Alliant Energy Corp (LNT) 2010 Q4 法說會逐字稿

Thank you for holding, ladies and gentlemen, and welcome to Alliant Energy's year-end 2010 earnings conference call. As a reminder, today's call is being recorded. At this time, all lines are in a listen-only mode.

I would 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 the webcast for joining us today, we appreciate your participation. With me today are Bill Harvey, Chairman and Chief Executive Officer, and Pat Kampling, President and Chief Operating 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 2010 fourth quarter and full-year earnings. This release also provides our 2011 earnings guidance as well as projected capital expenditures over the next 3 years. The release and supplemental slides for today's call is available on the investor page of our website at www.alliantenergy.com.

Before we begin, I need to remind you 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 and supplemental slides, which are available on our website at www.alliantenergy.com. At this point, I will turn the call over to Bill.

Thanks, Susan. Good morning, everyone. Before proceeding with my prepared remarks, I want to publicly recognize and congratulate Pat Kampling on her election yesterday as, President and Chief Operating Officer of Alliant Energy. In addition, yesterday our Board elected Tom Hanson, as Vice President, Chief Financial Officer and Treasurer, and Robert Durian, as the Company's Controller and Chief Accounting Officer. This is, of course, a big step in the career of these fine Executives. More importantly, however, this represents an excellent step forward for our Company and its investors. Congratulations, Pat, Tom and Robert.

My comments today will recap 2010 results and detail our priorities for 2011. Later in the call Pat will discuss various financial and regulatory matters. Let's start with a recap of 2010 results. We released earnings this morning with Alliant Energy's GAAP earnings from continuing operations of $2.62 per share. However, adjusting for certain items, we believe one should see 2010's adjusted earnings as being $2.75 per share compared to 2009's adjusted earnings of $1.95 per share. These comparisons are detailed on supplemental slides 2 and 3. For the quarter, GAAP earnings are $0.43 per share. But if you exclude the $0.12 per share charges and credits related to IP&L's 2010 electric rate case decision, the adjusted earnings from continuing operations were $0.55 per share which is right in line with external estimates for the quarter.

As previously announced we excluded certain items from our 2010 earnings guidance. Those exclusions include a one-time charge related to the US Federal Healthcare Legislation, restructuring and impairment charges, a depreciation adjustment, tax benefits related to completion of Federal income tax audits and charges and credits related to IP&L's 2009 test year electric rate case. We did not record a loss for the cash balance pension plan lawsuit in 2010 due to appealable issues in the lawsuit and accounting standards that require benefit costs to be recognized in the period when a plan is amended.

The biggest drivers of 2010 adjusted utility results were additional WPL and IP&L revenues arising from rate increases plus warmer than normal summer weather, partially offset by increased transmission expenses at IPL, higher incentive-related compensation costs and higher depreciation and interest expense associated with new rate base. I'm pleased with the results delivered in 2010. 2010 marked the year of progress and the execution of our wind and environmental control plants, continued progress and success on these plans, as well as continued effective cost controls remain high priorities for 2011.

As part of the 2009 test year IUB decision, we accepted the condition to freeze electric customer base rates for test years 2010 through 2012. We concluded that the freeze was an acceptable condition to implementation of the sought after transmission cost rider. This means that the next time IPL will have an opportunity to file for increased retail base electric rates in Iowa will be in the first quarter of 2014 utilizing a 2013 test year. To help insure that both of our utilities earn their authorized returns, we've instituted reduced discretionary spending, capped employment levels and planned discreet reductions in the capital spending over the next 3 years. We intend to earn our authorized returns over the period and do not foresee that the IPL base rate freeze will undermine our strategic capital spending, which is reflected in this morning's press release. We expect our current capital expenditure plan and effective cost controls to contribute to a forecasted long-term earnings growth rate of 5% to 7%.

Our forecasted weather normalized retail electric sales growth for 2011 is approximately 1.4% for IPL and 1% for WPL. A further breakdown of the projected sales growth by customer class is provided in supplemental slides 9 and 10. These forecasts remind us that the recovery from the worst economic decline since the great depression is projected to be slow in our service territories.

Now let me update you on our capital projects starting with wind. All turbins at WPL's Bent Tree Wind Farm have been conditioned and to date we own and operate 468 megawatts of wind generation capacity and purchased approximately 430 megawatts of wind capacity. We also own or purchase over 65 megawatts of other renewable generation capacity. We expect to meet or exceed the existing renewable standards for Iowa and Wisconsin but do expect to fall short some in Minnesota some time after 2012. We will likely meet the more aggressive Minnesota standard for at least some period of time after 2012 by purchasing renewable credits. We are scheduled to start receiving wind turbins associated with the last 100 megawatts under the Vestas contract in June of this year. Since our current owned and purchased renewable energy will meet or exceed the renewable standards and because regulatory support for new renewable energy development maybe waning, we have expanded our review of project options to include the possible deployment of the turbines on the unregulated side of our business. That could all change, however, if there is further Federal or State action in the clean, energy or renewals arena.

Turning to environmental matters, we continue to build on our commitment to reduce our SO2, NOx and mercury emissions. In 2010 we celebrated the completion of our first large scale environmental control project, which involved the installation of selected catalytic reduction equipment and a baghouse at IPL's Lansing Unit 4, at capital cost of approximately $190 million. Engineering and design work for the planned SCR equipment at WPL's Edgewater Unit 5 is underway. The estimated capital expenditures for this project at 100% of the cost are $154 million. That SCR is expected to be in service in 2013.

Before the end of this month we anticipate the Wisconsin Public Service Commission will issue a decision on our requested certificate of authority to install scrubbers and baghouses at both units of the Columbia Generating Station, which is owned by WPL, Wisconsin Public Service and the Madison Gas and Electric. WPL's estimated share of capital expenditures for this project is approximately $290 million and the controls are expected to be placed in service in 2014. Our budget assumes that we get PSC approval for both the scrubbers and baghouses and that they would be installed at the same time. Supplemental slide 11 provides a breakdown of our forecasted strategic environmental capital expenditures over the next 3 years and the projected in-service dates for each project. To help ensure that we are in compliance with all pending, Federal and State environmental rules, we may be making further additions to the environmental capital expenditure plans in the 2012 and 2013 time periods as the rules and our plans solidify.

Energy policy has been a key theme in the Federal and State policies agendas of late. It is anticipated that the EPA will be issuing it's proposed utility maximum achievable control technology rule in the first quarter of this year. This rule, along with EPA's proposed transport rule and the Wisconsin State mercury rule, are the key rules driving our capital expenditure plan. We are moving forward with our emission reduction plans premised on the assumption that the compliance timelines will be as currently proposed by the EPA, which will require us to make significant commission reductions as early as 2014.

In closing, let me recap our priorities for 2011. First, we'll continue to focus on cost control measures. Second, we'll execute our wind and environmental control programs as part of an ongoing commitment to a greener future. And finally, we'll work closely with our regulators and stakeholders to produce fair rate case outcomes. Next, Pat will provide the details regarding these regulatory matters. We appreciate your continued support for our Company, and at this time I'll turn the call over to Pat.

Thanks, Bill, and good morning to everyone. My remarks this morning will provide details on our 2011 earnings guidance, financing matters and rate cases. In December, we announced Alliant Energy's 2011 guidance with the mid-point estimate of $2.85 per share comprised of the utilities mid-point of $2.70 per share and unregulated impairment at $0.15 per share. The utilities estimate is split 50/50 between IPL and WPL. WPL's 50% share includes approximately $0.21 per share from the investment in ATC. Our guidance assumes an effective tax rate of 32% in 2011 which includes approximately $20 million of production tax credits generated from our owned wind farms. The PTC's estimated for 2011 are approximately $8 million higher than 2010 due to Bent Tree's in-service. Detail of our 2011 guidance may be found on supplemental slide 8.

Turning to our non-regulated business, RMT's earning are expected to be $0.04 per share in 2011, up from a negative $0.02 per share earned in 2010. RMT is currently constructing 7 wind and solar projects and anticipate construction to start on at least 4 more projects this year. There also are several other potential projects in development for later in 2011 and 2012.

This morning we provided our updated capital expenditure outlook for 2011 through 2013. The projected capital expenditure of $720 million in 2011 includes the anticipated purchase of (inaudible) Edgewater Unit 5, completion of Bent Tree Wind Farm, emission controls at several generating facilities, payments on a remaining 100 megawatts of Vestas turbines and our typical maintenance capital expenditures. Our projected capital expenditures for 2012 are higher than previously disclosed primarily due to a shift in wind spending between 2011 and 2012 and increased environmental expenditures at our non-operated generating facilities. Finally, you will note that we've included $335 million for generation capital in 2013. This is for the anticipated exercise of a buyout option at the conclusion of a purchase power agreement with Calpine on the Riverside Generating Facility. Riverside is a 600 megawatt natural gas-fired combined cycled electric generating facility located in Beloit, Wisconsin.

Our current liquidity is strong totally approximately $800 million. The price of almost $130 million of cash and marketable securities and over $670 million of available capacity under our credit facilities and sale receivables program. We currently have no commercial paper outstanding at IPL and approximately $30 million of commercial paper outstanding at WP&L. Financing the utilities capital plan with involve a combination of internally generated funds, equity infusion from cash at the parent, short-term debt and our IPL sales of receivables program. Our current 2011 financing plans do not include the issuance of long-term debt. However, that can change based on (inaudible) conditions. We do not expect to issue any material equity through 2012.

Our 2011 financing plan also assumes we will make no significant contribution to our qualified pension plan in 2011. The combination of our 13% return on planned assets and the increase in discount rates from our previous estimates alleviated the need for contribution in late 2010. For 2011, the discount rate assumption for the plan-- for the pension obligation is 5.6%, and the estimated return on plan assets is 8%.

Cash flows from operations increased over $325 million from 2009 to 2010. This increase was largely due to increased collections from rate increases and higher electric sales, less pension planned contributions in 2010 and higher cash flows from the sales of accounts receivables. The increase was partially offset by higher IPL payments to ITC for transmission service. We are forecasting strong operating cash flows in 2011 due to the continued benefits of rate release and tax strategies resulting in no Federal tax payments.

Bonus depreciation deductions taken for our Federal tax returns have contributed to taxable losses for the past couple of years. Based on projects placed into service in 2010, we estimate our total 2010 bonus tax depreciation deduction to be approximately $425 million. This estimate assumes a portion of Bent Tree placed in-service in 2010 qualifies for bonus depreciation at the 50% rate. Federal Legislation passed in 2010 allows for bonus depreciation deductions to continue to 2011 and 2012. These additional bonus depreciation deductions are expected to add to our current net operating loss position.

In addition, we filed a request with the IRS for a change in tax method of accounting for mixed service costs. The request change would allow us to currently deduct rather than capitalize a portion of mixed service costs. We estimate this tax initiative will provide approximately $390 million of deductions on our 2010 Federal income tax return. As a result of additional tax deductions expected from bonus depreciation, annexed service costs, we currently do not expect to make any material Federal tax payments through at least 2015.

This is a good time to review the impact that bonus depreciation may have on rate base. Regardless of our current tax position, the rate base that IPL is earning on, as shown on supplemental slide 14, will not change until we file the next IPL electric rate case which will occur no earlier than 2014. For WPL, we have previously disclosed estimated retail and wholesale rate base for WPL in 2012 to be approximately $2.4 billion, which includes construction work in progress. We do not expect the recent extension of bonus depreciation and related tax impacts to significantly reduce WPL's rate base announced since we are in a net operating loss position and expect to add to our net operating losses in 2011 and 2012. Therefore, the impact of the bonus depreciation extension on WPL's rate base is not as immediate as it might be for other companies who are not in a net operating loss position. In supplemental slide 12, we provide scenarios of the impact on rate base from bonus depreciation with or without an offsetting deferred tax related to the net operating loss carry forwards.

We are prepared to have another important and active year in the regulatory area. We are analyzing the need for and size of a WPL 2012 and 2013 bi-annual test year retail electric rate case to be filed in April 2011. Our preliminary analysis would support a retail electric rate case increase of less than 5%. New rates would be expected to become effective at the beginning of 2012. The primary drivers of the case would be partial recovery of the construction work in progress balance, the emission controls project at Edgewater Unit 5 and the Columbia units. Our rate filing would include a new fuel plan for 2012 under Wisconsin's new fuel rules which allows the recovery of emission controls chemicals and allowances within the fuel recovery mechanism.

In 2010, IPL also requested a rate increase in Minnesota, and on July 6 was granted interim rates that increased annual electric revenues by approximately $14 million or 20%. Interim rates will remain in effect until the MPUC issues a final decision, which is expected in the third quarter of 2011. IPL's final request seeks to increase annual revenues by approximately $15 million. Interim rates are subject to refund with interest.

On January 18, IPL filed it's compliance [terrace] pursuant to the Iowa's Utility Board final order in a 2009 best year rate case. The IUB has 30 days to rule on that filing, which includes the first year of the 3-year plan related to IPL's cost management initiative which provides credits to customers. We expect to [clear] $64 million to IPL customers in 2011 under the cost management plan.

On January 28, IPL filed the request for reconsideration on a limited number of specific points with the Iowa Utilities Board's written decision order for IPL's 2009 test year retail electric rate case. The request asks the IUB to clarify a few minor issues in it's order and to provide further guidance on a number of other items. We do not expect material changes to it's revenue requirement, but if the IPL motion is approved, the revenue requirement identified in the order could be lowered by less than $1 million. The IUB does not approve certain elements of the reconsideration, specifically associated with the impairment related to Whispering Willow-East and the Sixth Street Generating Station, the impairments identified in the 8-K filed on December 21, 2010 could change.

In summary, the primary drivers of the increased earnings per share in 2011 versus 2010 will be first, benefits from continued effective cost control, second increased retail rates at WPL and a full year of increased rates at IPL, which reflect recovery of Bent Tree, Whispering Willow and Lansing and Michigan controls capital investments. In closing, we are in the process of finalizing our 2011 investor relations plans and look forward to the opportunity to meet with many of you throughout the course of the year. At this time, I will now turn the call back over to the Operator to facilitate the question and answers.

Thank you, Mrs. Kampling. 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) We'll go first to the line of Brian Russo with Ladenburg Thalmann. Please go ahead with your question.

Hi, good morning.

Good morning, Brian.

Just the 5% to 7% CAGR that you mentioned earlier, is that a 5-year CAGR, and does that include Riverside, does it include the potential environmental CapEx related to final EPA rules? Maybe just a little more clarity on that.

Yes, no it's good to think of it as about a-- roughly speaking a 5-year planning horizon. And yes it does include Riverside and the other items that you mentioned.

Okay. Could you just explain to us the process on Riverside? I believe the capacity contract expires in June of 2013, are you guys thinking of maybe accelerating that to early 2013? Or just what's the regulatory process?

I believe there are two things. There's one, which is the commercial, the contractual process. The other is the regulatory process. Deal with the commercial process first. The notice to exercise the option to purchase needs to be issued late-- mid-2012 and we do need to make a cash deposit with Calpine for the exercise of the option. I would expect that prior to the exercise of the option in mid-2012 we will commence the regulatory process to secure commission approval for the purchase of the asset. So if you think of the commercial process is going to run from mid-2012 to closure in mid-2013 and the regulatory process will antedate that slightly.

What's the total amount of the cash deposit?

Got to get that number for us here. I think it's on the order of $365 million.

So almost the entire value of the plant?

Yes, yes, that's right. That's right.

Okay and just remind me, the capacity team into that that will fade away and be replaced with actually owning the asset, the rate impact to the customers is relatively insignificant when you look at it on a net basis, correct?

Yes, we're kind of scrambling to come up with the specific capacity charge payments. It's around $60 million a year but you're absolutely right, Brian, if you look at the revenue requirement impact of shifting from capacity payments under the purchase power agreement to the recovery of a return of a non-rate base and the associated depreciation with it, it's just about awash.

Okay, great. And you mentioned I think-- would you mind just running through what the 2011 rate base is at IPO and WPL and then just reiterate what the rate base at WPL is in 2012?

Sure, Brian, On IPL, if you want to just start looking at page 14 with the recap of the current rates that are in effect right now, and rate base will really not change under the rate freeze. So right now the adjusted rate base that we're earning on is about $2.4 billion in IPL. That's electric only also.

Okay and WPL?

WPL we really haven't changed from our current estimates, we were disclosing approximately $2.4 billion for 2012.

Okay. All right and that will be filed in this mid-year rate case, correct?

That's correct. Correct, and on slide 13 you'll see the 2011 average rate base of $1.7 billion for retail electric.

Okay and then last thing, maybe you just want to comment on the consolidation that we're seeing in the industry. Are there any benefits for Alliant to consolidation as a mid-sized utility with quite a significant amount of capital expenditures and rate base growth and potential financing needs?

Yes, Brian, it's very hard to guesstimate whether or not there would be any benefits to our share owners associated with the consolidation. As we look at the Company's position today with its very, very strong financial condition with it's significant, but nevertheless manageable capital expenditure program over the course of the next several years in very, very high quality regulatory environments, it's difficult for us to foresee any benefits associated with any kind of consolidation that is going to make our world look better than it does today. Having said that, there's always conjecture about the benefits that could attend consolidation. But the bottom line is, and I want to be direct in response to your question, from a financing our strategic plan perspective, we have no need whatsoever to rely upon the balance sheets of any other players to get it done. It's very, very financeable internally.

Got you, thank you very much.

We'll go next to the line of Alex Kania with Banc of America. Please go ahead. Alex, your line is open.

Sorry, hi, can you hear me? Sorry about that.

Good morning.

Good morning. First of all, congratulations, Pat, for the promotion.

Thank you.

Well deserved. I guess let me I think the first is just on bonus depreciation, I kind of want to make sure I understand I guess the direct cash flow benefits that you've got, I guess particularly in near terms. So you said that you're going to be kind of taking about $425 million of bonus depreciation I guess this year associated with kind of capital spending kind of related to I guess probably 2010 or so. And that would probably translate into, if I kind of do the math right, about $150 million of kind of cash benefit. And I guess what you're saying in terms of how the impact is on rate base is that in IPL is-- obviously you're not going to rate case for awhile, so the impact is what the impact is going to be, but it's far off. But in WPL you do have an NOL position that kind of means that here is kind of a natural offset, so when you go into your rate case, the $2.4 billion, there isn't going to be a change. Does that- making sure I-- I know that right?

You explained it very well. Yes, that is the case.

Okay, perfect. Great. I just wanted to make sure that it was the-- the depreciation was done on kind of a cash versus just what you're depreciating.

Right.

Okay. Great.

And if you look at slide 12 it has that example.

Right.

Just as you described it.

Okay, great. The other question is just in terms of the long-term growth, I'm kind of assuming that it looks from the discussion that you've done that IPL it clear, and help me if I'm kind of not thinking about this right, but you sort of said that the rate base is going to be kind of relatively kind of unchanged I guess for the next several years just based on kind of the kind of reallocating your capital and thinking about cost cutting, is it fair to think that earnings from that business are going to be relatively flat over the next few years?

I want to direct your attention to slide, slide 7 did you say? Slide 11.

11, okay.

Go ahead, Pat.

Yes, I was going to say if you look at slide 11, we still have some capital that we'll be deploying, that will earning AFUDC.

Right.

And again these projects will not be going into service until after the rate freeze is over.

Sure, okay.

So we should still see some growth in some of the capital. And also there should be some natural sales growth, it's not high but it's in the-- yes, it's over 1%, so we'll see both of those.

Sure, okay got it. So are any of your kind of earned ROEs there, plus you're going to get some kind of add benefit from the AFUDC assessment?

Yes.

Great. And I assume you're also kind of assuming that there's going to be continued kind of steady growth from the unreged business as well RMT, et cetera?

That's right.

Okay, great. Thanks very much, guys.

You're welcome.

We'll go next to the line of Jay Dobson with Wunderlich Securities. Please go ahead.

Hello, good morning.

Good, morning, Jay.

Jay.

Question for you, Bill and Pat, on the cost control. Could you just talk to us a little bit about sort of what you see there and what you see the opportunity? Obviously that's going to be critical to earning your allowed return, but just want to get a little more sort of granularity about what you see is the opportunity for cost reduction, particularly at IPL but I'm sure you're addressing it across the entire entity.

Yes, in general you-- we're going to be dealing with controlling labor costs in the business, as Pat indicated in her remarks, we've implemented a head count freeze in the Company, not a hiring freeze, but a head count freeze. There are a whole menagerie of different spending patterns that exist across the Company that we are going to manage very rigorously over the course of the rate freeze period. We'll continue to identify and implement efficiency benefits associated with our now pervasive Lean Six Sigma practices throughout the Company. There will be some reductions in capital spending as we mentioned. None of it will be related to what we characterize as strategic capital, which is the wind, Riverside, environmental retrofits.

But there is just tremendous discipline in our spending across the Company over the period of time in the rate freeze, we think will create some considerable opportunity for us to enhance earnings without, in any way compromising the quality of service to customers, the safety of the service that we provide to customers or our ability to comply with any Federal or State laws and regulations. We just will be, from a spending perspective, sub-optimizing what would otherwise be a preferred course of spending in the business. That's a very generic answer but it's as direct as I can be.

Sure, no, I appreciate it. I mean taking it one step further, do you expect or suspect that there's enough opportunity there to maybe keep O&M flat? I guess I'm just trying to put a bracket around --

Yes, I think that' a reasonable planning assumption. I think that's a very reasonable planning assumption.

Great. And then back to the deployment of the Vestas wind turbines, you suggested I think for the first time these may go into an unregulated opportunity. Just maybe flush that out a little bit and sort of let me know what you're thinking there.

Yes, well I don't want to suggest that we've completely closed the door on the idea of deploying them in some fashion at one of our utilities. But just read the tea leaves, read the magazines and watch television, the reality is that there's been a break, if you will, in the public's affection for the deployment of renewable energy resources. I think there is a natural hesitation that's emerging on the part of the States and all the regulators to see incremental renewable projects have the sort of upward impact on pricing that they must have. So because of that sensitivity, if you will, that sensitivity about the trends that seem to be materializing in the country and in our States, we think it's appropriate to broaden our perspective.

That said, there's a great deal of tax equity appetite that's emerging. Out there in the country today there is still a robust program of Federal subsidies that are available to wind projects, which frankly can be capitalized on far more effectively and immediately on the unregulated side of our business in contrast to the regulated side of our business, that the prudent thing for us to do is to expand our review of all alternatives. We obviously will do that both within our Alliant Energy unregulated business appetite as well as through RMT, looking at opportunities with it's client base to deploy the turbines in what would be a satisfying way for us.

Got you. And I guess you could sell the turbines as well although I imagine prices have declined since you contracted those. But perhaps maybe broadening it out to RMT since you brought it up, I mean how does that, your comment that sort of the appetite for renewables has certainly declined and I would concur with that, it seems to bleed into RMT's business prospects and although I know it's not a heroic assumption you're making turning from a loss to a profit in 2011, what's your level of confidence around RMT and sort of it's current business situation?

I would say the level of confidence is high. It's-- there's a lot of activity going on in the renewable space yet particularly on the solar side of the marketplace. That's proven to be a very vibrant marketplace for RMT. And getting back to the notion of potentially deploying the turbines in collaboration with RMT and 1 or more of it's client base, the reality is that the renewables appetite in the country is not consistent throughout the country. Certainly on the West Coast there continues to be a very vibrant appetite for renewable energy, when you get into the New Jersey corridor there appears to be a very vibrant appetite for renewable energy projects. It's not bland and unenthusiastic throughout the entirety of the country, there are still very robust marketplaces, they just are not as pervasive nationally as they were a couple of years ago.

That's great. And then last question, Pat, on the transportation [trend], how did that do in the fourth quarter and full year?

I'm sorry, but just looking the numbers up for you right now.

Great, thanks.

So from 2009 to 2010 it was $0.03. For the full year earnings were about $0.10.

Got you. That's great. Thanks so much and congratulations again, Pat.

Thank you, Jay.

(Operator Instructions) We'll go next with James Bellessa with D.A. Davidson & Co. Please go ahead.

Good morning. This is actually Michael Bates on for Jim. One question I had is the gas utility posted moderate declines in volumes over the last 2 years. Do you expect that trend to continue to carry into 2011 and 2012?

The weather is such an important variable in terms of throughput on our gas system. We do believe that there may be continued moderate impacts on usage associated with the continued success of our and other agency's energy efficiency programs. But we don't expect that to be dramatic in any way, it will be noise in the grand scheme of things.

Sure, okay, thank you. And on the $0.12 charge associated with the IUB rate case, can you clarify for me where that hit on your income statement and what the pre-tax amount was?

It is buried in the O&M, Michael. The pre-tax charge is, let's get that for you, is about $30 million.

Great. And then lastly, we have this rate freeze in Iowa going through the next 3 years but you're going to continue building out that system. I guess my question is, will there be sticker shock when you're able to finally file your new rate case in a few years? And if that's the case, what is the justification for the rate freeze?

Yes, no sure, Michael. No, we do not expect sticker shock because of the time we filed the next rate case, we'll have the offset the bonus depreciation in the rate case, so that should be helping our customer rates at that point.

Great. Okay, thank you very much. And congratulations, Pat.

Thank you, Michael.

We'll go next to the line of Ashar Khan with Visium. Please go ahead.

Hi, good morning.

Good morning.

Can I just ask growth rate we can assume starting from 2011 base, is that-- would that be accurate or which base should we start that from?

Ashar, growth rate in what?

The earnings.

The earnings, okay. Yes.

Okay, so we can use 2011 as a--

I would use 2010 actual as the base, or 2010 adjusted as we call it as the base.

Which is $2.75, correct?

Right.

Okay. And that is, as you said, is like for the next 4 or 5 years, that's a long-term growth rate over what time period?

Yes, roughly over the next 5 years is an appropriate time frame to reflect upon and think of that as an average annual. Obviously in our business with rate cases being episodic, it's-- it doesn't tend to be smooth, but think of it as an average.

So-- but you can achieve it within the next 3 years because you're not going to be going into the Iowa territory for-- until 2014, so it's something that still can be still achieved with that rates being-- not being allowed to increase rates in that territory, is that correct?

We think that it can.

Okay, thank you.

And Mrs. Gille, there are no further questions at this time.

If there are no further questions at this time, we conclude our call. A replay will be available through February 11, 2011 at 888-203-1112 for US and Canada, or 719-457-0820 for international. Callers should reference pass code 8244179. 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 any time with follow-up questions.

That concludes today's conference call. Thank you for your participation.