Alliant Energy Corp (LNT) 2007 Q4 法說會逐字稿

Thank you for holding, ladies and gentlemen. And welcome to Alliant Energy's year end 2007 earnings conference call. At this time, all lines are in a listen-only mode. As a reminder, this call is being recorded. I would now like to turn the call over to your host, Jamie Freeman, Manager of Inventory Relations at Alliant Energy.

Good morning. I would like to thank all of you on the call and on the webcast for joining us today. We appreciate your participation. With me here today are Bill Harvey, Chairman, President and Chief Executive Officer and Eliot Protsch, our Chief Financial Officer as well as other members of the senior management team. Following prepared remarks by Bill and Elliot, we will have time to take questions from the investment community. We issued a news release this morning, announcing Alliant Energy's 2007 fourth quarter and full year earnings. This release is available on the right hand side of the Investor's page of our website at www.alliantenergy.com.

Before we begin, I need to remind you that the remarks we make on this call and our answers to your questions include forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters discussed in Alliant Energy's press release issued this morning and in our filings with the Security and Exchange Commission. We disclaim any obligation to update these forward-looking statements. In addition, our presentation today contains non-GAAP financial measures. The reconciliations between the GAAP and non-GAAP measures are provided in the supplemental slides available on our website. At this point, I'll turn the call over to Bill.

Thank you, Jamie. And welcome to our Investor Relations team. To those on the call, good morning, and thanks for your continued interest in our company. My comments will focus on key takeaways from 2007 and on our generation buildout initiatives. Later in the call, Elliot will provide a more detailed discussion of our 2008 financial guidance and our regulatory proceedings.

We're pleased with our financial results for 2007. Our strength enabled us to increase our common dividend for the third year in a row. We continued to execute our strategic plan by completing the sales of our IP&L transmission assets and the Laguna del Mar property. We have posted supplemental slides on our website to aid in our discussions with you this morning. At this point, I would direct you to slide number two that provides a reconciliation of our 2007 earnings. I'll pause for a moment to allow you to pull that up.

We recommend making several adjustments to our earnings from continuing operations of $3.78 in order to get a more normalized level. These include items such as the gain on the sale of our IP&L transmission assets, settlement of a fuel-related rate case at WP&L and various tax items. Factoring out such items results in adjusted earnings per share from continuing operations of $2.66. Our utility results, excluding the gain on the transmission sale, reflect higher electric margins due to improved fuel cost recoveries and more favorable weather, lower cost from retirement and incentive compensation plans and the accretive effect of fewer shares outstanding. These increases were partially offset by a higher effective income tax rate and lower gas margins due to the reduced gains from WP&L's discontinued performance-based gas cost recovery program.

Utility results were also negatively impacted by $0.06 due to severe ice storms that paralyzed a large portion of our Iowa and Minnesota territory and left more than half of IP&L's electric customers without power. Recently, the Edison Electric Institute presented IP&L with the 2007 Emergency Recovery Award recognizing our employees' and contractors' exemplary restoration efforts. Once you exclude the impacts of weather, the February sale of electric distribution properties in our Illinois service territory and the impact of February's ice storm outages, year-over-year retail electric sales growth at WP&L was approximately 1.6%, while sales at IP&L increased approximately six-tenths of a percent. While these results were lower than our expected long-term electric sales growth projections, we do not see anything in the fundamentals that alter our growth outlooks of approximately 2.5% for WP&L and 1.5% for IP&L.

Next, as I update you on our generation plan, I refer you to slides four through six of the supplemental material. In Wisconsin, our certificate of public convenience and necessity application for Nelson Dewey unit number three was deemed complete by the Public Service Commission last December. Tomorrow, the first prehearing conference will be held. At a second prehearing conference later this month, the procedural schedule will be set. Under Wisconsin law, the commission can take a maximum of 360 days to act on the application after the completeness ruling. So we expect a decision by December. We expect a decision on Act 7 advanced fixed financial parameters at about the same time.

In Iowa, we recently completed public hearings on the proposed Sutherland generating station number four. Post hearing briefs in this proceeding will be filed later this month. The Iowa Utilities Board has indicated that it will make a decision in May. The air permit is expected to be reviewed in late summer.

At the hearings, we received strong support from local citizens, state officials and unions. As anticipated, opponents questioned the need for the plant and cited concerns over its carbon emissions. We do not believe we can meet our responsibilities to customers by waiting for clarity on carbon. That could be years away on the political and regulatory front and decades away on the technology front. We have an obligation to balance reliability, economics and the environment. This project, along with our investments in wind and environmental retrofits of existing plants is the right plan to deliver on this obligation.

The last step before construction can begin is the receipt of an order on ratemaking principles under House File 577. This filing is expected to be made later this quarter and will include a fixed return on equity and a cost cap for the project. We would expect the board to take about six months to rule on this filing. Therefore, under the timeline I have just outlined, construction could begin in the fourth quarter of this year. This brings us to an important distinction between the fixed ratemaking principal in Iowa and Wisconsin. Under Act 7 in Wisconsin, a utility is not obligated to file for ratemaking principles. Also, we can proceed with an approved project under traditional ratemaking if the terms of a commission order on the ratemaking principles are viewed as unsatisfactory to the company. You'll recall that is what WP&L did with respect to the Cedar Ridge Wind project. By contrast, in Iowa, we must file for ratemaking principles under House File 577 for any electric power-generating station over 300 megawatts in size. The project, if approved, must be built using the principles ordered by the board or not at all. Historically, House File 577 has worked as intended in Iowa.

There have been 790 megawatts of coal fire generation, 1,100 megawatts of natural gas fire generation and over 1,000 megawatts of wind power generation either placed in service or under construction pursuant to this legislation. Next, we intend to add almost 500 megawatts of owned wind generation to our system over the next three years. The official ground-breaking for WP&L Cedar Ridge Wind Farm took place last year. Access roads have been laid and the foundations have been built. Right now, we're in a winter construction break. In April, however, we will begin public road improvements, crane path development and underground cable installation. In late May, the towers will will be delivered, followed by the turbines in June. The first turbine will be erected in mid-July. We expect to begin commercial operations sometime during the fourth quarter of 2008. This 68-megawatt wind farm is expected to cost approximately $165 million.

WP&L is working on an additional 200 megawatts of owned wind generation as well. We have executed a letter of intent on a site in our service territory in southern Minnesota where the wind regimes are superior to those found in Wisconsin. We are preparing the necessary regulatory filings for Minnesota and Wisconsin. Similar to Cedar Ridge, we plan to use traditional ratemaking procedures for this project. Pending regulatory approval and the availability of turbines, we expect this capacity to be online during 2010 at a total cost between $400 million to $450 million. In Iowa, we have filed for ratemaking principles for up to 200 megawatts of wind generation. We have requested a 12.3% return on the common equity component of the investment. However, in negotiations with the Office of Consumer Advocate, we settled on an 11.7% return on equity, which is consistent with the return approved by the IUB in another recent wind project in the state. We expect an IUB decision on this project shortly.

IPL has secured development rights on two sites in north central Iowa, collectively named Whispering Willow with a combined potential capacity of approximately 500 megawatts. Pending the availability of turbines, we anticipate 200 megawatts of this project to be online during 2010 at a total cost between $400 million to $450 million. And finally, in April 2007, WP&L filed an application with the Wisconsin commission to purchase the Neenah Generating Facility. This is an existing 300-megawatt simple cycle natural gas facility located in Neenah, Wisconsin, which is owned by our nonregulated subsidiary. This purchased by WP&L is intended to replace the capacity currently available under a purchase power agreement with Calpine's RockGen facility. We expect a decision from the commission shortly and will then file for approval with the FERC. The approval is expected to occur in June of 2009 when the RockGen PPA expires. The Neenah facility's existing PPA with Wisconsin Energy will expire this summer. We have signed a contract to sell the plant's capacity until the proposed transfer of the facility to WP&L in June of 2009.

Turning to the legislative arena. Last November, several members of the Midwestern Governor's Association including governors from Iowa, Minnesota and Wisconsin, signed the Midwest Regional Greenhouse Gas Reduction Accord. The accord presents an ambitious vision for the region. There will be a tremendous amount of legislative and regulatory activity over the next few years to determine how much of this vision can and will be implemented. We look forward to being an active participant in that process.

In closing then, I'll summarize the key takeaways from 2007. First, we produced solid financial results despite the negative impact from multiple ice storms in our IP&L service territory. The worst storms in our company's history. Second, we successfully completed two significant divestitures. Third, our financial profile continues to strengthen. This is evidenced by our dividend increase, our successful completion of a $400-million common share prepurchase program and a strong year end cash position. And finally, 2007 marked the beginning of our substantial generation buildout program. The Cedar Ridge Wind Farm is under construction, the plans to add new two hybrid baseload coal units and additional wind capacity continue to advance through the regulatory process. We believe we are well positioned to meet our customer's future energy needs with a plan that balances reliability, economics and the environment. We appreciate your continued support and interest in our company. At this time, I'll turn the call over to Elliot.

Thanks, Bill, and thanks to all of you for joining us today. Our comprehensive earnings release is posted on our website. As Bill has touched upon our annual financial highlights, my primary focus here this morning will be on our 2008 financial guidance and an update on rate case matters. In December, we announced our 2008 financial guidance. We are reaffirming this guidance in our earnings release issued earlier today.

Slide eight of the supplemental material on our website details the key drivers for the change from 2007 actual results to the midpoint of our 2008 guidance. Our adjusted 2007 earnings from continuing operations' starting point is $0.10 higher than the level we shared with you during the December guidance call. The majority of this increase is attributable to tax items, including flow-through accounting for income taxes in our Iowa jurisdiction which resulted in a lower effective tax rate than was earlier contemplated. Our 2008 effective tax assumptions remain unchanged at 36% on a consolidated basis. Our 2008 earnings guidance of $2.55 to $2.75 per share calls for utility earnings to be essentially flat net of the transmission sale. This is based upon the midpoint of our 2008 utility earnings guidance of $2.33 per share compared to $2.34 per share in 2007. Investors should take note of our higher projected earnings at the parent for 2008 which includes interest earnings on the cash associated with the transmission sale net proceeds until those funds are redeployed in support of our core utility operations.

Let's move to capital expenditures for the year 2008 through 2010. The substantial increase forecasted for 2008 versus 2007 is driven largely by the spending associated the with our generation buildout program and an increase in our anticipated environmental related capital expenditures. Slide seven in the supplemental material references the approximate amount for individual utility generation projects. Our environmental capital spending plan encompasses the next ten years and includes the installation of emissions controls, supplemented with the allowance market as a balancing mechanism. Our upcoming 10-K disclosure will include our current estimated ranges of capital spending to achieve compliance over the next ten years. In addition, for those of you who are interested in more detail on our environmental strategy emissions profile and compliance plans, I refer you to our annual environmental report which is also available on our website.

Among other accomplishments, this report highlights NOx reductions of 33% from from 2002 to 2006 due to the installation of SmartBurn technology at several WPL and IPL generation units. SmartBurn technology provided by our RMT subsidiary lowers NOx emissions at substantially lower capital and operating cost than installing an SCR. We expect 2007 NOx emission rates to be further reduced when final numbers are available.

Next, I would you like to provide an update on our advanced metering infrastructure project or AMI. We expect a decision this quarter from the Public Service Commission of Wisconsin on WPL's certificate of authority application which would allow us to begin implementing the project for natural gas customers. WPL will also install AMI for electric customers but that portion of the project does not require prior regulatory approval. Assuming all approvals are received, we estimate the total expenditures on AMI in Wisconsin to be approximately $95 million and for the project to be completed by 2010. We are also planning to install AMI in our IPL service territory. The estimated cost for full deployment at IPL is approximately $105 million. However the timing and amount of this investment is conditional upon appropriate regulatory treatment in the various IPL jurisdictions. When fully deployed, AMI will provide the backbone for a future smart-grid capability which will allow customers to better monitor their electric and gas usage and offer increased energy conservation opportunities. These expenditures complement our generation buildout program by furthering our focus on demand side management initiatives.

Finally, with respect to CapEx, I would like to comment on slide number four posted on the website detailing our utility generation plan. This table, which will be included in our 10-K, now includes the amount of capitalized cost incurred to date for the major generation projects listed. This totals $99 million as of December 31, 2007. Next, we would also like to reaffirm that our 2008 cash flow from operations is expected to be in the range of $550 million to $600 million. This range is consistent with our 2007 results of approximately $590 million.

I would now like to touch upon our future financing plans. We plan to fund utility capital expenditures with a combination of internally-generated, external debt financings and equity infusions from the parent. We expect to issue up to $400 million of long-term debt, net of maturities in 2008. At year end, we had approximately $750 million in cash and short-term investments. As a result of this strong cash position, we are reaffirming that we do not anticipate issuing external common equity until 2010.

Now I will update you on our various rate matters. In late November, we received an order from the Public Service Commission of Wisconsin approving our request to reopen WPL's 2006 general rate case due to the discontinuation of customer credits. The order authorized an electric rate increase of $26 million for WPL to reflect the customer credits that discontinued at the end of 2007. The new electric rates were effective on January first 1, 2008. No incremental change in natural gas rates was requested. The order also clarified the regulatory accounting for AFUDC and current return on [flip] accounts to insure that the financing cost associated with our plan capital expenditures are recovered. This reopener also facilitates the Public Service Commission of Wisconsin and WPL's desire to evolve to a biennial rate case cycle. WP&L currently plans to file its next base rate case by the end of the month for a 2009 to 2010 forecasted test period.

During 2007, Wisconsin investor-owned utilities worked with commission staff and broader stakeholder groups on a revised mechanism for recovery of retail fuel cost as both fair to customers and fair to both customers and share owners. The commission is currently considering these proposals for new administrative rules governing fuel cost recovery. As for WP&L's wholesale business which represents approximately 15% of WP&L's electric revenues, formula rates became effective June 1, 2007 subject to refund. We are in the process of settling on the terms of the rates with our customers and will then file with FERC for final approval. We look forward to having formula rates becoming an ongoing component of our wholesale business as we embark upon our generation buildout program. At IPL, we do not anticipate any rate filings during the course of 2008.

Finally, I would like to comment on the customer rate impact of our generation buildout and environmental compliance plans. While many factors go into building an estimate for future rates, the most volatile component is fuel cost, particularly natural gas and purchase power. One of the many benefits for our customers of our buildout program is the replacement of purchase power with coal and wind generation. Coal as a fuel is both lower cost and more predictable, while wind-powered energy has no fuel-related cost. Overall, while rate changes will certainly vary both by year and by customer class, we expect rates to increase at an average annual growth rate of approximately 5% to 6% from 2007 through 2015, when most of our planned new generation and environmental compliance investments will be complete.

In closing, we're in the process of finalizing our 2008 investor relations plans and look forward to the opportunity to meet with many of you throughout the course of this year. At this time, I will turn the call back over to our operator, Margaret, to facilitate the question and answer session.

Thank you Mr. Protsch. At this time, the company will open up the call to questions from members of the investment community. Alliant Energy's management will take as many questions as they can within the one hour time frame for this morning's call. (OPERATOR INSTRUCTIONS) We'll pause for a moment to give everyone an opportunity to signal for questions. And we'll take our first question from Steve Gambuzza, Longbow capital.

Good morning.

Hi, Steve.

I have a few questions for you. First, on the AMI front, have you selected an equipment provider for the Wisconsin deployment?

Yes, we have.

Is that a public information yet?

I honestly don't know if we've made that public yet or not, so, I probably shouldn't reply, but we'll follow-up with Jamie on that and he can provide you the name, assuming we have disclosed it.

Understood. So, full deployment there will be $95 million through 2010 and when did you say regulatory process will be concluded on that front?

This quarter with respect to the gas portion of the WP&L service territory. There is no regulatory approval required for the electric portion of that investment.

Okay. And then, you mentioned IP&L would be $105 million conditional upon appropriate regulatory treatment? I was wondering if you could just expand upon what you meant by that.

Steve, this is Elliot. Iowa has a historical test year with the opportunity for post test year adjustments. As we look forward and embark upon our generation plan, we will attempt to time those investments in a manner that optimizes the recovery of the invested capital for our share owners before we significantly deploy that capital.

Okay. So, I guess that means you would want to time the expenditures such that you would be shortly filing a rate case subsequent to making them.

Right. You got it.

Do you have any -- can you give us any -- given the various substantial capital investment you're going to be making in Iowa and outside of generation on [somebody's] environmental expenditures, I was wondering if you could just give us some sense as to whether a general rate case filing is 2008, 2009 or 2010 event?

I would probably not, rather I would not comment beyond 2008. Clearly we indicated in our -- my prepared remarks that we are not contemplating a filing in 2008. I think if you monitor our CapEx plans particularly the availability of turbines and rate case outcomes on our various generation plant applications in Iowa, you should be able to derive pretty good insights as to the timing of that CapEx and then hence related rate filings.

Okay. But I guess the environmental -- given that the generation CapEx is all going to be recovered under kind of a nontraditional ratemaking?

Well it's a good question on environmental. I would reference the SmartBurn technology that we've been using in Iowa and Wisconsin with very good results. That tends to be a lower capital cost and buys us some time, generates -- reduce NOx emissions, may well generate credits and we are embarking upon a compliance plan in Iowa that involves a filing with the Iowa Utility Board which will lay out our contemplated plans and once they approve that filing, then we would begin a number of those expenditures. We do have a few projects that have previously been approved where we are beginning to deploy the capital but again, I guess I would reiterate as we look at our forward financials. We do not contemplate a filing in 2008 and at this point, we're not prepared to make any projections for 2009.

Sure. I guess what I was trying to understand though is it seems like a majority of what you're spending is generation related and is not going to require general rate case filing because you get to recover that under the legislation that exists there?

No. That legislation specifies the ratemaking treatment or recovery return of and return on those investments. It still requires a general rate case to have the revenue requirements established to recover those costs.

Okay. That's very helpful. Thank you.

Pardon us if we didn't make that clear.

Thank you. And on the calendars that you included in the slide deck for Iowa. When did you say the return parameter -- I didn't quite follow when the return parameters for the coal plant would be established?

It's reasonable to expect that, Steve, about six months following the board's determination on the construction application. So sometime in the late third quarter, early fourth quarter of this year.

Okay. And the 11.7% that you settled with in Iowa on the wind plant, when will IUB rule on that?

We expect that imminently, is the best adjective that I can use to describe when we expect it.

And is there an equity ratio as well in that settlement?

There's none. No. They tend to focus on what has been approved in past rate cases. I think for your purposes, you should think in terms of that 48 to 50% range.

Okay. And then finally you mentioned an expectation for when you look out at your substantial capital plan that rates would increase at 5 to 6% average rate through 2015. Just curious, what kind of assumptions you're making in terms of fuel costs? Is it just based on the forward curves that you see going out or is there substantial benefits from switching to coal? I was wondering if you could comment broadly on how fuel blends into that forecast?

Steve, your question had the answer in it. In terms of gas, it's -- we look at futures markets. In terms of coal, we make modest assumptions in terms of expected increases in price for both the fuel and its delivery but we do not envision anything that I characterize as out of the ordinary as it relates to solid fuel price and delivery. But we use futures market for gas.

Okay. Thank you very much.

And once again, if you'd like to ask a question, please press star one on your touch tone key pad. If you're using a speaker phone, please make sure your mute function is turned off to allow your signal to reach our equipment. And we'll take our next question from Reza Hatefi with Polygon Investments.

Thank you. Could you please break down the three-year CapEx guidance per each of the two utilities?

Reza, we're looking for that information. I know it will be in our 10-K. I apologize we do not have that handy here, but we have it summed for the utilities but we do not have it for the individual utilities.

I mean I guess you have the generation.

We will call you back on that -- for that information. Wait a minute. Somebody has given me a piece of paper that might have that information.

Yes.

Oh, here we go. Okay. It's actually in -- you do not have it in front of you? It's not in the early release.

I have it in the press release that has the total utility CapEx.

I can read them off for you very quickly here, if you wish.

Sure.

Total CapEx for IPL '08, $650 million. WPL, $525 million. IPL 2009, $575 million, WPL, 2009, $735 million. IPL, 2010, $920 million, WPL, $1 billion, 50 million.

Great. Thank you. And just kind of following up on the last series of questions, I kind of got lost a little bit, the recovery of capital of the two large coal plants, would that start when the plants go online?

Generally, that's the case. If the rate cases that we will file capture the in-service dates in a way that is sort of a perfection oriented rate making and that will likely be near the case for WPL, where we file a forecasted test year. At IPL, we have a historical test year with permitted post-test year adjustments that should allow us to get very close to that.

So is it fair to assume that from now until 2012, you'll most likely have noncash ASDC earnings through that time.

Yes.

And then starting in 2013, there will be some cash recovery of the return as well as return of the capital spending.

Yes, that issue varies a bit by the two jurisdiction. At IPL, your statement is 100% true. At WPL, we are allowed to earn a cash return on some level of construction work in progress. That was one of the issues that we clarified in the recent reopener with respect to WPL and in the case that we will shortly be filing for 2009 and 2010. We will of course, ask for appropriate returns on construction work in progress and the advanced ratemaking dockets in Wisconsin also will address that issue.

Thank you very much.

And it would be premature to speculate on what exactly will come out of that, but I think if you look at history and what we're doing now, you could get some pretty good insights into where they might land.

Thank you.

We'll go next to Danielle Seitz of Dahlman Rose.

Hi. I sense that you have to have a cross cap on the projects and since you have a wide range in cost estimates, when do you sense that those estimates will be finalized and given the escalation rate that is going on in construction, does that -- do you have some sort of safety net for that?

Commercially our plan, Danielle, with respect to both of the hybrid coal projects is to reach agreements with our EPC partners on a target price for the ultimate investment and we would expect that to be accomplished with respect to both of the projects by the time the regulatory filings for fixed ratemaking principles are made for each of the projects. That -- in both cases, will be sometime midyear, this year. In Wisconsin, the commissions historic practice has been to authorize the construction of a facility at an estimated cost and then to specify 5% or 10% addition to that estimated price as of -- and within which the company operates before it has to go back to the commission and get a reauthorization. In Iowa, as part of the fixed rate making principles there will be a cost cap prescribed.

I see. Today, I'm assuming that it should be on the high hand of the range that you have or it is still to be decided on the part of the builder?

Well, it continues to be a work in progress, but it's fair to assume that in connection with both the target price and the regulatory filings, there will be some level of contingency are built into the price to deal with cost escalations. That's a reasonable assumption that I'm sure the regulators in both jurisdictions expect.

Yes. I was also wondering about the replacement of the auction contract with actually putting Neenah in red base. Is that the right thing to assume and also is there saving -- would there be savings involved or it's just the replacement of a contract versus the ownership of the plant?

Well, there will be lower capacity costs reflected in revenue requirement as a consequence of Neenah replacing RockGen simply because it's fewer megawatts. Neenah is a 300 megawatts project and RockGen is 450 megawatts of capacity charges.

Which would allow for the rate basing of the plant on a regulated basis.

That's correct.

Great. Thanks a lot.

And ladies and gentlemen, it's star one if you have a question. And we'll go next to Jim Ferguson of IAG.

AIG. On referring again to slide 4, on the Neenah transfer, just clarifying how RockGen factors into this transfer? Is it just to get regulatory approval for the change of the PPA?

Well, the PPA will fall away by its own terms in June of 2009, Jim.

Yes.

The Neenah facility is currently owned by an unregulated affiliate of Alliant Energy. We require Wisconsin Public Service Commission approval to transfer it from the unregulated affiliate to Wisconsin Power and Light Company because it's an affiliated interest transaction and Wisconsin law requires the commission approve that.

So the two -- the RockGen and the transfer of Neenah are two separate events just happening at the same time.

That's right. They are interrelated in the sense that from our integrated resource planning perspective, we view Neenah and its capacity as replacing the capacity available to us under the RockGen contract. Obviously 300 is less than 450.

Sure.

But our integrated resource plan indicates that we require fewer peaking megawatts of capacity than was the case that the time the RockGen contract was put into effect. It's the right thing for us.

Thank you. And what is the $95 million cost estimate? Is that the price that you will gain in the sale from nonregulated to regulated?

Yes, it's the net book value. The estimated net book value of Neenah at the time of transfer. The affiliated interest legislation and the Wisconsin utility holding company act require that asset transfers from the unregulated side to the regulated side occur at the lower of cost or fair market value.

Okay.

And that net book value is cost.

So that will be a noncash transaction within the overall LNT?

Exactly right.

Okay. One other thing, in the past couple of years, you've had cash flow augmented by asset sales. Are there any to be anticipated in 2008 or 2009?

We're not planning on any.

Is there anything left to sell?

Well the answer to that is yes, of course. But we're not planning on selling anything. Our unregulated holding adjustment activity over the course of the last few years has been completed.

Great. Thank you very much.

And we'll take a follow-up question from Steve Gambuzza of Longbow.

I just wanted to make sure I understood how the regulation in Iowa is going to work. So for example, the wind you plan on bringing online in -- I guess it's 2010, is it?

Yes.

So you've essentially established the parameters for what the investment will ultimately earn. Let's say your 11.7% gets approved by the commission, but when you bring the plant online in 2010, will you have to file a general rate case to adjust the revenue requirements to reflect that return and that will essentially open up the entire ratemaking structure of the utility, is that correct?

That's right.

Okay. Thank you.

And Mr. Freeman, there are no further questions at this time.

With no more questions, this concludes our call. A replay will be available through February 13, 2008 at 888-203-1112 for U.S. and Canada and 4719-457-0820 for international. Caller should reference conference I.D. number 478-4982. In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the Investor section of the company's website later today. Thank you for your continued support of Alliant Energy and feel free to contact me with any follow-up questions.

Ladies and gentlemen that concludes today's conference. You may now disconnect.