Alliant Energy Corp (LNT) 2009 Q4 法說會逐字稿

Thank you for holding, ladies and gentlemen, and welcome to Alliant Energy's year-end 2009 earnings conference call. At this time, all lines are in a listen-only mode, and today's call is being recorded. I'd now like to turn the call over to your host, Susan Gille, Manager of Investor 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 Pat Kampling, Executive Vice President and Chief Financial Officer and Treasurer, 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 fourth-quarter and full-year earnings. This release also provides our 2010 guidance. The release is available on the investor page of our website at www.Alliantenergy.com.

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 reconciliations 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 will turn the call over to Bill.

Good morning. My comments today will recap 2009 results and detail our priorities for 2010. Later in the call, Pat will discuss various financial and regulatory matters.

Let's start with a recap of 2009 results. We released earnings this morning with Alliant Energy's GAAP earnings of $1.01 per share, down from $2.61 per share in 2008. However, adjusting for nonrecurring items, we believe one should see 2009's adjusted earnings as being $1.96 per share, compared to 2008 earnings from continuing operations of $2.54 per share. This comparison is detailed on supplemental Slide 2.

The nonrecurring items include the [phone's] tender offer, any restructuring and impairment charges, the income tax benefits and expenses resulting from Wisconsin's Senate Bill 62, and most recently the charges related to cancellation of IP&L's proposed coal plant and the net impacts of recent regulatory decisions.

The biggest drivers of 2009 utility results were higher IPL revenues from interim rates offset by increased pension and transmission expenses, higher depreciation and interest expense due to construction and acquisition expenditures, historically cool weather, and reduced industrial sales. The impacts of these drivers are detailed on supplemental Slide 3.

The negative year-over-year impacts were partially offset by the minimal flood-related expenses IPL incurred in 2009, compared to 2008, and to cost savings initiatives. Compared to budget, we estimate our cost-saving measures contributed $0.25 per share to 2009 results. We expect that approximately one half of these savings will be sustainable during 2010.

In 2009, IPL and the WPL earned retail regulatory returns on equity of 9% and 7% respectively. Lower RMT earnings reduced earnings-per-share from Alliant Energy's nonregulated businesses by $0.13 per share. The prolonged economic recession and the credit crisis decreased new construction of wind energy megawatts in the United States by between 35% and 40% in 2009 when compared to 2008. Lack of wind project financing and delays in the distribution of federal stimulus grants to completed projects combined to dampen new construction.

Competition among balance of plant contractors also resulted in lower margins at RMT.

Given the pressures of the economy, weather WP&L rates which were established without taking into account lower sales levels, I am proud of the results our team delivered in 2009. That said, we are glad that 2009 is behind us. With normal weather and better retail rates in Wisconsin, Minnesota and Iowa, we expect a brighter picture in 2010, as reflected in the financial guidance announced today. Pat will provide detailed information concerning the 2010 guidance in her prepared remarks.

2009 marked a year of significant progress in the execution of our plans. Continuing that progress remains a priority for 2010.

Let's start with wind. IPL's Whispering Willow East project became our second owned wind farm when it was fully commissioned in December of 2009. We are in the early planning stages for the second phase on this same site. That said, we have not set a date to file a request for IUB approval of the second phase of the wind farm.

WPL's Bent Tree wind farm to be constructed in Minnesota is a 200 MW project which is expected to be fully commissioned by the first quarter of 2011. The estimated cost for the project is $425 million to $460 million. WPL's current retail rates, which were approved in December of 2009, allow us to earn a return on one half of the anticipated QUIP balance during 2010 and allow us to accrue AFUDC on the remaining QUIP balance. We anticipate construction will begin during the spring of 2010. With the addition of this wind farm, WPL will have an energy supply portfolio made up of approximately 12% renewables.

We began installing an advanced metering infrastructure for WPL's electric and gas customers in April of 2008. As of the end of 2009, we have replaced or retrofitted about 90% of the electric and gas meters. WPL is one of the few utilities to have successfully executed a full-scale deployment of AMI that targeted all residential electric and gas customers, regardless of location. We view AMI as the necessary foundation to our Smart Grid plans.

In the near-term, IPL will put forth a more definitive AMI and Smart Grid plan and business case to persuade the Iowa Utilities Board and other interested parties that AMI should be deployed in Iowa. We will begin deployment of AMI there when we receive appropriate regulatory treatment.

Turning to environmental matters, we continue to build on our commitment to reduce SO2, NOx, and mercury emissions. In 2010, we will celebrate the completion of our first large-scale environmental control project, which involved the installation of selective catalytic reduction equipment and a baghouse at IPL's 270 MW Lansing Unit #4 at a cost of approximately $190 million. We are awaiting regulatory approval to start construction of two environmental control projects at WPL.

Before the end of the first quarter of this year, we expect a decision by the Public Service Commission of Wisconsin on the proposed installation of scrubbers at both units of the Columbia generating station. We estimate WPL's share of capital expenditures for this project to be $290 million. The scrubbers are expected to be placed in service in 2013.

Before the end of the second quarter of this year, we are expecting a decision concerning the proposed installation of SCR equipment at WPL's Edgewater Unit # 5. We currently estimate the WPL's share of the capital expenditures for this project to be $115 million. The SCR is expected to be in service in 2012.

Edgewater 5 is a facility WPL owns with Wisconsin Electric Power Company. WEPCO and WPL have entered into a definitive agreement pursuant to which WEPCO will sell its 25% ownership interest in Unit #5 to WPL for an undisclosed purchase price. Under the terms of the definitive agreement, WEPCO may solicit an alternative proposal from a specified third-party for a limited time. If WEPCO is unable to close the alternative transaction within that limited time, the WEPCO is obligated to sell its 25% ownership interest in Unit 5 pursuant to the terms of the definitive agreement with WPL. The transaction is subject to customary closing conditions, including the receipt of applicable regulatory approvals. Upon completion of this transaction, WPL would own 100% of Edgewater Unit #5.

We believe execution of our wind, energy efficiency and environmental control investments are consistent with Senate Bill 450 and Assembly Bill 649 now pending before the Wisconsin Legislature. These bills propose that 20% of electricity must come from renewable resources by 2020 and 25% by 2025. The legislation contains mandates for low carbon fuels and increases the state's investment in energy efficiency by enacting a statewide goal of 2% annual energy savings.

In closing, let me recap the priorities for 2010. First, we will execute our wind, energy efficiency and environmental control programs as part of an ongoing commitment to a greener future. Second, we will continue to focus on cost control measures. Finally, we will work closely with our regulators and stakeholders to produce fair outcomes in the rate cases that will be filed in Iowa, Wisconsin, and Minnesota.

Next, Pat will provide the details regarding those rate cases. We appreciate your continued support of our company. Now, I will turn the call over to Pat.

Thanks, Bill, and good morning to everyone. My remarks this morning will provide details on our 2010 guidance, liquidity, cash flow, financing plans and rate case matters.

This morning, we announced Alliant Energy's 2010 guidance with a midpoint estimate of $2.60, comprised of the utilities midpoint of $2.45 and all other at $0.15. ATC will contribute approximately $0.21 to utility earnings, and the remainder should be split approximately 60/40 to represent earnings at IPL and WPL, respectively. Not only does the guidance reflect the impacts of the two recently received rate orders and the expected sustained savings from our 2009 cost-cutting efforts, it also incorporates estimated interim rates projected to be in effect in late March for Iowa and in the third quarter for Minnesota. I will provide further detail on these rate cases in a few minutes.

The utility guidance for 2010 also reflects a slight decrease from 2009 weather normalized megawatt hours sales as shown on supplemental Slide 7. The factors causing 2010 projected sales to be lower than 2009 are a full-year affect of IP&L's ADM's cogeneration facilities and closed industrial facilities at WP&L. When comparing 2010 guidance to 2009 actual results, we are anticipating operating expenses and depreciation to increase as a result of placing Whispering Willow and Lansing projects in service and lower AFUDC income.

Interest expense is expected to be higher in 2010 versus 2009, as a result of increased long-term debt outstanding.

Our guidance has RMT's earnings at an unexpected $0.04 per share, up from a negative $0.01 in 2009. RMT expects to complete construction on two wind projects during the first half of 2010 and expects to start construction on at least five other projects beginning in the second quarter. While the market for their services appears to be strengthening, a firm backlog and improved margins are not yet being realized. Further detail on 2010 guidance can be found on supplemental Slide 6.

Our capital expenditure outlook for 2010 through 2012 reflects our commitment to renewables, environmental controls and reliability. 2010's total projected capital expenditures of $875 million include $290 million for construction of WPL's Bent Tree wind farm, $95 million for environmental controls at Lansing, Columbia and Edgewater, and $425 million for ongoing capital for the utilities infrastructure.

We believe Alliant's current liquidity is very strong, totaling $770 million, comprised of almost $155 million of cash and marketable securities and over $468 million available capacity under our credit facilities. We currently have $155 million of commercial paper outstanding at IPL and no commercial paper outstanding at WPL. This year's only long-term debt maturity is $100 million due at WPL in March. Alliant Energy's $623 million of credit facilities do not expire until November 2012.

Cash flow from operations for 2009 was greater than $650 million, even after taking into account the pension contributions of $125 million. This $300 million increase over 2008 was largely due to higher cash flows from federal tax strategies, including the ability to take advantage of bonus depreciation. We are again forecasting strong cash flows from operations in 2010 due to the continuation of additional federal tax initiatives and improved earnings stemming from rate relief and the absence of any major pension funding.

Financing the utilities capital plan will involve a combination of internally generated funds, equity infusions from f cash at the parent, and issuing long-term debt. Long-term debt issuance for 2010 are forecasted to be up to $400 million in aggregate for both IPL and WPL. Timing the debt influence will be influenced by market conditions. Due to our anticipated ongoing strong cash flow, our current projections show that there should be no need to issue new common equity through 2011.

As previously announced, we accelerated the Company's planned 2010 pension contributions and therefore 2009's total contribution was $125 million. Like others, we experienced an increase in our pension plan assets during 2009 and our funded status increased from 67% in 2008 to 89% at the end of 2009. Our 2010 financing plan also assumes we will make no additional contribution to our qualified pension plan in 2010.

We are prepared to have another very important and active year in the regulatory area. In addition to the ongoing dockets that Bill mentioned earlier relating to WP&L's emission reduction initiatives, we also plan to file rate cases in all of our three retail jurisdictions -- Iowa, Minnesota and Wisconsin.

Recall that Iowa (inaudible) an historic test year. The IUB may adjust test year results for nine months of known and measurable changes since the end of the test year. The rate increase is granted in two phases with interim rates becoming effective ten days after filing, followed by final rates approximately ten months later. Items that will be included in interim rates generally include the return on and of capital investments placed in service in the test year, as well as known operating expense changes that occur in the year of the filings. Return on and of post test year capital additions may be reflected in the final rate request.

As practiced in Iowa, rates will be based on actual test-year kilowatt hours sales, not weather normalized sales.

IPL plans to file its Iowa 2009 base test year retail electric case in March with interim rates established to recover our investment in Whispering Willow and recovery of 2010's transmission costs. The final rate request will seek recovery of approximately $190 million of environmental equipment at Lansing which will be placed in service midyear 2010. IPL plans to again request an automatic adjustment clause for FERC-regulated ITC transmission charges since the IUB deferred this decision until this case.

Total construction costs for Whispering Willow, excluding AFUDC, are forecasted to be approximately $468 million for $2,340 per kw. The advanced rate-making principles approved in February 2008 for this facility included not only a return on equity at 11.7% but also an approved cost cap for construction costs of $417 million, excluding AFUDC. Therefore, total costs exceeded the previously approved cost cap by approximately $50 million. As a result, IPL is required and will demonstrate the construction costs above the cap are prudent and reasonable in order to recover the additional cost in rates. We believe all costs are prudent. Therefore, we plan to file for interim rates that reflect recovery of $417 million of Whispering Willow, but will request that final rates expected in early 2011 will reflect the full $468 million of construction costs.

Please note that the AFUDC portion of Whispering Willow was offset when the plan went into service by using $29 million of the regulatory liability account established at the time of the Duane Arnold sale.

In May, IPL will file its first retail electric rate case in Minnesota since 2005. We operate IPL as one utility operating in two states with Minnesota representing approximately 6% of IPL's total electric operations. Therefore, the drivers for this Minnesota increase are the same as those for Iowa's 2008 and 2009 test year cases. Minnesota law allows utilities to increase rates on an interim basis 60 days after the filing of the case. In addition, we have recently filed a request for a transmission rider in Minnesota and plan to request a renewable energy rider later this month.

Finally, we are preparing for WP&L's 2011 and 2012 biannual test year retail electric and gas case to be filed in March. New rates are expected to become effective at the beginning of 2011. The primary drivers of the case are recovery of the remaining 50% of the Bent Tree, which is expected to have staggered in-service dates from the fourth quarter of 2010 through the end of the first quarter of 2011, and to address recovery of the capital expenditures related to the proposed emissions reduction projects at Edgewater and Columbia.

I would like to commend the IUB and the PSCW for considering our unique circumstances and issuing fair and balanced decisions during these challenging economic times. We believe that these rate case decisions should allow IPL and WPL to earn ROEs closer to authorize rates.

This past year, our employees took great actions to reduce costs to minimize the rate increases to our customers. In 2010, we pledge to continue to look for ways to control costs while achieving our strategic goals to invest in wind, energy efficiency, environmental controls, reliability and safety.

In summary, we expect the primary drivers of increased earnings-per-share in 2010 versus 2009 to be, first, increased retail rates at WPL which reflect reasonable sales levels and partial recovery of the Bent Tree capital investment; second, interim retail rates in effect at the end of the first quarter for Iowa reflecting recovery of Whispering Willow; third, benefits from continued cost reductions; and finally, a return to more normal weather.

In closing, we are in the process of finalizing our 2010 Investor Relations plans, and Bill, Susan and I look forward to the opportunity to meet with all of you.

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

Thank you. 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 timeframe for this morning's call. (Operator Instructions). Jay Dobson, Wunderlich Securities.

A question for you -- I was wondering if you could live a little more clarity on the RMT outlook just as you stare forward from where we are now into 2010. I certainly understand the environment is better but not perfect, but any insight you can provide would be helpful.

Well, the guidance is $0.04 for the business for the year. I'm not going to put a label on that as aggressive or conservative. We believe it is reasonable. Nothing has fundamentally changed with respect to RMT's interface with the marketplace, Jay. But the marketplace, all of the published rhetoric notwithstanding, remains relatively tepid in terms of actual new project construction getting underway.

As we look back at '09 in terms of work actually done, RMT held its own in terms of maintaining a market share. So the variable that is just very difficult for us to predict with respect to RMT is not whether it can maintain its market share but how big that market is. Conventional wisdom from virtually everyone on the planet says that somewhere between 8000 and 9000 MW of wind is going to undertake construction during fiscal 2010. Our perspective on that is it better hurry up if it's going to do that because we are not seeing that materialize yet. That's about as much color as I can give you.

Perfect. I guess the only other bit of granularity would be, in the guidance you give, understanding market share is hard to get at but I know you saw some margin compression in 2009. Would you be sort of assuming flat margins into '10 or are you forecasting some recovery there?

No, we are looking at flat margins.

Brilliant, thanks. Two other questions, if I can, then? Can you just give me a little idea of a preview of how you're going to defend the higher Whispering Willow East costs when you file the case? Then I was hoping Pat could give us an idea of what maybe the effective tax rate for 2010 would be.

You bet. The incremental costs above that which was estimated in early 2008 is very straightforward. Turbines cost more in actuality than what they were estimated to cost when the early 2008 filing occurred. It's nothing more complicated than that. The turbine marketplace, if you recall back in that time frame, we had turbine scarcity and prices rising, and the turbines ended up costing more. There is no more mystery or complication to the incremental costs than that.

I think it was the right thing for us to do to move forward and build Whispering Willow when we did. We obviously, had we waited two or three years, we would have been able to get turbines at a lower price, but the wind farm wouldn't be in commercial operation until two or three years hence. It is in commercial operation today, producing a goodly amount of carbon-free energy for our customers.

Just addressing the effective tax rate, the composite effective tax rate for the Corporation is about 30%. Recall that will include the PTCs that will be flowing through the tax rate.

Perfect, that's great. Thank you very much.

Brian Russo, Ladenburg Thalmann.

Good morning. Just in terms of the guidance and specifically the utility guidance with a midpoint of $2.24, what kind of actual ROEs are you assuming in that?

Brian, you mentioned midpoint of utility guidance for '10 being $2.24 --

Deregulated utilities.

Yes. Oh, you're excluding ATC.

ATC, yes.

Oh, all right. Yes, I'm sorry. Go back and repeat the question if you would.

Yes, the $2.24 earnings-per-share guidance for the regulated utilities -- what type of ROE does that assume?

Approximately those levels currently authorized in both jurisdictions.

Okay, so the midpoint assumes authorized levels. So, what could get you to the high end of your regulated utility guidance if the midpoint assumes your authorized ROEs?

Better sales, greater success at cost controls than we currently are envisioning. Those would be the two variables that would take us to the high note.

Okay. Could you possibly quantify the dollar amounts that you'll still implement in IPL in May, or give us kind of a sense of what type of rate -- percentage rate increases that will be?

You know, Brian, we will give you more granularity when we file the cases next month. But just the increased transmission costs in Iowa and rate-basing Whispering Willow would put the rate increase higher than that of interim rates last year.

Okay. Then I noticed your CapEx for 2012 looks like a total of $780 million or utility of $765 million. Can you just talk a little bit about that? Were there other -- did you recently increase that outlook or what are the main drivers there?

Well, the primary drivers are new generation. That's wind, environmental. Our capital expenditure is going to be just a bit under $100 million in 2010.

AMI has a relatively modest capital expenditure next year, our normal utility asset maintenance capital expenditure of about $425 million. So that's it.

Okay. Then also, the RPS pending legislation in Wisconsin -- is there any way for RMT WindConnect to kind of -- is there any competitive advantage you guys have, being located in that state, or how can RMT kind of leverage off what could be a nice ramp-up in renewable construction there?

Well, given the breadth of RMT's participation in the market, which is certainly not Wisconsin or Iowa-centric -- it is national in its scope -- any legislation, be it at the federal or the state level, which drives greater construction of renewable energy in the country and wind energy in particular should (inaudible) the RMT's advantage if it is able to maintain and grow its market share. But renewable RPS standards in Wisconsin, I don't think that creates any unique competitive advantage for RMT. I would like it to very much, but it is a competitive marketplace today and I don't think they would have any particular leg up because they happen to be headquartered here.

Okay, great. Thank you very much.

Alex Kania, Banc of America.

Good morning. I was just thinking about --

Alex, can you speak up a little bit? We can't hear you very well.

Hold on a second. Is this a little bit better?

Oh, that's a lot better!

Okay, great. I was thinking, on Monday or Tuesday, the new Wisconsin energy coal plant came online and you certainly have another 600 MW or so of additional capacity coming online later on this year from that plant. How does that affect your wholesale business? I was just thinking because that's obviously going to be pretty high up in the dispatch order. Does that long-term kind of have a negative impact on wholesale margins or your ability to continue to contract?

I don't think so. We don't, as we look forward, we don't envision any material market impact on our wholesale business at all, given the very efficient functioning of the MISO marketplace.

Great, okay, so you're sort of thinking that a lot of that power will kind of go elsewhere outside of Wisconsin as well?

Well, I don't know where their power will go. We obviously have a substantial portfolio of wholesale business that is in place today under contract with us. Our sales on behalf of those customers will not be impacted by new generating resources coming into the marketplace in the neighborhood.

Okay, great, thanks. Just a follow-up question I'm thinking on tax policy -- I was looking at the recently proposed budget of the Obama administration. I believe there is some proposed extensions of bonus depreciation. Do you have any idea if that would be a material benefit for you in 2010?

Sure, we will definitely look at that and take advantage of every dollar of bonus depreciation that we can. With the bench reconstruction going on in 2010, that could have an impact, a positive impact, on us if it does get passed.

Great, thank you.

Leon Dubov, Catapult.

Good morning. I just wanted to check. Last year, when you guys talked about cost cutting, you kind of put some framework on that and you said it was about a $0.25 benefit. Is their cost cutting incremental to that assumed in 2010 to hit that allowed ROE target?

There is not.

There is not. So you are basically assuming flat costs, or you are assuming some normal O&M inflation?

We are -- as I indicated in my prepared remarks, we don't think all of the cost-cutting that took place last year is sustainable over time. However, as we put our plans, our spending plans, together for this year, we are going to be reinstituting the 401(k) match for employees. We are not envisioning furloughs for employees as of this time this year. We will find new ways to reduce expenses as we go into this fiscal year. So --

So should we think of O&M as being sort of flat to a year ago then? Meaning those new ways basically offsetting some of the step-up we might see from no more furloughs, etc.?

Yes, no, I think we will see O&M spending actually increase for the year. We've got considerably new resources that have been deployed that need to be operated in the utility business. Those are new incremental O&M expenses that have to be borne. We are confident that we have reasonable levels of O&M spending captured in the retail rates put into place in both Iowa and Wisconsin, however.

Okay, thank you very much.

Reza Hatefi, Decade Capital.

Thank you. You -- I guess I didn't hear anything regarding pension. Is there a pension expense increase or decrease here in 2010 versus 2009?

Yes. Our pension funding levels went up to 89% at the end of 2009, so our pension, total pension costs are down dramatically from 2009 numbers -- or 2010 pension is down dramatically from 2009 levels.

Okay. Would you be able to tell us what the impact is?

You know, it is about half, so it's down about $25 million from last year.

So the expense that hits the income statement is down about $25 million?

I am hesitating because of the way it is reflected in rates.

Just hold on a second, we'll make sure. Yes, some of our FAS expense is capitalized, so if you want to take half of maybe the $25 million delta and put that to the bottom line, but then you also have to realize how it is reflected in rates. In Iowa, they are averaging the '09 and '10 FAS expense in rates. In Wisconsin last year it was deferred So we will put a slide together to make sure you guys can follow the pension costs through '09 and '10.

I guess, if I recall, last year, IPL had pension expense up by like $15 million. Does that sound right as per your --?

Yes, that's correct. That's correct.

Right, so and then Wisconsin I guess you just said had a deferral --

Deferral.

So here in 2010, the expense -- Iowa was up a lot, but Wisconsin was deferred. But I guess looking from '09 to '10 from an income statement standpoint, it should be down like $10 million or something like that?

That's probably a pretty good estimate.

This upcoming IPL rate case, that will use a 2009 test year? Is that correct?

That's correct.

What is -- what do you imagine, envision or what is the total system rate base for IPL at the end of 2009?

Yes, it's on supplemental Slide 10 if you have those in front of you. So, it is about $1.8 billion.

I guess that's the year -- that's the 2008 retail rate base. I was wondering with the '09 rate base --?

So then add Whispering Willow to that, which is approximately $400 million.

Okay, okay. I guess there's a couple of questions on O&M. There will be some improvements and then some will come back from last year. Should we assume, besides the stuff that's coming back on, some of the savings that might be coming back, is there natural O&M growth on the underlying O&M, I mean besides stuff that was sort of one time in nature? I guess I just got a little bit confused on the previous O&M question.

Well, there is; there is natural growth in O&M. If you think [Sutteris] Paribas as the standard, you've got incremental O&M that will be driven by the operations and maintenance of the wind farms. There'll be incremental O&M experienced as a consequence of the operations of maintenance of pollution control equipment at the Lansing generating station, a reinstitution of the various -- of the 401(k) match for our employees. So, all of those variables would tend to cause increases in O&M expenditures.

Okay. Thank you very much.

(Operator Instructions). Tom [O'Neil], Green Arrow.

Good morning. Just a couple of quick questions -- I think I heard you say the tax rate assumed in 2010 was 30%. I just wanted to verify that.

That's correct.

Would you expect that it stays at that level in the future?

You know, it is very variable based on PTCs, so as more wind comes on, the tax rate should drop.

Okay. Then is that the tax rate that is in retail rates?

That is actually the composite corporate tax rate. Keep in mind, Iowa has got flow-through, so that's closer to 24%. In Wisconsin, it's in the mid 30s%.

Okay. Then, last question on the CapEx -- does that include the Edgewater purchase?

No, it does not.

Okay, thank you.

Steve Gambuzza, longbow Capital.

Good morning. Just to clarify the tax rate, it sounds like the reason why the 30 -- there is a lower than kind of normal tax rate at the consolidated level is primarily driven by these tax credits which flow through the rate payors' rates. There's no real kind of tax benefit accruing, unusual tax benefit accruing to shareholders this year driving an unusually low tax rate? Is that correct?

You are correct, Steve.

Okay, thank you.

Jay Dobson, Wunderlich.

I wanted to go back to Brian's question and just make sure that I heard it right. Was I to understand your response that the $2.24 regulated utility sort of midpoint shown on your Slide 6 represents both Wisconsin and Iowa earning their allowed returns?

It would be close to their allowed returns.

Got you. I guess just scratching my head a little bit over that, and maybe the answer is operating costs, but hopefully you can clarify. I know, in Iowa, you were not allowed to revise the sales forecast. Sort of holding all things constant, that should prevent you from earning your return if in fact sales were below what you had laid out in the case. So, should I assume that the lower operating costs, even though they are snapping back about half, is what is allowing you to do that? It still seems like a sort of small number, so I'm struggling a little bit. Maybe you could help me out.

Sure. Yes, actually with the Wisconsin case when rates were set for 2010, that we did not get that last adjustment to industrial sales. So you are correct that sales levels right now were a little -- the sales levels are set a little higher than what we proposed in the case -- not dramatic but they were [such as] slightly higher. If you look on supplemental Slide 9, we walk you through the WPL weather-normalized rates, the sales. For Iowa, they will be based on 2009 actual sales when we file for interim rates in 2010.

So if you looked on Slide 9 with WPL, do you have that in front of you?

Yes.

Okay, you see that the rate case sales were 9934.

Got you.

Guidance was lower to reflect what we believe the actual sales are.

Right. So again, just making up that delta is costs?

Yes.

Okay, fair enough. Thanks.

(Operator Instructions). Brian Russo.

Just on Slide 7, you've got 2010 budgeted sales at IPL, versus 2009, weather-normalized. So I guess the self-implementation of rates is going to reflect 2009 actual sales, and it looks like you are showing a decline in '10 versus '09. So should that help the availability to earn the allowed ROE?

Yes, it should.

All right, thank you.

That are no further questions at this time.

With no more questions, this concludes our call. A replay will be available through February 11, 2010 at 888-203-1112 for US and Canada, or 719-457-0820 for international. Callers should reference passcode 8244179. In an 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 website later today.

We thank you for your continued support of Alliant Energy. Feel free to contact me with any follow-up questions.

Once again, that concludes today's call. Thank you all very much for joining us. Have a good day.