our counterparties to these contracts may not fulfill their obligations to provide natural gas or coal to us due to financial or operational problems, such as natural disasters or severe weather. If we were unable to obtain enough natural gas or coal for our electric generating facilities under our existing contracts, or to obtain electricity under existing or future purchased power agreements, we could be required to purchase natural gas or coal at higher prices or forced to purchase electricity from higher-cost generating resources in the MISO energy market. If, for natural gas delivery to our customers, we were unable to obtain our natural gas supply requirements under existing or future natural gas supply and transportation contracts, we could be required to purchase natural gas at higher prices from other sources. Natural gas market prices have generally been stable recently, but have been volatile in the past during periods of extremely cold temperatures or disruption in supply caused by major storms or pipeline explosions. We may not be able to pass on the changes in costs to our customers, especially at WPL where we do not have a retail electric automatic fuel cost adjustment clause. Increases in prices and costs due to disruptions that are not fully and timely recovered in rates may adversely impact our financial condition and results of operations.

We may not be able to fully recover higher transmission costs - Neither IPL nor WPL own or operate electric transmission facilities, however, both IPL and WPL pay for the use of the interstate electric transmission system based upon FERC-regulated rates. IPL and WPL rely primarily on the use of the ITC Midwest LLC (ITC) and American Transmission Company LLC (ATC) transmission systems, respectively. Due to the formula rates used by ITC and ATC to charge their customers and possible future changes to these rates, there is uncertainty regarding IPL’s and WPL’s future electric transmission service expense. In addition, FERC may change the way transmission companies set rates to socialize transmission system upgrades or to differently price generation resources necessary to maintain system reliability and resiliency. The prices that IPL and WPL charge for electricity may not totally compensate for the increase in such transmission costs. We may not be able to fully or timely pass on the increases in such transmission costs to our customers. In addition, if the transmission cost rider at IPL or escrow accounting treatment of transmission costs at WPL are amended or removed, we may not be able to fully recover transmission costs. Inability to fully recover transmission costs in a timely manner may adversely impact our financial condition and results of operations.

We face risks associated with operating electric and natural gas infrastructure - The operation of electric generating facilities involves many risks, including start-up risks, breakdown or failure of equipment, failure of generating facilities including wind turbines, the dependence on a specific fuel source, including the supply and transportation of fuel, the risk of performance below expected or contracted levels of output or efficiency, employee safety, operator error and compliance with mandatory reliability standards. Our energy delivery infrastructure is aging, which increases certain risks, including breakdown or failure of equipment and fires developing from our power lines. In addition, the North American transmission grid is highly interconnected and, in extraordinary circumstances, disruptions at particular points within the grid could cause an extensive power outage in our delivery systems. Increased utilization of customer- and third party-owned generation technologies could disrupt the reliability and balance of the electricity grid. Further, the transmission system in our utilities’ service territories can experience constraints limiting the ability to transmit electric energy within our service territories. The transmission constraints could result in an inability to deliver energy from generating facilities, particularly wind generating facilities, to the national grid, or to access lower cost sources of electric energy. We also have obligations to provide electric service under regulatory requirements and contractual commitments. Failure to meet our service obligations could adversely impact our financial condition and results of operations.

The operation of our gas transmission and distribution infrastructure also involves many risks, such as leaks, explosions, mechanical problems and employee and public safety, which could cause substantial financial losses. These risks could result in loss of human life, significant damage to property, environmental emissions, impairment of our operations and substantial losses to us. We are also responsible for compliance with new and changing mandatory reliability and safety standards, including anticipated new regulations under the Pipeline and Hazardous Materials Safety Administration. Our infrastructure is aging, which could impact safety and compliance with possible new regulations. Failure to meet these standards could result in substantial fines. Electric and gas infrastructure operations could be impacted by future compliance with the Clean Power Plan. We also have obligations to provide service under regulatory requirements and contractual commitments. Failure to meet our service obligations could adversely impact our financial condition and results of operations.

Storms or other natural disasters may impact our operations in unpredictable ways - Storms and other natural disasters, including events such as floods, tornadoes, blizzards, ice storms, droughts, fires, solar flares or pandemics may adversely impact our ability to generate, purchase or distribute electric energy and gas or obtain fuel or other critical supplies. In addition, we could incur large costs to repair damage to our generating facilities and electric and gas infrastructure, or costs related to environmental remediation, due to storms or other natural disasters. The restoration costs may not be fully covered

 
18
 


by insurance policies and may not be fully recovered in rates, or recovery in rates may be delayed. Storms and natural disasters may impact our customers and the resulting reduced demand for energy could cause lower sales and revenues, which may not be replaced or recovered in rates, or rate recovery may be delayed. Any of these items could adversely impact our financial condition and results of operations.

We may incur material post-closing adjustments related to past asset and business divestitures - We have sold certain non-utility subsidiaries such as Whiting Petroleum Corporation (Whiting Petroleum), as well as regulated assets such as our Minnesota electric and natural gas distribution assets. We may continue to incur liabilities relating to our previous ownership of, or the transactions pursuant to which we disposed of, these subsidiaries and assets. Any potential liability depends on a number of factors outside of our control, including the financial condition of Whiting Petroleum and/or its assignees. Any required payments on retained liabilities, guarantees or indemnification obligations with respect to Whiting Petroleum, the sales of our Minnesota electric and natural gas distribution assets, or other future asset or business divestitures, could adversely impact our financial condition and results of operations.

We are subject to limitations on our ability to pay dividends - Alliant Energy is a holding company with no significant operations of its own. The primary sources of funds for Alliant Energy to pay dividends to its shareowners are dividends and distributions from its subsidiaries, primarily its utility subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation to pay any amounts to us, whether by dividends, distributions, loans or other payments. The ability of our subsidiaries to pay dividends or make distributions to us and, accordingly, our ability to pay dividends on Alliant Energy common stock will depend on regulatory limitations, earnings, cash flows, capital requirements and general financial condition of our subsidiaries. Our utilities have dividend payment restrictions based on the terms of any outstanding preferred stock and regulatory limitations applicable to them. If we do not receive adequate dividends and distributions from our subsidiaries, then we may not be able to make, or may have to reduce, dividend payments on Alliant Energy common stock.

Our pension and other postretirement benefits plans are subject to investment and interest rate risk that could negatively impact our financial condition - We have pension and other postretirement benefits plans that provide benefits to many of our employees and retirees. Costs of providing benefits and related funding requirements of these plans are subject to changes in the market value of the assets that fund the plans. The funded status of the plans and the related costs reflected in our financial statements are affected by various factors, which are subject to an inherent degree of uncertainty, including economic conditions, financial market performance, interest rates, life expectancies and demographics. Recessions and volatility in the domestic and international financial markets have negatively affected the asset values of our pension plans at various times in the past. Poor investment returns or lower interest rates may necessitate accelerated funding of the plans to meet minimum federal government requirements, which could have an adverse impact on our financial condition and results of operations.

Energy industry changes could have a negative effect on our businesses - We operate in a highly regulated business environment. The advent of new and unregulated markets has the potential to significantly impact our financial condition and results of operations. Further, competitors may not be subject to the same operating, regulatory and financial requirements that we are, potentially causing a substantial competitive disadvantage for us. Changes in technology could also alter the channels through which electric customers buy or utilize power, which could reduce the revenues or increase the expenses of our utility companies. Increased competition from any restructuring efforts in our primary retail electric service territories may have a significant adverse impact on our financial condition and results of operations.

We face risks related to non-utility operations - We rely on our non-utility operations for a portion of our earnings. If our non-utility investments do not perform at expected levels, we could experience a material adverse impact on our financial condition and results of operations.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES
Alliant Energy - As a holding company, Alliant Energy doesn’t directly own any significant properties other than the stock of its subsidiaries. The principal properties of those subsidiaries are as follows:


 
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IPL and WPL
Electric - At December 31, 2017, IPL’s and WPL’s EGUs by primary fuel type were as follows:
IPL
 
Expected
 
 
 
Primary
 
Nameplate
 
Generating
 
 
Retirement or
 
In-service
 
Dispatch
 
Capacity
 
Capacity
Name of EGU and Location
 
Fuel Switch (a)
 
Dates
 
Type (b)
 
in MW
 
in MW (c)
Marshalltown Generating Station (Units 1-3); Marshalltown, IA
 
N/A
 
2017
 
IN
 
706

 
630

Emery Generating Station (Units 1-3); Mason City, IA
 
N/A
 
2004
 
IN
 
603

 
535

M.L. Kapp Generating Station (Unit 2); Clinton, IA
 
N/A
 
1967
 
IN
 
218

 
101

Marshalltown Combustion Turbines (Units 1-3); Marshalltown, IA
 
N/A
 
1978
 
PK
 
189

 
112

Prairie Creek Generating Station (Unit 4); Cedar Rapids, IA
 
N/A
 
1967
 
PK
 
149

 
111

Burlington Combustion Turbines (Units 1-4); Burlington, IA
 
Retire by 6/1/18
 
1994-1996
 
PK
 
79

 
48

Red Cedar Combustion Turbine (Unit 1); Cedar Rapids, IA
 
Retire by 6/1/18
 
1996
 
PK
 
23

 
13

Total Gas
 
 
 
 
 
 
 
1,967

 
1,550

 
 
 
 
 
 
 
 
 
 
 
Ottumwa Generating Station (Unit 1); Ottumwa, IA (d)
 
N/A
 
1981
 
BL
 
348

 
330

Lansing Generating Station (Unit 4); Lansing, IA
 
N/A
 
1977
 
BL
 
275

 
227

Burlington Generating Station (Unit 1); Burlington, IA
 
Fuel switch by 12/31/21 (e)
 
1968
 
BL
 
212

 
199

George Neal Generating Station (Unit 4); Sioux City, IA (f)
 
N/A
 
1979
 
BL
 
179

 
161

George Neal Generating Station (Unit 3); Sioux City, IA (g)
 
N/A
 
1975
 
BL
 
164

 
128

Prairie Creek Generating Station (Units 1 and 3); Cedar Rapids, IA
 
Fuel switch or retire by 12/31/25 (e)
 
1958-1997
 
BL
 
65

 
37

Louisa Generating Station (Unit 1); Louisa, IA (h)
 
N/A
 
1983
 
BL
 
32

 
29

Total Coal
 
 
 
 
 
 
 
1,275

 
1,111

 
 
 
 
 
 
 
 
 
 
 
Lime Creek Combustion Turbines (Units 1-2); Mason City, IA
 
N/A
 
1991
 
PK
 
90

 
70

Total Oil
 
 
 
 
 
 
 
90

 
70

 
 
 
 
 
 
 
 
 
 
 
Whispering Willow - East (121 Units); Franklin Co., IA
 
N/A
 
2009
 
IN
 
200

 
32

Franklin County (60 Units); Franklin Co., IA
 
N/A
 
2012
 
IN
 
99

 
17

Total Wind
 
 
 
 
 
 
 
299

 
49

 
 
 
 
 
 
 
 
 
 
 
Dubuque Solar Garden; Dubuque, IA (i)
 
N/A
 
2017
 
IN
 
5

 

 
 
 
 
 
 
 
 
 
 
 
Total capacity
 
 
 
 
 
 
 
3,636

 
2,780

WPL
 
 
 
 
 
Primary
 
Nameplate
 
Generating
 
 
 
 
In-service
 
Dispatch
 
Capacity
 
Capacity
Name of EGU and Location
 
Expected Retirement (a)
 
Dates
 
Type (b)
 
in MW
 
in MW (c)
Riverside Energy Center (Units 1-3); Beloit, WI
 
N/A
 
2004
 
IN
 
675

 
542

Neenah Energy Facility (Units 1-2); Neenah, WI
 
N/A
 
2000
 
PK
 
371

 
285

South Fond du Lac Combustion Turbines (2 Units); Fond du Lac, WI (j)
 
N/A
 
1994
 
PK
 
191

 
147

Rock River Combustion Turbines (Units 3-6); Beloit, WI
 
Retire by 12/31/20
 
1967-1972
 
PK
 
169

 
138

Sheepskin Combustion Turbine (Unit 1); Edgerton, WI
 
Retire by 12/31/20
 
1971
 
PK
 
42

 
34

Total Gas
 
 
 
 
 
 
 
1,448

 
1,146

 
 
 
 
 
 
 
 
 
 
 
Columbia Energy Center (Units 1-2); Portage, WI (k)
 
N/A
 
1975-1978
 
BL
 
557

 
550

Edgewater Generating Station (Unit 5); Sheboygan, WI
 
N/A
 
1985
 
BL
 
414

 
410

Edgewater Generating Station (Unit 4); Sheboygan, WI (l)
 
Retire by 9/30/18 (e)
 
1969
 
BL
 
239

 
181

Total Coal
 
 
 
 
 
 
 
1,210

 
1,141

 
 
 
 
 
 
 
 
 
 
 
Bent Tree (122 Units); Freeborn Co., MN
 
N/A
 
2010-2011
 
IN
 
201

 
31

Cedar Ridge (41 Units); Fond du Lac Co., WI
 
N/A
 
2008
 
IN
 
68

 
10

Total Wind
 
 
 
 
 
 
 
269

 
41

 
 
 
 
 
 
 
 
 
 
 
Prairie du Sac Hydro Plant (8 Units); Prairie due Sac, WI
 
N/A
 
1914-1940
 
IN
 
33

 
12

Kilbourn Hydro Plant (4 Units); Wisconsin Dells, WI
 
N/A
 
1926-1939
 
IN
 
10

 
6

Total Hydro
 
 
 
 
 
 
 
43

 
18

 
 
 
 
 
 
 
 
 
 
 
Total capacity
 
 
 
 
 
 
 
2,970

 
2,346



 
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(a)
Expected dates for the retirement and fuel switching of these EGUs are subject to change depending on operational, regulatory, market and other factors. The potential retirement of other EGUs within the generation fleet continues to be evaluated. IPL and WPL are working with MISO, state regulatory commissions and other regulatory agencies, as required, to determine the final timing of certain of these actions. Final MISO studies could indicate that the retirement of an individual EGU may result in reliability issues and that transmission network upgrades for system reliability are necessary to enable such retirement. Under the current MISO tariff, the specific timing for the retirement of these EGUs could depend on the timing of the required transmission network upgrades as well as various operational, market and other factors.
(b)
Base load EGUs (BL) are designed for nearly continuous operation at or near full capacity to provide the system base load. Intermediate EGUs (IN) follow system load changes with frequent starts and curtailments of output during low demand. Peak load EGUs (PK) are generally low efficiency, quick response units that run primarily when there is high demand.
(c)
Based on the accredited generating capacity of the EGUs as of December 31, 2017 included in MISO’s resource adequacy process for the planning period from June 2017 through May 2018.
(d)
Represents IPL’s 48% ownership interest in this 726 MW (nameplate capacity) / 687 MW (generating capacity) EGU, which is operated by IPL.
(e)
Actions and plans for retirement or fuel switch meet requirements specified in IPL’s and WPL’s respective Consent Decree, which are discussed in Note 16(e).
(f)
Represents IPL’s 25.695% ownership interest in this 696 MW (nameplate capacity) / 626 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(g)
Represents IPL’s 28% ownership interest in this 584 MW (nameplate capacity) / 456 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(h)
Represents IPL’s 4% ownership interest in this 812 MW (nameplate capacity) / 730 MW (generating capacity) EGU, which is operated by MidAmerican Energy Company.
(i)
This EGU did not receive any accredited generating capacity for the planning period from June 2017 through May 2018.
(j)
Represents Units 2 and 3, which WPL owns. WPL also operates, but does not own, South Fond du Lac Combustion Turbines Units 1 and 4.
(k)
Represents WPL’s 50.1% ownership interest in this 1,112 MW (nameplate capacity) / 1,098 MW (generating capacity) EGU, which is operated by WPL.
(l)
Represents WPL’s 68.2% ownership interest in this 351 MW (nameplate capacity) / 265 MW (generating capacity) EGU, which is operated by WPL.

At December 31, 2017, IPL owned approximately 17,300 miles of overhead electric distribution line and approximately 3,200 miles of underground electric distribution cable, as well as approximately 550 substation distribution transformers, substantially all of which are located in Iowa. At December 31, 2017, WPL owned approximately 16,100 miles of overhead electric distribution line and approximately 5,700 miles of underground electric distribution cable, as well as approximately 300 substation distribution transformers, substantially all of which are located in Wisconsin.

Gas - IPL’s and WPL’s gas properties consist primarily of mains and services, meters, regulating and gate stations and other related transmission and distribution equipment. At December 31, 2017, IPL’s gas distribution facilities included approximately 5,100 miles of gas mains located in Iowa and WPL’s included approximately 4,500 miles of gas mains located in Wisconsin.

Other - IPL’s and WPL’s other property consists primarily of operating and storeroom facilities, vehicles, computer hardware and software, communication equipment and other miscellaneous tools and equipment. IPL’s other property also includes steam service assets. Refer to Note 10(b) for information regarding WPL’s lease of the Sheboygan Falls Energy Facility from AEF’s Non-utility Generation business.

AEF - AEF’s principal properties included in “Property, plant and equipment, net” on Alliant Energy’s balance sheet at December 31, 2017 were as follows:

Non-utility Generation - Includes the Sheboygan Falls Energy Facility, a 347 MW, simple-cycle, natural gas-fired facility near Sheboygan Falls, Wisconsin that was placed in service in 2005 and is leased to WPL. The Sheboygan Falls Energy Facility was accredited with 296 MW of generating capacity for MISO’s resource adequacy process for the planning period from June 2017 through May 2018.

Transportation - Includes a short-line railway in Iowa with 114 miles of railroad track and 10 active locomotives; and a barge terminal on the Mississippi River.


 
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Corporate Services - Corporate Services’ property included in “Property, plant and equipment, net” on Alliant Energy’s balance sheet at December 31, 2017 consisted primarily of a customer billing and information system for IPL and WPL and other computer software, and the corporate headquarters building located in Madison, Wisconsin.

ITEM 3. LEGAL PROCEEDINGS

Alliant Energy - None.

IPL - None.

WPL - None.

Other - Alliant Energy, IPL and WPL are involved in legal and administrative proceedings before various courts and agencies with respect to matters arising in the ordinary course of business. Although unable to predict the outcome of these matters, Alliant Energy, IPL and WPL believe that final disposition of these actions will not have a material effect on their financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES

None.

EXECUTIVE OFFICERS OF THE REGISTRANTS
The executive officers of Alliant Energy, IPL and WPL for which information must be included are the same; however, different positions may be held at the various registrants. None of the executive officers for Alliant Energy, IPL or WPL listed below are related to any member of the Board of Directors or nominee for director or any other executive officer. All of the executive officers have no definite terms of office and serve at the pleasure of the Board of Directors. The executive officers of Alliant Energy, IPL and WPL as of the date of this filing are as follows:
Name
 
Age as of Filing Date
 
Registrant
 
Positions
Patricia L. Kampling
 
58
 
Alliant Energy
 
Ms. Kampling has served as a director since January 2012, and as Chairman of the Board and Chief Executive Officer (CEO) since April 2012, and as President from February 2011 to December 2017.
 
 
 
 
IPL and WPL
 
Ms. Kampling has served as a director since January 2012, and as Chairman of the Board and CEO since April 2012.
John O. Larsen
 
54
 
Alliant Energy
 
Mr. Larsen has served as President since January 2018. He previously served as Senior Vice President (VP) since February 2014 and as Senior VP-Generation from January 2010 to February 2014.
 
 
 
 
IPL
 
Mr. Larsen has served as Senior VP since February 2014. He previously served as Senior VP-Generation since January 2010.
 
 
 
 
WPL
 
Mr. Larsen has served as President since December 2010.
Robert J. Durian
 
47
 
Alliant Energy, IPL and WPL
 
Mr. Durian has served as Senior VP, Chief Financial Officer (CFO) and Treasurer since January 2018. He previously served as VP, CFO and Treasurer since December 2016; as VP, Chief Accounting Officer (CAO) and Treasurer from July 2016 to December 2016; as VP, CAO and Controller from July 2015 to July 2016; and as Controller and CAO from February 2011 to July 2015.
James H. Gallegos
 
57
 
Alliant Energy, IPL and WPL
 
Mr. Gallegos has served as Senior VP, General Counsel and Corporate Secretary since February 2015. He previously served as Senior VP and General Counsel since February 2014 and as VP and General Counsel from November 2010 to February 2014.
Douglas R. Kopp
 
64
 
Alliant Energy and WPL
 
Mr. Kopp has served as Senior VP since March 2014. He previously served as VP-Environmental Affairs since January 2013.
 
 
 
 
IPL
 
Mr. Kopp has served as President since April 2014.
Benjamin M. Bilitz
 
43
 
Alliant Energy, IPL and WPL
 
Mr. Bilitz has served as CAO and Controller since December 2016. He previously served as Controller since July 2016 and as Assistant Controller from March 2011 to July 2016.


 
22
 


PART II

ITEM 5. MARKET FOR REGISTRANTS’ COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Stock Data - Alliant Energy’s common stock trades on the New York Stock Exchange under the symbol “LNT.” Quarterly sales price high and low ranges and dividends with respect to Alliant Energy’s common stock were as follows:
chart-e815b0f78cb05a5f90da04.jpg
chart-b1f2fc7cd2b2579a8fda04.jpg
Closing sales price at December 31, 2017: $42.61

Shareowners - At December 31, 2017, there were 26,165 holders of record of Alliant Energy’s common stock, including holders through Alliant Energy’s Shareowner Direct Plan. Alliant Energy is the sole common shareowner of all 13,370,788 and 13,236,601 shares of IPL and WPL common stock, respectively, currently outstanding. As a result, there is no established public trading market for the common stock of either IPL or WPL.

Dividends - In November 2017, Alliant Energy announced an increase in its targeted 2018 annual common stock dividend to $1.34 per share, which is equivalent to a quarterly rate of $0.335 per share, beginning with the February 2018 dividend payment. The timing and amount of future dividends is subject to an approved dividend declaration from Alliant Energy’s Board of Directors, and is dependent upon earnings expectations, capital requirements, and general financial business conditions, among other factors.

Alliant Energy does not have any significant common stock dividend restrictions. Refer to Note 7 for information about IPL’s and WPL’s dividend restrictions and limitations on distributions to their parent company.

Common Stock Repurchases - A summary of Alliant Energy common stock repurchases for the quarter ended December 31, 2017 was as follows:
 
 
Total Number
 
Average Price
 
Total Number of Shares
 
Maximum Number (or Approximate
 
 
of Shares
 
Paid Per
 
Purchased as Part of
 
Dollar Value) of Shares That May
Period
 
Purchased (a)
 
Share
 
Publicly Announced Plan
 
Yet Be Purchased Under the Plan (a)
October 1 to October 31
 
2,125

 

$42.99

 
 
N/A
November 1 to November 30
 
3,542

 
44.66

 
 
N/A
December 1 to December 31
 
491

 
43.94

 
 
N/A
 
 
6,158

 
44.02

 
 
 

 
23
 



(a)
All shares were purchased on the open market and held in a rabbi trust under the DCP. There is no limit on the number of shares of Alliant Energy common stock that may be held under the DCP, which currently does not have an expiration date.

Other - Refer to “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters” in Item 12 for details of securities authorized for issuance under equity compensation plans.

ITEM 6. SELECTED FINANCIAL DATA

Financial Information
Alliant Energy
2017 (a)
 
2016 (a)
 
2015 (a)
 
2014
 
2013
 
(dollars in millions, except per share data)
Income Statement Data:
 
Operating revenues

$3,382.2

 

$3,320.0

 

$3,253.6

 

$3,350.3

 

$3,276.8

Amounts attributable to Alliant Energy common shareowners:
 
 
 
 
 
 
 
 
 
Income from continuing operations, net of tax
455.9

 
373.8

 
380.7

 
385.5

 
364.2

Income (loss) from discontinued operations, net of tax
1.4

 
(2.3
)
 
(2.5
)
 
(2.4
)
 
(5.9
)
Net income
457.3

 
371.5

 
378.2

 
383.1

 
358.3

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

$1.99

 

$1.65

 

$1.69

 

$1.74

 

$1.64

Loss from discontinued operations, net of tax

$—

 

($0.01
)
 

($0.01
)
 

($0.01
)
 

($0.02
)
Net income

$1.99

 

$1.64

 

$1.68

 

$1.73

 

$1.62

Common shares outstanding at year-end (000s)
231,349

 
227,674

 
226,918

 
221,871

 
221,887

Dividends declared per common share

$1.26

 

$1.175

 

$1.10

 

$1.02

 

$0.94

Market value per share at year-end

$42.61

 

$37.89

 

$31.225

 

$33.21

 

$25.80

Book value per share at year-end

$18.08

 

$16.96

 

$16.41

 

$15.50

 

$14.79

Market capitalization at year-end

$9,857.8

 

$8,626.6

 

$7,085.5

 

$7,368.3

 

$5,724.7

Other Selected Financial Data:
 
 
 
 
 
 
 
 
 
Cash flows from operating activities

$983.4

 

$859.6

 

$871.2

 

$891.6

 

$731.0

Construction and acquisition expenditures

$1,466.9

 

$1,196.8

 

$1,034.3

 

$902.8

 

$798.3

Total assets at year-end

$14,187.8

 

$13,373.8

 

$12,495.2

 

$12,063.5

 

$11,092.5

Long-term obligations, net

$4,870.6

 

$4,325.1

 

$3,837.0

 

$3,768.7

 

$3,318.2

IPL
 
 
 
 
 
 
 
 
 
Operating revenues

$1,870.3

 

$1,820.4

 

$1,774.5

 

$1,848.1

 

$1,818.8

Earnings available for common stock
216.8

 
215.6

 
186.0

 
181.6

 
172.0

Cash dividends declared on common stock
156.1

 
151.9

 
140.0

 
140.0

 
128.1

Cash flows from operating activities
440.0

 
361.9

 
385.0

 
406.1

 
232.6

Total assets
7,606.0

 
7,304.7

 
6,709.1

 
6,450.2

 
5,793.9

Long-term obligations, net
2,406.6

 
2,154.0

 
1,857.4

 
1,758.6

 
1,549.5

 
 
 
 
 
 
 
 
 
 
WPL
 
 
 
 
 
 
 
 
 
Operating revenues

$1,472.8

 

$1,459.1

 

$1,435.1

 

$1,449.1

 

$1,406.3

Earnings available for common stock
186.6

 
190.4

 
176.3

 
180.4

 
177.5

Cash dividends declared on common stock
125.9

 
135.0

 
126.9

 
118.7

 
116.3

Cash flows from operating activities
465.7

 
521.4

 
449.8

 
424.4

 
423.3

Total assets
5,756.5

 
5,290.3

 
5,270.4

 
5,117.6

 
4,796.2

Long-term obligations, net
1,914.3

 
1,623.2

 
1,624.2

 
1,658.3

 
1,423.2


(a)
Refer to “Results of Operations” in MDA for discussion of the 2017, 2016 and 2015 results of operations.

Alliant Energy is the sole common shareowner of all 13,370,788 and 13,236,601 shares of IPL’s and WPL’s common stock outstanding, respectively. As such, earnings per share data is not disclosed herein for IPL and WPL.

 
24
 



ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This MDA includes information relating to Alliant Energy, IPL and WPL, as well as AEF and Corporate Services. Where appropriate, information relating to a specific entity has been segregated and labeled as such. The following discussion and analysis should be read in conjunction with the Financial Statements and Notes included in this report. Unless otherwise noted, all “per share” references in MDA refer to earnings per diluted share.

EXECUTIVE OVERVIEW

Description of Business
General - Alliant Energy is a Midwest U.S. energy holding company whose primary subsidiaries are IPL, WPL, AEF and Corporate Services. IPL and WPL are public utilities, and AEF is the parent company for Alliant Energy’s non-utility businesses and holds all of Alliant Energy’s ATC Investment. Corporate Services provides administrative services to Alliant Energy and its subsidiaries. An illustration of Alliant Energy’s primary businesses is shown below.
 
 
Alliant Energy
 
 
 
 
 
 
 
 
 
 
 
 
 
Utilities and Corporate Services
 
ATC Investment, Non-utility and Parent
 - Retail electric and gas services in IA (IPL)
 
 - ATC Investment (ATI)
 - Retail electric and gas services in WI (WPL)
 
 - Transportation (AEF)
 - Wholesale electric service in MN, IL & IA (IPL)
 
 - Non-utility wind investment (AEF)
 - Wholesale electric service in WI (WPL)
 
 - Sheboygan Falls Energy Facility (AEF)
 - Corporate Services
 
 - Parent Company

Utilities and Corporate Services - IPL and WPL own a portfolio of EGUs located in Iowa, Wisconsin and Minnesota with a diversified fuel mix including natural gas, renewable resources and coal. The output from these EGUs, supplemented with purchased power, is used to provide electric service to approximately 960,000 electric customers in the upper Midwest. The utility business also procures natural gas from various suppliers to provide service to approximately 410,000 retail gas customers in the upper Midwest. Alliant Energy’s utility business is its primary source of earnings and cash flows. The earnings and cash flows from the utilities and Corporate Services business are sensitive to various external factors including, but not limited to, the amount and timing of rates approved by regulatory authorities, the impact of weather and economic conditions on electric and gas sales volumes and other factors listed in “Risk Factors” in Item 1A and “Forward-looking Statements.”

ATC Investment, Non-utility Business and Parent - AEF holds all of Alliant Energy’s ATC Investment. AEF also manages various businesses including Transportation (short-line railway and barge transportation services), a non-utility wind investment, the Sheboygan Falls Energy Facility and several other modest investments.

Financial Results - Alliant Energy’s net income and EPS attributable to Alliant Energy common shareowners were as follows (dollars in millions, except per share amounts):
 
2017
 
2016
 
Income
 
EPS
 
Income (Loss)
 
EPS
Continuing operations:
 
 
 
 
 
 
 
Utilities and Corporate Services

$416.7

 

$1.82

 

$397.3

 

$1.75

ATC Investment
25.4

 
0.11

 
23.1

 
0.10

Non-utility and Parent
13.8

 
0.06

 
(46.6
)
 
(0.20
)
Income from continuing operations
455.9

 
1.99

 
373.8

 
1.65

Income (loss) from discontinued operations
1.4

 

 
(2.3
)