Alliant Energy Corporation
) subsidiary, Interstate Power and Light Company ("IPL"), has
received approval from The Iowa Utilities Board ("IUB") for its
natural gas base rate case that was filed in May 2012.
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With this approval, Iowa natural gas rate base is set at $254
million. IUB has sanctioned an increase in IPL's annual natural
gas service revenue requirement of approximately $10.5 million
and a 10% return on common equity. Also, IUB has approved IPL's
Cost Management Plan. This plan will use tax benefits to credit
customer bills and mitigate any impact on base rates for a period
of three years. New rates are expected to be effective from the
first quarter of 2013.
Generally, cost of gas is passed on to customers on a dollar to
dollar basis. On an average, cost of gas makes up 60% to 70% of
the average residential natural gas bill. However, it has
remained unaffected under this rate case proposal. Currently, due
to lower gas costs, the average current residential bill is
approximately 20.0%, down since the IPL's last rate case in 2005.
Currently, the company is focusing on heavily expanding and
developing its utility assets in the Iowa region. Recently, the
company had filed two applications with the Iowa Utilities' Board
for regulatory approval for the planned building of the 650
megawatt Marshalltown Generating Station ("MGS"). It expects a
decision in the fourth quarter of 2013. The natural gas-fired
Marshalltown unit is a $650-$750 million investment, which is
expected to be a major revenue churner for Alliant Energy. Prior
to this, the company had announced the completion of its Power
Iowa project in Hardin County.
The company expects this rate case to recover more than $70
million spent for infrastructure investments in natural gas
distribution systems since the last case.
The company seems to be focusing on the well-being of its
customers and shareholders. Recently, its third-quarter earnings
call increased its annual dividend to $1.88 from the current
target of $1.80.
Based on stable economy, ability of IPL and WPL to earn their
authorized rates of return, income tax benefits at IPL from tax
initiatives, continuing cost controls and operational
efficiencies and execution of capital expenditure plans, the
company presently retains a short-term Zacks #2 Rank (Buy) like
Xcel Energy Inc.
Wisconsin Energy Corp.
Headquartered in Madison, Wisconsin, Alliant Energy Corporation
is engaged in providing regulated electricity and natural gas
services to residential, commercial, and industrial customers in
the Midwest region of the United States. The company, through its
subsidiary, IPL engages in the generation and distribution of
electricity, and distribution and transportation of natural gas
in Iowa and southern Minnesota; and generation and distribution
of steam in Cedar Rapids, Iowa. Alliant Energy, through its
subsidiary, Wisconsin Power and Light Company ("WPL"), is also
involved in the generation and distribution of electricity, and
distribution and transportation of natural gas in southern and