MADISON, Wis., July 15 /PRNewswire-FirstCall/ — Alliant Energy Corporation (NYSE:LNT) announced today that the estimated impact of last month’s unprecedented flooding in its service territory will reduce its utility business earnings per share by approximately $0.20 in 2008. While almost 75 percent of the counties in the three states that Alliant Energy provides service were declared federal disaster areas, the most significant damage was experienced in Cedar Rapids, Iowa, the company’s largest load center. The Cedar River in downtown Cedar Rapids crested at over 32 feet on June 13, double the 16 foot level that defines a major flood stage. The resulting flooding exceeded the 500 year flood plain boundaries and caused nine square miles of the city to be evacuated.
While many communities across Alliant Energy’s service territory were impacted, the damage was most extensive in Cedar Rapids. The 185 megawatt Prairie Creek and 55 megawatt Sixth Street Generating Stations located on the Cedar River remain out of service. Initial assessments at Prairie Creek have been completed and it is expected to return to service by the end of the year. Assessments are ongoing at Sixth Street and a decision about the plant’s future will await these results. Photographs of some of the damage experienced by the company’s operations are available in a supplemental presentation at http://www.alliantenergy.com/investors.
Alliant Energy expects to benefit from several mechanisms that will mitigate the financial impacts of the floods, including:
— Insurance: An insurance policy with total limits of $100 million for covered flood losses
— Iowa Fuel Clause: An electric fuel cost recovery mechanism in Iowa that allows for recovery of replacement purchased power expense
— Steam Contracts: Renegotiated retail steam contracts which recoup all costs plus a small margin for temporary steam production that is normally provided by the Prairie Creek and Sixth Street generating stations.
— Regulatory: Deferral requests have been filed with the regulatory commissions in Wisconsin and Minnesota, although costs in those jurisdictions are expected to be minimal. The company is in ongoing discussions with the Iowa Utilities Board (IUB) on cost estimates and cost recovery options. While no commitments or understandings with the IUB have been reached, we anticipate reasonable cost recovery in future regulatory proceedings.
Alliant Energy expects the following costs to fall outside of any of the available recovery mechanism and therefore impact 2008 earnings:
— Electric Sales: The 2008 margin impact due to lost sales is estimated at $0.07 per share. This reflects Alliant Energy’s best estimate of sales lost-to-date and of when customers will resume normal levels of usage. In the immediate aftermath of the flooding there were over 35,000 customers that typically consume 280 megawatts of load that were unable to receive service. Today, less than 1,000 customers, but including certain large industrial customers, are unable to receive service. The load for those remaining customers not receiving service is estimated at 100 megawatts, the majority of which are expected to resume service between now and the end of the year.
— Steam Sales: Alliant Energy has approximately 200 steam customers in Cedar Rapids that take high-pressure steam for production purposes or low-pressure steam for hot water and heat. As previously mentioned, costs for temporary steam production will be passed on to customers under new contracts. However, it is anticipated that margins for the remainder of the year will be significantly reduced due to our inability to provide predominately coal-fired steam to customers. While steam results are reported as part of Interstate Power and Light’s (IPL) financial statements, steam sales are an unregulated part of IPL’s business. In 2007 the steam business provided an earnings contribution of approximately $0.04 per share. In 2008 the steam business is forecasted to break even.
— O&M: In addition to modest insurance deductibles, expense items not covered by insurance include repairs to the electric distribution system and rental costs for standby generation during the summer months. Because cost recovery options in Iowa are still being discussed, these expenses are currently being charged to the income statement.
The total earnings impact of these items on utility operations is currently estimated at a negative $0.20 per share. At this point in time, all flood-related losses are not expected to be recurring in nature. There is no material flood-related earnings impact expected at Alliant Energy’s non-regulated businesses.
“As efforts to recover from the recent flooding continue, we are getting a better understanding of the associated cost,” said Bill Harvey, Alliant Energy Chairman, President, and CEO. “While we still have much work to do, our current estimate of the impact to earnings from clean up and restoration costs reflects reasonable assumptions of insurance and regulatory recovery. I am extremely proud of our employees and their ongoing efforts in getting our operations back in business. Our customers and the city of Cedar Rapids have shown great resilience in the face of this catastrophe, and Alliant Energy remains committed to helping the area recover.”
Alliant Energy will provide its second quarter earnings results and updated earnings guidance as a part of its second quarter earnings release, currently scheduled on August 6, 2008.
Alliant Energy Corporation is an energy-services provider with subsidiaries serving approximately 1 million electric and 400,000 natural gas customers. Providing its customers in the Midwest with regulated electric and natural gas service is the company’s primary focus. Interstate Power and Light Company, the company’s Iowa utility subsidiary, serves approximately 530,000 electric and 235,000 natural gas customers. Alliant Energy is a Fortune 1000 company traded on the New York Stock Exchange under the symbol LNT. For more information, visit the company’s Web site at http://www.alliantenergy.com/.
This press release includes forward-looking statements. These forward-looking statements can be identified as such because the statements include words such as “expect” or other words of similar import. Similarly, statements that describe future financial performance or plans or strategies are forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Actual results could be affected by the following factors, among others: anticipated amount of O&M expenses and property losses, timing of customers resuming normal levels of service usage, and levels of steam margins. The forward-looking statements included herein are made as of the date hereof and Alliant Energy undertakes no obligation to update publicly such statements to reflect subsequent events or circumstances.
First Call Analyst:
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Source: Alliant Energy Corporation