Alliant Energy Corp (LNT) 2009 Q3 法說會逐字稿

Ladies and gentlemen, welcome to Alliant Energy's third quarter 2009 earnings conference call.

At this time, all lines are in a listen-only mode. I would now like to turn the call over to your host, Sue Gille, Manager of Investor relations at Alliant Energy. Please go ahead, ma'am.

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 Pat Kampling, our Chief Financial Officer; as well as other members of the senior management team. Following prepared remarks by Bill and Pat, we will have time to take questions from the investment community.

We issued a news release this morning announcing Alliant Energy's 2009 third quarter earnings. This release, as well as supplemental slides that will be referenced during today's call, are available on the investor page of our website. Before we begin, I need to remind you 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 Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements. In addition, this presentation contains non-GAAP financial measures. The reconciliation between the non-GAAP and GAAP measures are provided in our earnings release, which is available on our website at www.alliantenergy.com.

At this point, I'll turn the call over to Bill.

Thank you, Sue.

For those on the call, good morning, and thank you for your continued interest in our company. My comments today will focus on three areas. First, our third quarter results. Second, changes in our 2009 guidance and the variables giving rise to that change. Third, a recap of our position on the Waxman-Markey and Kerry-Boxer bills.

Pat will follow with a discussion of some key financial matters, a status report on our two critical pending rate cases, and an update on various strategic projects. Then we'll welcome your questions.

As we will discuss throughout the call, we have experienced historically cool weather and unfavorable economic conditions in 2009. However, with constructive outcomes from our pending rate cases and an expected resurgence in the wind development market, we expect a much brighter picture for both our utilities and RMT in 2010.

First, let's discuss the third quarter results versus the same period last year. Utility earnings were down $0.11. The three major factors driving the year-over-year earnings decline were historically cool summer weather, which accounted for a $0.15 decline; reduced industrial and wholesale sales, which accounted for a $0.07 decline; and a $0.04 decline due to Wisconsin rates, which did not take into account the reduced sales resulting from a recessionary economy. Minor factors causing the year-over-year decline will be discussed further on in the call.

The negative quarter impacts were partially offset at IP&L by the absence of the 2008 flood expenses of $0.11 a share, and the 2009 interim rate relief, which added $0.14 per share to third quarter earnings. Hopefully, at this time next year we will not be discussing historic events in our service territory.

Third quarter 2009 retail and wholesale electric sales were down 10% and 24% respectively versus the third quarter of 2008. In the retail class, residential and commercial were down about 8% and 5% respectively, while industrial sales were down about 14%. Supplemental slides four and five present the 2009 quarter by quarter sales declines, at IP&L and WP&L.

Comparing the 2009 forecast versus 2008, IPL and WPL anticipate industrial sales declines of 12% and 14% respectively. However, at IPL, we had expected a decline of about 10% due to the anticipated start up of approximately 200 megawatts of new customer owned cogeneration facilities. That decline has been reflected in our guidance throughout the year. Setting aside that expected decline, sales on the industrial side at IP&L were down only 2%.

The 14% industrial decline at WP&L continued the trend we had been seeing throughout 2009. We estimate that WP&L has permanently lost approximately 7% of its industrial megawatt hour sales due to plant closures. Although the industrial sales decline is slowing, there is little evidence that any recovery from industrials is forthcoming over the near term.

The third quarter marks the first time that we have seen a significant decline in wholesale sales at WP&L. Two-thirds of the 24% decline was due to an expected decline in sales due to some full requirement sales shifting to partial requirements. And that decline has been reflected in our guidance throughout the year. The remaining one-third of the 24% decline was primarily a function of cooler weather and the same recessionary impacts affecting WP&L's retail business.

Next, let's discuss our continued commitment to controlling costs at all levels of the organization. Year-to-date the cost controls have benefited earnings by approximately $0.15 per share. By year-end we expect cost-cutting measures to benefit earnings by about $0.25 a share. I want to take this opportunity to thank our employees who have not only made some difficult business decisions, but have also sacrificed pay and benefits to help us capture these significant savings.

IPL's interim rates largely offset higher expenses incurred in the quarter. Those higher expenses were largely comprised of increased tension and transmission expenses. Unfortunately, WP&L's rates were unable to offset increases in depreciation and interest expense for the third quarter of 2009 versus 2008.

Increases in WP&L depreciation and amortization expense for the third quarter of 2009 decreased earnings per share by about $0.03 over the same period in 2008; and were driven by WP&L's purchase of the Neenah power plant in June of 2009, and its continued deployment of advanced meters. Increases in WP&L interest expense in the quarter decreased earnings by $0.03 and were driven by its issuance of long-term debt to fund wind farm construction and advanced meter purchases.

Now that we've completed nine months of the year, we have narrowed our 2009 utility guidance by lowering the high end of the range. This adjustment was caused by the cooler than normal weather experienced in August and September of this year. As a reminder, previous guidance issued in August had included the anticipated negative $0.12 impact for July weather alone.

Now let's turn our focus to the unregulated segment of Alliant Energy. Non-regulated generation and transportation performed well in the third quarter. But RMT results for the quarter were down $0.07 per share versus the same period last year. And 2009 year-to-date results reveal a loss of nearly $0.03 per share.

RMT's revenues were down $90 million for the third quarter of 2009, were--I'm sorry, were $90 million for the third quarter of 2009 versus $144 million for the same period in 2008, a decline of $54 million. O&M expenses were $89 million in the third quarter of 2009 versus $131 million for the same quarter in 2008, a decline of only $42 million. Obviously, expenses did not decline at the same or greater rate than revenues because in late 2008 and continuing into this year, RMT decided to spend money to strengthen its platform to prepare for the long-term growth in the renewable energy market.

All costs incurred did and will position RMT to remain successful in this space. Also, since the list of projects in 2009 was substantially smaller than expected due to the economic recession, RMT accepted smaller margins on projects in order to maintain its market share, which it did. Due to the year-to-date results and the forecast for fourth quarter 2009, we're lowering our earnings expectation for RMT from $0.03 to $0.00 for the year. This earnings guidance excludes RMT restructuring expenses of about $0.01 a share.

RMT recorded some restructuring expenses in the second quarter, but a majority of the expenses will be incurred in the fourth quarter of 2009. We remain optimistic that RMT will once again bring material bottom-line benefits to our company. Our research indicates that wind construction is starting to experience a rebound and analysts expect a substantial increase in wind and solar construction in 2010.

Finally, I'd like to provide you with an update on our advocacy to improve the House and Senate climate bills. You may remember that our board of directors voted years ago to support a national program to reduce greenhouse gases, and I'm proud that we were one of the first utilities to do so. Our support for a national program at the time, however, was contingent on it not imposing an undue economic burden on our customers, and that remains our focus in the current debate.

We believe there are three main ways the bills must improve to produce sensible economic impacts on our customers. First, there should be an increase in the electric utility sector's share of allocated allowances. Second, allowances for the sector should be allocated to companies based solely on emissions, not partly on retail sales. The current formula in both bills gives nuclear and hydro-heavy states allowances they simply do not need, which would ultimately lead to a transfer of wealth from the Midwest states to the coastal states. And third, any bill passed should include strong cost containment provisions to protect customers in case the program does not work or is significantly more costly than expected.

In closing, let me recap the key take-aways for the quarter. For our utility businesses, earnings continue to be challenged by the economy, weather, and rates in Wisconsin, which were set without factoring in sales levels due to the recession. While our employees sacrificed pay and benefits to help partially offset these challenges, our investors continue to realize returns on equity well below those authorized in retail rates.

We are looking to our regulators to fairly administer the regulatory compact in our pending rate cases and provide our utilities a reasonable opportunity to earn their authorized returns. For RMT, earnings will seriously disappoint in 2009, but we believe the wind and solar development service markets will rebound; and that RMT is well positioned to deliver positive earnings in 2010 and beyond.

We appreciate your continued support of our company. And at this time, I'm going to turn the call over to Pat.

Thanks, Bill. And good morning to everyone.

I would like to begin by providing an update of the Company's strong liquidity position. Currently we have approximately $250 million of cash and marketable securities, plus approximately $665 million available under our credit facilities and receivables program for a total liquidity position of over $900 million.

Although earnings are significantly below the same period last year, we have experienced a dramatic increase in cash flow from operations. Year-to-date cash flow from operations improved by approximately $175 million over the same period last year. Most of the improvement was largely due to bonus depreciation deductions under the ARRA and several other federal tax initiatives that we undertook. We anticipate the total cash benefits from these federal tax initiatives to be $120 million in 2009 and $250 million in 2010.

Current projections show there will be no need to issue new common equity through 2011 based on the cash flows from tax initiatives and our current strong cash position. The third quarter improvement in the debt capital markets gave us the opportunity to retire the [phones] notes, the Company's derivative debt instrument. The redemption price was below 60% of its face value and the tender was financed by issuing traditional holding company debt. In essence, we were able to replace the $402 million of 2.5% phones notes with $250 million of 4% debt.

The $128 million noncash nonrecurring charge recorded in the third quarter stemmed from the very low $39 million carrying value on our books, based on the required accounting treatment for derivative instruments. The successful tender offer also allowed us to extinguish a lawsuit that was consuming time and money. We are very pleased with the cost effective manner in which we were able to retire those securities and put the litigation behind us.

In addition to cost controls, another main focus of the organization this year is on achieving constructive outcomes in our two pending rate cases. Timelines for the rate cases, as well as details regarding the major rate case issues, may be found on supplemental slides six through nine. As previously stated, the most important issue in the WPL case is that customer rates must be established based on the lower retail kilowatt hours sales forecasted for 2010.

While WPL's 2009 retail electric sales are down 8% versus 2008, the current sales variance from what is reflected in customer rates is a staggering 13%. In July, WPL was permitted to file additional testimony in the rate case, which further lowered our 2010 retail electric sales forecasts by approximately 2%, reflecting the continued weakness in the Wisconsin economy. Staff testimony filed in September did not take this additional information into account since the staff audit of WPL's filing requirements was completed just prior to our July update.

WPL continues to emphasize the need to incorporate the most recent sales forecast when determining final rates. Incorporating the most recent forecast will help ensure that WPL has the opportunity to actually collect the revenue requirements authorized by the commission. The hearings in this case concluded in early October and we expect a written order in December.

IPL's current case seeks recovery of increased transmission and pension expense and the recovery of infrastructure investments made as a consequence of the 2008 flood. Traditionally, the Iowa Utilities Board has allowed Iowa Utilities to fully recover these items and rates; and we believe this case should not be any different.

Also, in Iowa rate proceedings the board's staff does not file testimony. However, the three Iowa Utility Board members preside over the hearings and do ask many questions of the witnesses. IPL will not know the preliminary board decision until the IUB's open meeting is held in December. The IUB has until January 17, 2010 to issue final rates in this case. Once IPL establishes compliance tariff rates, the IUB has 30 days to review and approve them before they go into effect.

In both these rate requests, we have worked diligently to balance the financial requirements of the Company with the economic realities that our customers are facing. We have aggressively supported our filings and believe we have provided a strong record for the IUB and PSCW to consider during their deliberations.

Please note that both WPL and IPL plan to file rate cases in the first quarter of 2010. IPL expects to file an Iowa retail rate case based on a 2009 historical test period. The key driver for this filing is recovery of investment and the Whispering Willow East wind project and other capital projects. Any customer rate changes are expected to be implemented in two phases with interim rates effective approximately 10 days after the filing, and final rates effective approximately nine months later.

WPL's case will be based on a forward-looking test period that includes 2011 and 2012. The key driver for the filing is recovery of investments in the Bent Tree wind farm and other capital projects as well. The rate change granted are expected to be effective in January 2011.

Construction activity is wrapping up at IPL's 200 megawatt Whispering Willow East wind farm in Iowa. The turbines have all been fully erected and the project is expected to be in service by the end of the year. At the end of the third quarter, the project had incurred capital costs of almost $425 million exclusive of AFUDC. Under the rate making principles approved by the IUB, this investment is expected to earn a return on common equity of 11.7%.

WPL's 200 megawatt Bent Tree wind project recently received its last two required approvals, the first from the Minnesota public utilities commission for a site permit and a certificate of need. And secondly, from Free Born County, Minnesota, the transmission route conditional use permit. Earlier this summer Bent Tree was approved by the Public Service Commission of Wisconsin with a cost cap of $497 million inclusive of AFUDC.

At the end of the third quarter, WPL had spent $125 million on this project, primarily related to turbine down payments. Since the regulatory approval process took longer than anticipated, we do not plan to begin a meaningful construction work at this site until the spring of 2010. While this will help control costs on the project by avoiding winter construction, this decision does push out our expected service date from the end of 2010 to the first half of 2011.

IPL and WPL are both well-situated to meet future renewable portfolio standards. With the addition of Bent Tree, 12% of WPL's retail sales are expected to come from renewable energy sources, which is above the state's current 10% 2015 requirement. With the addition of Whispering Willow East, IPL is expected to increase its renewable energy sources to about 8%. IPL is also planning to expand the Whispering Willow site by deploying the remaining 100 megawatts of our Vestas turbines in 2012 to further increase our commitment to own and promote renewable energy.

Progress also continues on the company's important environment controls projects. The $200 million SCR and baghouse projects at IPL's Lansing generating station were currently under construction and are expected to be in-service in 2010.

At WPL, two projects are moving through the regulatory approval process at the PSCW. Earlier this month, technical hearings were conducted for the addition of scrubbers at the Columbia generating station. WPL's share of this project is projected to be $290 million, and the PSCW staff witness has concluded that this proposal is cost-effective. A final order is expected in early 2010. Direct testimony was also filed earlier this month on the $115 million Edgewater 5 SCR project. Technical hearings are scheduled for January 2010, and a final order is anticipated in the second quarter of 2010.

Finally, WPL's investment in AMI, when combined with technologies already in place, creates the foundation for smart grid in our WPL service territory. To date, we have installed more than 80% of our AMI-enabled meters. The information from these meters will be used to educate our customers on their energy use, patterns of use, and will also provide WPL with strategic customer and operational information. This week we learned that WPL was selected to receive a $3 million grant for smart grid distribution automation.

Wrapping up, let me review the key take aways. Alliant has a very strong liquidity and cash position. Current and future cash flow projections show we should be able to fund our strategic capital expenditures without issuing common equity through 2011.

Alliant's wind, environmental controls, and smart grid investments are progressing well and are expected to provide returns within the next few years. And although we are optimistic as to the outcome of our two pending rate cases, we do not plan on issuing guidance for 2010 until the year-end earnings call. We look forward to meeting many of you in a few days at the annual EEI Finance conference.

At this time, I will turn the call back over to our operator to facilitate the question-and-answer session.

Thank you. (Operator Instructions) We'll take our first question from Dave Parker with RW Baird.

Good morning.

Boy, a lot of great detail, thanks for catching us up. And as Pat went through, I don't know what, 15 bullet points on regulatory issues that have to deal with a good build in front of you, I was wondering if you could maybe summarize or refresh my memory, anyway, on how particularly renewable investments or environmental equipment investment is being recovered? Is that--I thought some of it's rider, some of it's through rate based mechanisms. I guess the whole idea is with this year under earning authorized ROEs significantly will -- the accelerated spend and, therefore, filing for recovery of this investment create a drag on future periods from an earned ROE. Or how should we think about that?

Sure Dave, in Wisconsin, it's all rate based treatment. And with the forward-looking test year, we should--we don't anticipate having drags on any investments at WPL. In IPL, again, it's an historic test year with known and measurable for the current year, so we wouldn't anticipate putting them in the interim rates that would go into effect when we file the Iowa rate cases.

Great.

And then you'll be also recovering or recording AFUDC [equipment], I guess, I assume in earnings.

That's right. Until they're in service, right.

Until they're in service, right. All right. Perfect. That answers my question. Thanks very much.

Thank you.

We'll take our next question from Brian Russo with Ladenburg Thalman.

Good morning.

Could you just elaborate a little bit on the revisions to your load growth forecasts at WPL, and the ability to get that adjustment in the pending rate case?

Well, we have--Brian, we have certainly reflected our anticipated load growth outlook in the rate case. To date in Wisconsin, we have seen a favorable reception to our initially-filed declines in sales. We did, during the course of the case, make one more downward revision in our forward outlook. That was not reflected in the commission staff's filed testimony in the docket due to the fact that their audit had been completed at that point in time. But it is in the case, it is a conspicuous part of our rebuttal testimony in the case.

So I would say we are guardedly optimistic that the process will treat that revised outlook favorably and take it into account when final rates are set. So it's all out there. We're confident that the vast majority of the outlooked weakness in sales will be captured in the final rate and are hopeful that the entirety of it will be captured.

Okay, thanks.

And then you mentioned earlier that briefs will be filed in December in the pending IPL rate case and you think we should get some insight as to what the final order will look like; is that accurate?

No, Brian, I think in the posted slides on our website, the briefs in the Iowa rate case are going to be filed in early November. The Iowa Utilities Board will meet in open meeting to discuss the case in December. So briefs November, oral discussion and resolution of the case in December, written final order in January is the sequence in Iowa.

Okay, got you.

And then just on RMT. Could you just talk about any backlog or projects that you've committed to or just give us a little more comfort that other than just a general rebound in the wind market that you guys can capitalize on? And then maybe any comment on the types of margins you're seeing now and what type of expansion we could see in 2010 and beyond.

Yes, there are--the RMT is currently involved in the active construction of four large projects here in the states. Their pipeline, if you will, I won't have the number precise; but I would say their pipeline of projects, which in our vernacular means projects for which they have either been selected or short-listed as a candidate to do their work is--I would characterize it as robust. It is in excess of 30 projects. The resurgence in the marketplace, I would expect, is only going to increase that pipeline, and hopefully increase our short-listing.

But at the end of the day, living on a short list is not a good place to be, you've got to have deals financed, deals closed, and construction commenced. That's where the resurgence in the marketplace comes in. We think that will be favorably impacted by what we see as a relaxing of financing, a more -- returning to more historic levels of project financings being closed. The stimulus package, it appears to us, is beginning to sink roots in that marketplace.

So that's really the backlog profile, if you will, at RMT. I hope that's responsive.

Yes, it is, thank you.

One last question on IPL. The upcoming rate case you plan to file and implement interim rates in early 2010. Outside of Whispering Willow, can you give us a sense of what type of incremental transmission expense recovery you're going to seek? And then if you could just comment on ITC's recent disclosures of incremental capital expenditures in the Midwest and how might that change your outlook on the trends you're seeing in those transmission expenses?

Okay. We have--there's a number of ways that we should approach answering that question.

Number one, ITC has indicated that they anticipate some uptick in their revenue requirements in our space in Iowa. That's going to get dealt with as a part of our Iowa retail rate proceedings; and in the event that we choose to contest it, obviously, it will get dealt with in some fashion at the FERC.

I think the other consideration that is important here is that we, ITC, the Iowa Utilities Board, and everyone anticipates a substantial uptick in ITC revenue requirements next year due to a number of catch-up provisions that were anticipated and prescribed when the sales transaction was approved by the Iowa Utilities Board. So there's going to be a considerable uptick in ITC-related transmission costs in 2010 associated both with their announced increase in transmission expenses, as well as the catch-up requirements that were envisioned by everyone.

Our hope is that, as a part and parcel of our pending IP&L rate case, the Iowa Utilities Board will make the decision to implement a transmission rider to allow for the flow through recovery of ITC-related costs. In the event that they do not, when we file our 2010 IP&L rate case, it would be our expectation that we would recover the totality of the increases in ITC-driven expenses as a part of the interim rates that would go into effect.

In terms--it seems like there's some support for a rider; but can you talk about the possibility of a cap on what you can pass through in terms of that rider?

Well, I suppose there can always be something that comes out of the regulatory process but we certainly do not expect that. The reality is that ITC charges are FERC-approved costs and we have every confidence that the Iowa Utilities Board will appropriately recognize its obligation to allow the recovery of those costs in retail rates.

Okay, thank you.

I don't expect there to be a cap.

Thank you.

(Operator Instructions) We'll take our next question from Alex Kania with Banc of America-Merrill Lynch.

Good morning.

A couple questions. The first is, at the IP&L rate case was there anything interesting that came out from the hearings that happened, I guess a couple weeks ago? That's the first question.

The second question is, related to RMT, I was looking at the American Wind Energy Association's third quarter update; and they kind of have talked about year-to-date 2009 being kind of a record year in terms of wind development. And I'm just trying to reconcile that sort of result with the RMT outlook and--in terms of how we should be thinking about RMT's growth in earnings and how does that--is there like a timing consequence?

Meaning, 2009 was a very bit year. Was a lot of the RMT earnings in 2008 associated with this big build in 2009? So what we should be doing is we should be looking at what the projected outlook is in the construction pipeline; and is that a better way of looking at RMT's growth versus actual construction additions?

Let me take a whack at that, Alex.

First of all, with respect to the IP&L rate case hearings, rate case hearings are always interesting; but the reality is that we would certainly characterize the totality of the IP&L rate case hearings as being very constructive, obviously as is always the case in Iowa, very efficient, very well run rate cases. There is nothing that transpired in the case that I would call heart stopping or dramatic or surprising. So I would characterize them as constructive; and frankly, that gives rise to optimism.

As you know, in Iowa, the board members actually sit in the hearings, they actually preside with the assistance of an administrative law judge in the hearings. They're there, they hear the testimony, they see the cross-examination. But I would say that there was no evident takeaway in the hearing from any of the participation or reaction by any of the board members; they were, as you would expect, very professional in their participation.

To the RMT question, we see the--the announcements all of the time as well. There is, I think their latest announcement, at least if my recollection is fairly correct, suggests that about 5,100 megawatts of new wind capacity is going to go into service this year. We know that the lion's share of that project activity had commenced in 2008 and was completed in the earlier part of this year. We also know that activity in terms of the financing and the commencement of new projects in the second half of this fiscal year has been pretty slow.

But we also believe that on a going-forward basis; activity, both on the financing, and financing is the gate to actual construction, which is where RMT lives, that that is picking up. It is picking up pace, equity investors are coming back to the space, cycle times on completing project financings are returning to the three and four month level versus the seven and eight month level to which they had dragged earlier in this year. Our belief--our belief is that in the '10, '11, '12 timeframe we're going to see project financings and project initiation on the order of 2,000 megawatts a quarter or higher, which I think 2,000 megawatts a quarter roughly reflects what actually transpired in 2008.

So we're optimistic that the market opportunities are going to be there for us and I take this opportunity to say we're optimistic that RMT is very well-positioned to do well in that more robust marketplace as well for a number of reasons. As we've seen their earnings this year, obviously RMT is still a cash business today. And if you experience a very material decline in your revenue line and your cost profile doesn't decline directly and proportionately, your earnings go down. And as I referred earlier to some of the third quarter data, obviously, revenues went down a lot more than costs quarter-over-quarter, and that produces disappointing results.

But RMT has learned a great deal in this extraordinarily volatile year. Number one, they've learned that they have to be prepared to respond, to reduce the variable costs more quickly in the event that there are swings in the marketplace. We didn't do that particularly well this year because we anticipated that projects, when completed, would be able--we'd be able to move resources on to the next project.

But what actually happened is the next project didn't get financed so variable labor cost reductions didn't occur as quickly as they should have in retrospect. Secondly, we've added a good deal of controls and systems to the RMT business, which over time will better enhance our ability to predict and realize margins on projects that are secured.

And thirdly, and perhaps most importantly, Steve Johannsen and Frank Greb, who are really the individuals that have taken our participation in the wind business to the level that it's at today, have substantially supplemented their senior executive team with a number of very talented individuals, a new Chief Financial Officer named Tracy Pearson, who I think is going to do an exceptional job for us; on the operating and project management side, Dale Withers has moved to RMT from the utility. Dale will do an extraordinary job project managing the projects that we are successful in winning. And Dave Kutcher, who is an exceptional business attorney, has joined the team as well.

So we have, we believe, an excellent team in place to take RMT to ever greater levels of success on a going-forward basis. That's a little advertisement for RMT, but we feel very optimistic about it, and if the market cooperates I think we'll do well.

Great.

I have just one real quick follow-up, just in terms of that as well. In terms of revenue recognition from a project, I'm just thinking of like the life cycle of a development project. Is there--is it -- following, let's say financing and construction begins, is your revenue recognition pretty steady over the course of a development, or is it kind of more heavily weighted towards the front, the middle or the back?

We account for it on a percentage of completion basis.

Okay. Great. Thanks.

Thank you.

We'll take our next question from Tim Winter with Gabelli.

Good morning.

I was wondering if you can just update me on the difference between what transmission rates were last year versus what ITC is charging you, and whether 100% of that is currently included in interim rates? And if there's any--if you have any guidance for what that is going to be in 2010?

Sure.

Tim, when we filed the rate case this year, we did know what the transmission rates would be for 2009. So those are reflected in interim rates, albeit with a lag since the rates did not go into effect until the end of March. And again, next year for 2010, we do expect them to possibly be 60% higher than this year. Again, going to what Bill was saying, not only are costs going up; but next year is a true-up year for the 2008 costs, which was fully anticipated. So when we file the rate case next year again, we're hoping that the rider gets approved. If the rider is not approved, we'll be filing for increased transmission costs and they would be reflected in interim rates.

What was the dollar amount difference between '08 and '09 that's included in rates?

Around $60 million.

Okay. Thank you.

Thanks, Tim.

Thank you. And Ms. Gille, there are no further questions at this time.

With no more questions, this concludes our call.

A replay will be available through November 6, 2009 at 888-203-1112 for US and Canada, or 719-457-0820 for international. Callers should reference conference ID number 8244179. In addition, an archive of our conference call and a script of the prepared remarks made on the call will be available on the investor section of Company's website later today. Thanks to all of you for your continued support of Alliant Energy and feel free to contact me with any follow-up questions.

Thank you.

Ladies and gentlemen, this does conclude today's conference. We appreciate your participation. You may now disconnect.