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WIKI ANALYSIS
Alliant Energy (NYSE:LNT) is a investor-owned public utility holding company focusing primarily on regulated electricity and natural gas services.[1] In addition to other energy subsidiaries, the Company has two public utility subsidiaries, Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL), that serve approximately one million electric and approximately 412,000 natural gas customers in the Midwest.[2] Alliant's utility business has three segments: electric operations; gas operations, and others. As a regulated utility, Alliant's earnings depend on allowed returns on equity and rate levels. While rate base levels rose in 2009 and 2010, they are projected to remain almost flat in 2011-2013.
Business Growth
Revenue has primarily grown as a result of rate increases in Iowa and Wisconsin.[3] However, Wisconsin is not expected to increase rates significantly and Iowa has frozen its rate from 2010 to 2012.[4] Long-term growth initiatives include a $375 million purchase option of the Riverside gas facility from Calpine in 2013 and a $465 emissions control projects to be completed by 2014.[5]
Trends and Forces
Almost all of Alliant's business is heavily regulated by government agencies
As a regulated utilities, Alliant's primary holdings depend on permitted returns on equity and rate base levels.[6] While Alliant's customers may always need electricity or natural gas services, Alliant's revenues and returns depend on rates set by Iowa, Minnesota, and Wisconsin regulators.[7] Rate activity is projected to remain weak from 2011 to 2013 in Wisconsin and Iowa after both states increased rates shortly beforehand. However, as a result of persistent flat rates, rates have the potential of rising significantly in adjustment.[8]
Alliant's business also is dependent on the ability of its regulators to adjust rates at an appropriate enough rate to accurately reflect the Company's capital expenses and its return on equity.[9] The Company has significant growth projects scheduled for 2013 and 2014 and its ability to finance those projects has the potential of being hindered by regulatory lag.[10]
Alliant's non-regulated and regulated businesses are capable of benefiting from renewable energy spending
Current Federal and State legislation and regulations call for reductions in CO2 emissions in favor of natural gas driven electricity and renewable sources.[11] While Alliant's non-regulated business, under the RMT unit, compose a small part of total revenues, these business engage in end-to-end project development for wind, solar, and geothermal energy.[12] While government and commercial spending on environmentally-friendly energy sources has the potential of increasing, these energy sources are not as economically viable sources of energy as coal and crude.[13] As a result, success in this industry depends heavily on government support.
Alliant also provides natural gas services, which produce less emissions than coal-driven energy.[14] However, a majority of Alliant's electricity is from coal plants, which could be negatively impacted by environmental legislation or spending.[15]
Competition
Because electric customers in Iowa and Wisconsin cannot choose their electric provider, Alliant's utility businesses face little competition. However, electric utility companies compete on price and service when trying to enter new services areas.
The gas utility business is still regulated at the present time. Currently, federal and state policies are being enacted that will work towards deregulating the industry.[16]This is in hope of bringing more competition and innovation to the industry. This will result in more competition in the sale of Natural gas and similar services.[17] However, the distribution of natural gas will still be a regulated industry.
Some of LNT's largest competitors include Wisconsin Energy (WEC) and Xcel Energy (XEL).
References
- ↑ Reuters.com: Alliant Energy Company Profile
- ↑ Reuters.com: Alliant Energy Company Profile
- ↑ Alliant Energy 2010 10-K filing
- ↑ Alliant Energy 2010 10-K filing
- ↑ jsoline.com:Alliant eyes rate hike, purchase of Beloit power plant
- ↑ Alliant Energy 2010 10-K filing
- ↑ Alliant Energy 2010 10-K filing
- ↑ Alliant Energy 2010 10-K filing
- ↑ Alliant Energy 2010 10-K filing
- ↑ Alliant Energy 2010 10-K filing
- ↑ gamutnews.com:Alliant Energy Announces Sale of RMT’s Environmental Business Unit to TRC Companies, Inc.
- ↑ gamutnews.com:Alliant Energy Announces Sale of RMT’s Environmental Business Unit to TRC Companies, Inc.
- ↑ gamutnews.com:Alliant Energy Announces Sale of RMT’s Environmental Business Unit to TRC Companies, Inc.
- ↑ gamutnews.com:Alliant Energy Announces Sale of RMT’s Environmental Business Unit to TRC Companies, Inc.
- ↑ gamutnews.com:Alliant Energy Announces Sale of RMT’s Environmental Business Unit to TRC Companies, Inc.
- ↑ Energy-tel.com:Iowa Energy Choice
- ↑ Energy-tel.com:Iowa Energy Choice
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