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WGL Holdings’ (WGL) CEO Terry McCallister on Q2 2016 Results – Earnings Call Transcript

WGL Holdings, Inc. (NYSE: WGL ) Q2 2016 Earnings Conference Call May 5, 2016 10:30 ET Executives Doug Bonawitz – Investor Relations Terry McCallister – Chairman and Chief Executive Officer Vince Ammann – Senior Vice President and Chief Financial Officer Adrian Chapman – President and Chief Operating Officer Gautam Chandra – Senior Vice President, Strategy, Business Development and Nonutility Operations Analysts Mark Levin – BB&T Sarah Akers – Wells Fargo Operator Good morning and welcome to the WGL Holdings’ Second Quarter Fiscal Year 2016 Earnings Conference Call. At this time, I would like to inform you that this conference is being recorded and that all participants are in a listen-only-mode. [Operator Instructions] The call will be available for rebroadcast today at 1:00 p.m. Eastern Time running through May 12, 2016. You may access the replay by dialing 1-855-859-2056 and entering PIN number 97338125. I will now turn the conference over to Doug Bonawitz. Please go ahead. Doug Bonawitz Good morning, everyone and thank you for joining our call. Before we begin, I would like to point out that this conference call will include forward-looking statements under the federal securities laws. Forward-looking statements inherently involve risks and uncertainties that could cause our actual results to differ materially from those predicted in such forward-looking statements. Statements made on this conference call should be considered together with cautionary statements and other information contained in our most recent annual report on Form 10-K and other documents we have filed with or furnished to the SEC. Forward-looking statements speak only as of today and we assume no duty to update them. This morning’s comments will reference a slide presentation. Our earnings release and earnings presentation are available on our website. To access these materials, please visit wglholdings.com. The slide presentation highlights the results for our second quarter of fiscal year 2016 and the drivers of those results. On today’s call, we will make reference to certain non-GAAP financial measures, including operating earnings of WGL Holdings on a consolidated basis and adjusted EBIT of our operating segments. A reconciliation of these financial measures to the nearest comparable measures reported in accordance with Generally Accepted Accounting Principles, or GAAP, is provided as an attachment to our press release and is available in the quarterly results section of our website. This morning, Terry McCallister, our Chairman and Chief Executive Officer will provide some opening comments. Following that, Vince Ammann, Senior Vice President and Chief Financial Officer will review the second quarter results. Adrian Chapman, President and Chief Operating Officer will discuss key issues affecting our business and the status of some of our principal initiatives. And in addition, Gautam Chandra, Senior Vice President, Strategy, Business Development and Nonutility Operations is also with us this morning to answer your questions. And with that, I would like to turn the call over to Terry McCallister. Terry McCallister Thank you, Doug and good morning everyone. Our non-GAAP operating earnings for the second quarter is shown on Slide 3 in our presentation were $89.5 million or $1.78 per share compared to $101 million or $2.02 per share in the second quarter of 2015. On a non-GAAP basis, consolidated operating earnings for the first six months were $148.7 million or $2.96 per share. This compares to $159 million in the prior year or $3.18 per share. The decrease in operating earnings in the second quarter primarily driven by lower results on retail energy marketing and midstream operating segments partially offset by higher results at our regulated utility and commercial energy systems operating segments. At the utility, earnings were higher year-over-year primarily due to strong customer growth and rate recovery related to our accelerated pipeline replacement program. We added approximately 11,300 active average utility customer meters year-over-year, which represent an annual growth rate of approximately 1%. We also remain on track to equal last year’s record spend on accelerated replacement program of $113 million. These investments immediately impact earnings and have been a driver of improved results in the utility since the start of these programs in 2011. On the utility regulatory front, Washington Gas filed an application with Public Service Commission of the District of Columbia in February to increase base rates. Filing addresses rate relief necessary for the utility to recover its cost and earn its allowed rate of return. We also continue to anticipate the filing of a rate case in Virginia in the near future and Adrian will talk more about these developments shortly. On the non-utility side of business, as previously mentioned, our commercial energy systems business delivered improved results. We continue to seek earnings growth driven by the distributed generation assets that we own across the country. We remain on track to invest a record $200 million in this area in fiscal 2016. We have also seen more activity locally in our energy efficiency contracting business. Retail energy marketing segment delivered lower results compared to second quarter of 2015. This was expected given the unusually high asset optimization results in 2015 and our expectation of more normal levels in 2016. Midstream energy services also realized lower earnings in 2015 partially due to the effects of warmer weather on current market prices. Given our results in the first six months and our earnings outlook for the remainder of the year, we are affirming our consolidated non-GAAP earnings guidance in the range of $3 to $3.20 per share for fiscal year 2016. I am now going to turn the call over to Vince who will review our second quarter results by segments. Vince Ammann Thank you, Terry. Turning first to our Utility segment, adjusted EBIT for the second quarter of fiscal year 2016 was $153.9 million, an increase of $1.5 million compared to the same period last year. The drivers of this change are detailed on Slide 5. We continued to add new meters. The addition of 11,300 average active customer meters improved adjusted EBIT by $2.3 million. Higher revenues from our accelerated pipe replacement programs also added $3.1 million in adjusted EBIT. Lower operations and maintenance expense improved adjusted EBIT by $4.4 million. Offsetting these items, lower margins associated with our asset optimization program reduced adjusted EBIT by $2.7 million. The unfavorable effect of changes in natural gas consumption patterns in the District of Columbia reduced adjusted EBIT by $2.6 million. Reduced revenues related to the recovery of gas inventory carrying costs due to lower gas prices decreasing the value of our storage gas balances reduced adjusted EBIT by $600,000. Other miscellaneous items reduced adjusted EBIT by $2.4 million. Turning to the retail energy marketing segment, adjusted EBIT for the second quarter of fiscal year 2016 was $8.4 million, a decrease of $18.7 million compared to the same period last year. On Slide 6, you will see the primary driver of the decrease was lower natural gas gross margins. In the natural gas business, gross margins were $15.7 million lower driven by a decrease in portfolio optimization activity that returned to more historical levels during the quarter. The same quarter in the prior fiscal year showed outsized gains in this area that were not expected to recur in the current year. Electric margins decreased $1.1 million driven by higher capacity charges from the regional power grid operator, PJM that impacted the timing of margin recognition. These costs will decline in the latter half of the year. As stated previously, our retail energy marketing business has increased its focus on large commercial and government account relationships in both the electric and natural gas markets. As a result, the overall number of electric and natural gas accounts both declined this quarter 10% and 7% respectively compared to the prior year. However, indicative of our revised focus, electric volumes increased 7% versus the prior year and natural gas volumes were slightly higher versus the prior year. The increase in commercial load in both electric and natural gas continues to help offset the decline in mass-market customers on a volumetric basis. Operating expenses increased by $1.9 million primarily due to higher commercial broker fees. Next, I will move to the commercial energy systems segment. Adjusted EBIT for the second quarter of fiscal year 2016 was $2.3 million, an increase of $700,000 compared to the same period last year. The increase reflects growth in distributed generation assets in service, including higher income from state rebate programs and solar renewable energy credit sales as well as improved margins from the energy efficiency contracting business. We also saw improved results in our investment in solar businesses related to changes in the recognition of earnings from our solar partnership. These improvements were partially offset by higher operating and depreciation expenses due to additional in-service distributed generation assets and a $3 million impairment related to our investment in thermal solar project recorded during the three-month period. During the second quarter, our commercial distributed generation assets generated over 43,500 megawatt hours of electricity, which is sold to customers through power purchase agreements. This represents a 57% increase in megawatt hours compared to the second quarter of last year. As of March 31, the commercial energy systems segment has invested $449 million in distributed generation assets. Our alternative energy investments, which include ASP, Nextility, and SunEdison represent an additional $128 million of capital investments since inception. We now have approximately $577 million invested in total in this segment. Next, I will move to the midstream energy services segment. Results for the second quarter of fiscal year 2016 reflect an adjusted EBIT loss of $8.4 million compared to a loss of $3.1 million for the same quarter of the prior fiscal year. The decrease is primarily related to the recognition of losses associated with current market pricing. We anticipate these losses will reverse by fiscal year end as we realized the value of economic hedging transactions to be executed during the first two quarters and as certain contractual procedures approach resolution. Results for our other non-utility activities reflect an adjusted EBIT loss of $1.5 million compared to a loss of $800,000 for the same period for the prior fiscal year. Interest expense, primarily driven by long-term debt, was essentially unchanged at $13 million during the second quarter compared to $13.3 million in the prior period. As Terry stated earlier, we are affirming our consolidated non-GAAP operating earnings guidance in the range of $3 to $3.20 per share. This guidance does not include any potential impacts related to the decision in April by the New York Department of Environmental Conservation to deny the Section 401 certification for the Constitution Pipeline, except for the reduction in forecasted AFUDC related to the project. Our expectations for the regulated utility are modestly lower driven by higher O&M costs for system integration work and project expenses related to a new customer service system. On the non-utility side, we anticipate better than expected results in the midstream segment related to the impact of favorable spreads on storage earnings. These will be somewhat offset by lower results in the energy marketing segment as customer growth is expected to be lower than planned for the year. Please note that this earnings guidance includes dilution from the planned issuance of equity in fiscal year 2016. In November, WGL filed a registration statement and launched a program to sell common stock with aggregate proceeds of up to $150 million through an at-the-market or ATM program. WGL first sold shares under this program in February. During the second quarter, WGL issued approximately 466,000 shares of common stock under this ATM program for net proceeds of $31.5 million. I will now turn the call over to Adrian for his comments. Adrian Chapman Thank you, Vince and good morning everyone. I am pleased to provide you with an update on our utility operations and regulatory initiatives. In the District of Columbia, Washington Gas filed an application on February 26 with the Public Service Commission to increase its base rates for natural gas service, which would generate $17.4 million in additional annual revenue. The revenue increase includes $4.5 million associated with accelerated pipeline replacements previously approved by the commission and currently paid by customers through monthly surcharges. On April 27, the commission issued an order approving Washington Gas special contract with the U.S. Architect of the Capitol. This contract for natural gas service will generate annual firm revenues of $2.6 million and results in a reduction of the revenue deficiency in the pending rate case from $17.4 million to $14.8 million. As part of this rate case filing, we requested approval of the revenue normalization adjustment, or RNA. The District of Columbia is currently the only jurisdiction where we do not have revenue decoupling in place. In addition, the filing includes a new combined heat and power rate schedule, which sets forth the framework for the delivery of natural gas for CHP systems to provide flexibility for negotiated rates to better meet customer needs. Finally, in line with our initiatives in other jurisdictions, the filing also proposes new multifamily development incentives to help bring the benefits of natural gas to more residents in the District of Columbia. The application request authority to earn an 8.23% overall rate of return, including a return on equity of 10.25%. A procedural schedule was issued on April 26 by the PSC. Hearings are currently scheduled for October 2016 with the projected issuance of the commission final order in March 2017, which is consistent with their goal of issuing an order 90 days after the close of the evidentiary record. As a reminder, the last rate increase in the District of Columbia was approved in May 2013. In Virginia, we planned to file a new rate case with the Virginia State Corporation Commission on or before July 31. The filing seeks to allow us to rebalance our revenues, expenses and utility investment in the Commonwealth of Virginia and include in base rates the accelerated pipe replacement expenditures whose plant-related costs are currently being recovered in a surcharge. The anticipated filing would transfer approximately $19 million in accelerated pipeline replacement revenues from our current surcharge into base rates. Virginia has a 150-day suspension period, therefore placing new rates into effect for the winter of 2016-2017 subject to refund. Our last rate increase in Virginia was affected in October 2011. Also in Virginia, Virginia allows local distribution companies to recover a return of and return on investments in physical gas reserves that benefit customers by reducing cost, price volatility, or supply risk. Washington Gas entered into an agreement with the producer in May of last year to acquire natural gas reserves in Pennsylvania. However, the SCC of Virginia issued an order denying our gas reserve application. We are continuing our pursuit of a long-term reserve investment opportunity that will benefit our customers and address the issues that were raised by the SCC of Virginia in our previous filing. Once Washington Gas finalizes a new agreement with the producer, we will file a new application with the SCC of Virginia. I would like to now turn the call back to Terry for his closing comments. Terry McCallister Thanks, Adrian. I would now like to highlight a few recent developments and provide an update on the status of our midstream and our distributed generation investments. First, an update on WGL’s investment in the Constitution Pipeline project. On April 22, the New York State Department of Environmental Conservation denied the necessary water quality certification for the New York portion of the Constitution Pipeline. While we are disappointed, the partnership remains absolutely committed to the project and intends to challenge the legality and appropriateness of the New York decision. In light of the denial of the water certification and the anticipated action to challenge the decision, target in-service date has been revised to the second half of 2018, which assumes that the legal challenge is satisfactorily and promptly included. We are still evaluating any potential impacts to our financial forecast. As of March 31, WGL Midstream had an equity investment of approximately $40 million in the Constitution Pipeline project. Next, I will turn to our investment in the Central Penn line. Central Penn line is greenfield pipeline segment of Transco’s Atlantic Sunrise project. This project is on track and development activities are proceeding as expected. Central Penn line has projected in-service date to the second half of calendar 2017. WGL Midstream will invest approximately $411 million in the project. And as of March 31, WGL Midstream has invested approximately $51 million. Our third pipeline investment involves Mountain Valley pipeline project. The Mountain Valley pipeline is a proposed 300-mile transmission line through West Virginia and Virginia is designed to help meet the increasing demand for natural gas in the Mid-Atlantic and Southeast markets. Project is on track and development activities are proceeding as expected. Projected in-service date is December 2018. WGL Midstream plans to invest $228 million in the project. And as of March 31, WGL Midstream has invested approximately $13 million. In February of this year, WGL Midstream exercised an option for an $89 million equity investment in the Stonewall Gas Gathering system, representing a 35% ownership stake. WGL Midstream’s ownership interest is expected to decrease to 30% during fiscal year 2016, as certain other participants are expected to exercise the rights to invest in the project. The Stonewall system connects with Columbia Gas Transmission, an extensive interstate transmission line that reaches markets across the Mid Atlantic region. M3 Midstream serves as the majority owner and operates the Stonewall Gas Gathering system. The system initiated operations in November of 2015 and is currently gathering 1 billion cubic feet of natural gas daily from the Marcellus production region in West Virginia. Turning to our commercial energy systems business, our portfolio of distributed generation assets continued to grow this quarter. And as of March 31, we had over 134 megawatts of capacity in-service with an additional 63-megawatt contracted or under construction. WGL Energy recently received approval to build and operate over 15 megawatts of community solar gardens in Minnesota as part of the utility program mandates in that space. WGL Energy has secured subscribers for all of these community solar gardens under a – that are under contract and the target operational date is later in the fall of this year. This investment highlights WGL Energy’s continued strategy of growing its distributed generation assets portfolio by taking advantage of favorable legislation in states like Minnesota. Finally, we look forward to seeing many of you at the AGA Financial Forum in a couple weeks. And that concludes our prepared remarks and we will now be happy to answer your questions. Question-and-Answer Session Operator Thank you. The question-and-answer session will begin now. [Operator Instructions] We will take our first question from Mark Levin, BB&T. Please go ahead. Mark Levin Thank you, gentlemen. First question, as it relates to Constitution and maybe how to think about it, as it relates to your long-term guidance and what’s embedded in it, I realize you guys don’t want to quantify it quite yet, but maybe giving us some of the parameters at least to think about? Vince Ammann Yes. Mark, this is Vince. As it relates to our long-term guidance, we – at this point, wouldn’t expect to change that because we think the project is good and it’s worth going forward. So that’s the way we view it from a long-term perspective. What we have done in the short-term is, we have suspended the accrual of AFUDC and that’s just a prudent thing to do, as we are waiting to get this issue resolved. Mark Levin Got it, fair enough. And in your options with regard or the options with regard to Constitution and maybe the timeline as to how to think about how that would proceed? Terry McCallister Yes. This is Terry. I think it’s probably a little premature for us to know that. I think all the partners are looking at that and saying, what are the options, how would we go forward on that. And so I think we are probably just a little – you are probably just a little ahead of the curve for us to know exactly what that looks like, yes. Mark Levin Got it, fair enough. And then finally, just with regard to the gas reserve opportunity, is it reasonable to assume that you guys would be able to strike an agreement sometime this fiscal year. And then the second part to that would be, maybe some of the lessons that you learned from the first attempt? Adrian Chapman Mark, this is Adrian. I think as we have mentioned last quarter, where our target is still to get a filing out before the end of our third fiscal quarter. So I think we are still working towards that as an end result. And I think certainly the commission’s focus was looking at probably the length of the term of the reserve agreement. The 20-year term was a concern of theirs and just uncertainty about pricing in the future. They were – expressed some concern about the different perspectives on the reserves and the volumes in the reserves and what the depletion rates were. So there was some differences of opinion in the hearings about that and I think we just need to be able to give them some greater certainty as to what deliverability would look like, because for a given fixed investment, lower volumes would mean a higher price per dekatherm. So that was the primary concern that they had. So we are working to try to fill those issues, fill those gaps and give the commission comfort with some greater balance of risk associated with an investment. Mark Levin Got it, great. Thanks guys. I appreciate it. Operator And your next question comes from the line of Sarah Akers with Wells Fargo. Your line is open. Sarah Akers Thanks. Good morning. Terry McCallister Hi Sarah. Sarah Akers Can you go over again the reasons for the lower utility outlook this year and any sense of the magnitude of the change in expectations there? Vince Ammann I will take a stab at that Sarah, this is Vince. We haven’t – traditionally, throughout the quarter, we haven’t provided specific guidance for the operating segments by – as we go from quarter-to-quarter, just started giving out, as you know consolidated guidance. But the only issue that we are addressing here on the – and what we have discussed is a couple of factors. We continued to see some higher operating expenses in the field as it relates to just leak repairs and system integrity type works that we have been doing that was a little ahead of what we have planned for the current year. We also have seen some higher project expenses. We launched a new e-service portal this year and that’s sort of in advance of going live with our new billing system next year and we had some difficulties when we first launched that and we have spent some dollars to bring that system back to good working condition. So, those are some of the issues that we see that were pretty temporary just for this quarter. And as it relates to the initial guidance and where we saw things last quarter. So, those particular items shouldn’t continue significantly for the rest of the balance of the year. So it’s pretty much a second quarter phenomena that then just caused us to re-think where we were going to be for the rest of the year. So those are the items on the utility side. That’s all I can think of Adrian that is of significance. If you have anything else you want to add, I think. Adrian Chapman No, I think you covered it. Sarah Akers Great. Thank you. And then just one on the midstream, so it sounds like there is some unexpected strength there, do you view that more as one-time opportunistic margins or should that uplift sustain into future years? Gautam Chandra Sarah, this is Gautam. I would say that the up-tick that we saw in midstream is based on the market conditions that we saw in midstream this year that we were able to capitalize on. Now as we have mentioned before, our storage portfolio is a low cost portfolio. So we expected to have good returns in the long-term, but there are some up-ticks and downticks depending on the exact storage spreads in any given year. Vince Ammann Yes. I would only add Sarah, that as we have said – we saw in recent years, we certainly know we can make money on that storage portfolio when the weather is extremely cold and we have the opportunity to pull gas out of storage at real high margins. But what we saw this year is confirming our expectation, which is when the weather is warmer than normal. There is also opportunities to see the seasonal spreads get very significant. So we came out of this winter heating season with a significant amount of gas. As an industry, it’s still in storage and the production levels were still high. So essentially, we saw the front end of the curve come down quite substantially and then yet the pricing for next winter stayed pretty firm. So we saw some good spread opportunities, which is what we would expect when you have warmer than normal sort of winter. So yes, I think as the supply balances out with our country storage, we do see that this is a – the storage play continues to be a low-risk opportunity to create some margins from the value added by storage. Adrian Chapman Sarah, this Adrian. We also hedge forward to some level. When we see that opportunity, we will hedge forward. It’s kind of how big the opportunity, but a lot of it or some of it just lock in a fair amount of value and so when prices fell this last quarter and the forward value didn’t fall, we locked in some of that value. So that’s why we are projecting that pick up during the second half. Sarah Akers Okay, great. Thank you. Operator Again, I would like to remind everyone that you can listen to a rebroadcast of this conference call at 1 p.m. Eastern Time today running through May 12, 2016. You may access the replay by dialing 1-855-859-2056 and entering PIN number 97338125. There are no further questions at this time. And I will turn the call back to Mr. Bonawitz for any additional or closing remarks. Doug Bonawitz Well, thank you all for joining us this morning. And if you do have further questions, please don’t hesitate to call me at 202-624-6129. Thanks and have a great day. Operator This concludes our conference call for today. Thank you for participating. All parties may disconnect now. 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Alliant Energy’s (LNT) CEO Pat Kampling on Q1 2016 Results – Earnings Call Transcript

Alliant Energy Corporation (NYSE: LNT ) Q1 2016 Earnings Conference Call May 5, 2016 10:00 ET Executives Susan Gille – IR Pat Kampling – Chairman, President & CEO Tom Hanson – SVP & CFO Analysts Andrew Levi – Avon Capital Brian Russo – Ladenburg Thalmann Andrew Weisel – Macquarie Research Operator Thank you for holding, ladies and gentlemen, and welcome to Alliant Energy’s First Quarter 2016 Earnings Conference Call. At this time, all lines are in a listen-only mode and today’s conference is being recorded. I would now like to turn the call over to your host, Susan Gille, Manager of Investor Relations at Alliant Energy. Susan Gille 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 here today are Pat Kampling, Chairman, President and Chief Executive Officer; Tom Hanson, Senior Vice President and CFO; and Robert Durian, Vice President, Chief Accounting Officer and Controller; as well as other members of the Senior Management Team. Following prepared remarks by Pat and Tom, we will have time to take questions from the investment community. We issued a news release last night announcing Alliant Energy’s first quarter 2016 earnings, re-affirmed 2016 earnings guidance. This release, as well as supplemental slides that will be referenced during today’s call, are available on the investor page of our website at 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 last night 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 non-GAAP and GAAP measures are provided in the earnings release, which are available on our website at alliantenergy.com. At this point I’ll turn the call over to Pat. Pat Kampling Thank you, Su. Good morning and thank you for joining us on the first quarter 2016 earnings call. I will begin with an overview of our first quarter performance. I will now review the progress made and transforming our generation fleet creating a smarter energy infrastructure and expanding our natural gas system. I will then turn the call over to Tom to provide details on our first quarter results as well review our regulatory calendar. Like the utilities in the region mild with the temperatures reduced first quarter results, ours by $0.05 per share. This is quite the opposite from first quarter 2015 where we experienced a positive temperature impact to earnings therefore temperature swings led to a significant quarter-over-quarter variance of $0.09 per share. During the past few years we have been executing on our plan for the orderly transition of our generating fleet and economic manner to serve our customers. We made progress in building a generation portfolio that has lower emissions, greater fuel diversity, is more cost efficient. The transition includes increasing levels of natural gas fired and renewable energy generation, lower levels of coal generation through coal unit retirements and installing emission controls on performance upgrades on largest coal fired facilities. We have also started water and ash program at our facilities to meet current and expected future environmental requirements. Now let me brief you on our construction activities. 2016 is another very active construction year with 4 investments of over $1.1 billion. Our investments are projected to include approximately $300 million for our elective distribution systems. These investments are driven by customer expectations to make our systems more robust, reliable and resilient. This year’s plan also includes $200 million for improvements in expansion of our natural gas distribution business almost double our year spending. The electric and gas distribution business will continue to be a focus for future investments as we create a smarter energy infrastructure. Now I will provide an over view of our drilling, investments and gas power generation. As you are aware the Public Sewage Commission of Wisconsin approved the certificate of public convenience and necessity for the river side expansion. And we expect to receive the written order today. We have already received the air permits and are awaiting approval for the water permits. We expect the asset from the new river side units to be approximately 700 MW and the total anticipated capital expenditure for river side remains at approximately $700 million excluding AFUDC and transmission. The targeted in service state is by early 2020. Later this month we plan to announce the engineering procurement and construction firms selected for this project. In Iowa the Marshalltown natural gas fired generating facility is progressing well and is now approximately 73% complete. Total CapEx is anticipated to be approximately $700 million excluding AFUDC and transmission. Marshalltown is on time and on budget and is expected to go in service in spring 2017. Riverside and Emery are two primary existing gas generating facilities, had another quarter of significant increase in dispatch when compared to prior years. During the first quarter of 2016 Riverside’s and Emery’s were more than double their five year averages. The ability to lean on our gas generation during periods of low gas prices results in fuel savings of our customers and shows the importance of a balanced energy mix. Moving on to our existing coal field, we are getting towards the end of our successful construction program to reduce emissions at our largest facility. At Edgewater Unified, we continue on the installation of backhouse. This project is approximately 97% complete and is on time and below budget and should be in service later this year. Total CapEx for these projects are anticipated to be $270 million. And last month construction of the Columbia Unit II SCR began. EPL’s total CapEx anticipated to be approximately $50 million and is expected to go in service in 2018. There are several new order and ash regulations being developed by the environmental protection agency which we anticipate will impact 9 of our generating facilities both located across Iowa and Wisconsin. Our water and ash program was designed according to EPA and DNR rules and regulations. We have ash plant closers and bottom ash conversions underway in Iowa as IPLs filed commission plan and budget. In Wisconsin we filed an application for the certificate of authority for bottom ash conversion for Edgewater. The total expenditures for our water and ash programs are anticipated to be over $200 million over the next 7 years. The estimates provided in our investor release presentation include the near term expenditures for this program. As we plan for future generation needs we aim to minimize impacts while providing safe, reliable and affordable energy for our customers. We believe that our current emissions will continue to decrease due to the transition of our generating fleet, the availability of lower natural gas prices and increase of renewable energy. We have continued to invest in and purchase renewable energy. We currently own 568MW of wind generation and purchased approximately 470MW of energy from renewable sources. Our 10 year capital plan includes additional investments to meet customer energy needs. Also we have several solar projects from which we anticipate gathering valuable experience on our best to integrate solar in a cost effective manner into our electric system. At our headquarters over 1300 solar panels have been installed and they are now generating power for the building. Construction has also started on Wisconsin largest solar farm on our Rock River landfill which is adjacent to riverside. In Iowa construction has started on the Indian Creek Nature Center in Cedar Rapids. We will own and operate the solar panels there. We also anticipate collecting additional solar investment opportunities in the near future. Listen to our customers and understand their evolving needs is shaping the path for the future. We have replaced our decade old customer information and billing system which is now providing customers of now many more online self service offerings and robust customer communication options. And we have plans to ramp up additional offerings with this new platform. We are managed our company well and have made great strides growing for our company on behalf of our investors, customers and employees. In fact, our stock price doubled between yearend 2010 and into the first quarter of this year. As recognition of this progress and the growth prospects going forward the Board of Director’s announced a two form stock split last month. Each share on record on the close of business on May 4 will receive one additional share for every outstanding common share held on that date. The additional shares will be distributed on May 19 and May 20 shares will be sold at the post-split price. This is a significant milestone that our company and investors should be proud of. Let me summarize today, we will work to deliver 2016 operating objectives. Our plan continues to provide for 5% to 7% earnings growth and a 60% to 70% common dividend payout target. Our target 2016 dividend increased by 7% over the 2015 dividend. Successful execution of our major construction projects include completing projects on time and at a below budget in a very safe manner, working with the regulators and customers and utilities in a collaborative manner, reshaping the organization to be leaner and faster while keeping our focus on our customers and being good partners in the community. We will continue to manage the company to strike a balance between capital investments, operational and financial discipline and impacts to customers. You are invited to join us at our annual meeting next week which will be held on May 13 in Wisconsin. Thank you for your interest in Alliant Energy and I will now turn the call over to Tom. Tom Hanson Good morning everyone, we released first quarter 2016 earnings last evening with our earnings from continuing operations of $0.86 per share which was $0.01 per share lower than 2015 earnings. a summary of the quarter over quarter earning’s drivers may be found on Slide 3. Consistent with our growth assumed in our 2016 earning’s guidance retail electric and temperature normalized sales for Iowa, Wisconsin increased to approximately 1% between first quarter 2015 and 2016. The commercial and industrial sectors continued to be the largest hales growth drivers quarter-over-quarter. Now let’s briefly review our 2016 guidance. In November we issued our consolidated 2016 earnings guidance range of $3.60 – $3.90 on a pre-stock split basis. The key drivers for the 5% growth in earnings led to infrastructure investments such as the Edgewater and the Lansing emission control equipment. And hire AFUDC related to the Marshalltown generating station. The earing’s guidance is based upon the impacts of IPLs and WPLs previously announced retail based rate settlement. In 2016 IPL expects to credit customer builds by approximately $10 million. By comparison the building credits in 2015 were $24 million. IPL expects to provide tax driver billing credits to electric and gas customers of approximately $62 million compared to $72 million in 2015. Over the years the tax benefit riders may have a timing impact but are not anticipated to impact full year results. The WPL settlement reflected electric growth for the Edgewater house projected to be place in service this year. The increase in requirements in 2016 for this and other base additions completely offset by lower energy efficiency recovery amortization. Slide 4 has been provided to assist you in modeling the assisted tax rates in IPL and WPL and AEC. Turning to our forecasted capital expenditures. In March, the pipeline and hazardous materials safety administration announced proposed regulations to update the safer requirements for gas pipeline. We currently anticipate final regulations will be issued in 2017. The forecasted capital expenditures provided during our year-end call include estimated amounts for this expected regulations. Now turning to our financing plans. Our current forecast incorporates the extension bonus depreciation deduction through 2019. As a result of the 5 year bonus depreciation Alliant Energy does not expect to make any significant federal income tax payments through 2021. This forecast is based on current federal net operating losses and credit carry forward positions as well as future mounted bonus depreciation expected to be taken under federal income tax returns over the next 5 years. Cash flows from operations are expected to be strong. Given their earnings generated by business. We believe that with strong cash flows and financing plan we will maintain our target liquidity and capitalization ratios as well as high quality credit rating. 2016 financing plans will soon be issued in approximately $25 million of our new common equity through our share to direct plan. The 2016 financing plan also anticipates issuing the long term debt of up to $300 million of IPL and approximately $400 million of parent Alliant Energy resources. We added $10 million to the proceeds at the energy resources are expected to be used to refinance the maturity of term loans. As we look beyond 2016 our equity needs will be driven by riverside expansion project, our forecast assumes that Capital expenditures for 2017 would be financed primarily by a combination of debt and new common equity. Our 2017 financing plan currently assumes issuing up to $150 million of common activity. We may adjust our financing plans as deemed prudent if market conditions warrant and our debt needs continue to be reassessed. We have several current and planned regulatory redactors of note of 2016 and 2017 which we have summarized in Slide 5. During the second quarter this year we anticipate filing a WPL retail electric and gas case for the 2017 and 2018 rates. For IPL we expect decision regarding permit application for approximately $60 million in natural gas pipeline. Iowa and retail electric and gas based cases are expected to be filed in the first half of 2017. We very much appreciate the continued support of your company. At this time I will turn the call back over to the operator to facilitate the question-and-answer session. Question-and-Answer Session Operator Thank you, Mr. Hanson. At this time the company will open the call for question for members of the investment community. Alliant Energy’s management team will take as many questions as they can within the one hour timeframe for this morning’s call. [Operator Instructions] We will go first to Andrew Levi at Avon Capital. Andrew Levi Hi, first question. Susan Gille Good morning Andy, congratulations. Andrew Levi Thank you. What do I get for anything or? Pat Thompson Nothing. Andrew Levi Just a quick question. Just on the non-reg, where was the breakdown on the earnings on the non-reg on the quarter? Pat Thompson Yes, the railroad and train facility. Tom Hanson I think the transportation $0.01 and our non-reg generation was another $0.01. Franklin County was a drag of about $0.01 and then we had activity of about another penny. Last time it was a positive in terms of the other benefits of the parent. Andrew Levi Okay and how did the Franklin, the non-reg generation and the railroad, how did that compare to last year? Tom Hanson I would say it’s fairly consistent. Andrew Levi Okay and then just in general on Franklin and the railroads. What’s kind of the thinking of the outlook this year relative to last year? Tom Hanson I think with Franklin last November when we gave guidance we said it would probably be a drag on earnings of about $0.04 to $0.05. And that is still reasonable, yes. Andrew Levi And on the railroad? Tom Hanson And assume $0.07 was our current outlook, current forecast we are assuming the same expectations for 2016. Andrew Levi $0.07 to the railroad. Is that what the railroad earned in 2015 or was it higher or lower? Tom Hanson No it was $0.07 last year as well. Andrew Levi Got it, that’s all I needed. Thank you very much. Operator We move next to Brian Russo with Ladenburg Thalmann. Brian Russo Hi, good morning. You reaffirmed your 5% to 7%, does that run through a particular year or through a particular planning periods? Maybe you could just talk about that just a little bit. Pat Thompson Yes, Brian we actually based it on last year’s weather normalized sales and it goes on for 5 years so till 2019. Brian Russo Okay and what was last year’s weather normalized sales? Pat Thompson $3.57 Brian Russo Okay. And just remind us the Riverside settlement and options from communities to grow up and energy, just remind us of the timing of that? Susan Gille Yes, Brian we updated our Investor Deck so if you got to Slide 9 on the Deck, basically the Wisconsin public service has the option for up to 200 MW in the 2024 timeframe. MG&E has up to 50 MW from the 2020 to 2025 timeframe and the co-op have up to 60 MW and they will determine that in the quarter this year. Brian Russo And how is that priced? Susan Gille Current book value at the time. Brian Russo Okay. Thank you. Operator Moving next to Andrew Weisel with Macquarie Capital. Andrew Weisel Good morning, appreciate the commentary on potential equity meets for next year. Just want to understand is that sort of a run rate we should assume for all years in 2017 and beyond or is it sort of a onetime thing? Obviously there’s other variables that could make the need go up and down but should we think of that as the number for the next several years or 2017 and there could be more 2018? Tom Hanson Assume that as the initial estimate for 2017 and in terms of the outer years. It’s going to be somewhat depended on the some of the parties just made reference to, in terms of the Riverside expansion so if and when MG&E might step into Riverside so for now assume up to $150 million applies to only till 2017. Andrew Weisel Okay. Great and the other one there was some change to the effective tax rate forecast in the Slide Deck, I believe and want to confirm. That’s earning as neutral and that offsets right to revenue line or is that something that could effectively shake out within the guidance range? Tom Hanson There will be some movement with the income statements. What has changed is principally an IPL which will have a less low through benefit. But that could not be impacting earnings. That will be offset someplace else. Andrew Weisel Okay. That cancelled the effect of tax rate so both IPL and corporation, I should think of it as neutral? Tom Hanson No, think of it as lien adjustment tax and something else will be offsetting it so the earnings guidance will remain consistent with previous estimates. Andrew Weisel Okay. So the $0.09 benefit in the full year guidance is still a good number to think about? Tom Hanson A little bit high but it is not going to be significantly high and will be offset by something else so far, guidance for 2016 is unchanged. Pat Thompson We know how carefully you guys track the tax rate so we want to provide the update this quarter. Andrew Weisel Yes, appreciate it was just trying to understand the potential impact of the bottom line. Thank you. Pat Thompson And Tom counts every penny also. Operator Ms. Gille, there are no further questions at this time. Susan Gille With no more questions, this concludes our call. A replay will be available through May 12, 2016 at 888-203-1112 for U.S. & Canada or 719-457-0820 for international. Callers should reference conference ID 8244179. In addition an archive of the conference call and the prepared remarks made on the call will be available on the Investor sections of the company’s website later today. we thank you for your continued support of Alliant Energy and feel free to contact me with any follow-up questions. Operator And that concludes today’s presentation. Thank you for your participation. Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. 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