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Alliant Energy Corporation (NYSE:LNT)

Q2 2011 Earnings Call

August 4, 2011 10:00 AM ET

Executives

Susan Gille – Manager, IR

William Harvey – Chairman and CEO

Thomas Hanson – VP and CFO

Analysts

Brian Russo – Ladenburg Thalmann

James Dobson – Wunderlich Securities

Jim Bellessa – D.A. Davidson

Alex Kania – Bank of America

John Alley – Decade Capital

Operator

Thank you for holding, ladies and gentlemen, and welcome to the Alliant Energy’s Second Quarter 2011 Earnings Conference Call. 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. Please go ahead.

Susan Gille

Good morning. I would like to thank all of you on the call and on the webcast for joining us today. We appreciate your participation.

With me here today are Bill Harvey, Chairman and Chief Executive Officer, Pat Kampling, President and Chief Operating Officer and Tom Hanson, Chief Financial Officer as well as other members of the senior management team. Following prepared remarks by Bill and Tom we’ll have time to take questions from the investment community.

We issued a news release this morning announcing Alliant Energy’s second quarter 2011 earnings. The release and supplemental slides for today’s call are available on the Investor page of our website at www.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 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’ll turn the call over to Bill.

William Harvey

Thank you, Sue and good morning everyone. My comments today will provide some detail on major capital projects both current and planned. Later in the call Tom will discuss second quarter results and important financial and regulatory matters. Our industry is facing a multitude of new EPA regulations, including new rules to reduce the emissions of SO2 and NOx and mercury. New rules to control coal ash handling and disposal and new rules to regulate water usage and discharge from power plants.

Compliance with these new rules and the desire to have a more diversified generation portfolio are the major drivers behind our plants to transform our generation fleet. The Cross-State Air Pollution Rule which will regulate SO2 and NOx emissions was issued in July. We have various options to achieve compliance including fuel switching, reducing coal-fired generation and installation of emission control equipment.

Use of the emission allowances is also available, but in our view is a tool to use on the margin, not as a permanent means of compliance. Well our planning has anticipated such regulations, we are still in the midst of understanding the implications of this rule on our fleet.

Today, I will outline for you the decisions we have made thus far in a nutshell we plan to rely on all four compliance mechanisms. First, we will rely on fuel switching we are in the process of switching fuel sources at two of our generating units. This fall we plan to convert the Dubuque, Iowa Generating Station to gas. And at the Nelson Dewey Generating Station in Cassville, Wisconsin. We plan to eliminate the use of petroleum coke as a Kicker Coal. In the longer-term, we may pursue more switching, but this is what certain right now.

Second, we will reduce our reliance on coal-fired generation. We have already retired 4% of our operating capacity, and we are likely to retire at least in additional 15% of our operating capacity over the next decade. The coal units under consideration for retirement totaled approximately 725 megawatts and have a net book value of approximately $180 million as of June 30, 2011.

At WP&L these retirements will give rise to limited new construction needs because in the fourth quarter of 2011 WP&L plans to file an application with the Public Service Commission of Wisconsin for the purchase of an existing 600 megawatts natural gas-fired facility and which it holds an option to purchase.

WP&L currently has a purchase power agreement with Calpine for 490 megawatts of capacity from the Riverside combining cycle generating facility located in Dewey , Wisconsin. The purchase power agreement extends through May 2013 and includes an option to purchase the entire facility at the end of the contract term.

With the acquisition of this 600 megawatt energy facility WP&L would increase gas-fired generation by approximately 110 megawatts. That should address WPL’s capacity needs for some time. At IP&L there is a major factor imply in addition to retirements. We currently believe it is unlikely that IPL will enter into any long-term agreement with NextEra energy for the purchase of electricity generated by the Duane Arnold nuclear power plant beyond the current purchase power agreement term which is set to expire in February 2014.

When we couple the absence of the Duane Arnold PPA extension with forecasted plant retirements our resource plan calls were approximately 700 megawatts of new generation for IPL. As a result we have begun initial planning for one alternative to meet those needs namely the construction of a new 600 megawatt natural gas combining cycle generating facility.

The current estimated cost of such a project is between $650 million and $750 million. Our plan to indicate an anticipated in service date no earlier than 2016. Regulatory approvals would be required to construct such a facility. If the project moves forward we would expect those regulatory filings to be made in mid 2012.

And finally we will install emission control equipment to assure compliance with the new rules. We plan to equip our larger generating units with a full array of emission control equipment. We classify these as our Tier 1 units. We provided a summary of our Tier 1 projects in supplemental slide number seven. Engineering and design work for the planned SCR equipment at WPL’s Edgewater Unit number 5 is essentially complete and construction has begun. The estimated capital expenditures for this project are approximately $155 million and the SCR is expected to be in service in 2013. All regulatory approvals for this project have been received.

Engineering firms had been selected for the scrubber and baghouses at both units of the Columbia Generating Station as well as the Ottumwa Generating Facility. WPL’s estimated share of the Columbia project is approximately $290 million and IPL’s estimated share of the Ottumwa project is approximately $175 million. These controls are expected to be placed in service in 2014. The engineering firm has also been selected for the approximately $50 million scrubber project at IPL Lansing Unit number 4. The scrubber at Lansing is expected to be in service in 2014. All regulatory approvals had been received for these projects.

Also installation of a baghouse SCR and scrubber at Neal Units 3 and 4 will start this year and the estimated in service date for these controls are 2013 and 2014. We call all these units with Mid American and our estimated share of these projects is approximately $135 million. All regulatory approvals have been received for these projects. The emission control projects I’ve just described our four units we have classified as Tier 1. Please also note that we are reviewing the projected capital expenditures disclosed on the left side of slide seven.

While our review is not complete it does appear as though these estimates may be on the high side, but not my wide margin. Our current emission planning includes construction of emission controls project represented by the grey boxes on the right side of slide seven. Our current plans have construction expenditures for the grey boxes starting after 2013 with in service dates no later than 2020. For example our post 2014 emission control plan includes installation of a scrubber and baghouse at Edgewater 5.

Using the Columbia baghouse and scrubber as a proxy we would estimate the capital expenditures for this project to be approximately $350 million. We plan to add greater clarity on our future capital expenditures by the end of this year. We have defined Tier 2 units as units which will not be fully retrofit with emission control equipment and for which we are exploring lower cost emission control options.

The future of these units is dependent on the evolving environmental compliance rule and many operational factors. While we plan to install lower cost emission control equipment on some of our Tier 2 units, other Tier 2 units will not be operating beyond the proposed utility MACT compliance deadline of late 2014.

Our current capital expenditure projections for 2011 through 2013 do not include estimates for lower cost emission controls which may be installed on Tier 2 units. However, a very rough estimate of our Tier 2 construction expenditures through 2015, would be around $200 million.

Now let’s turn to our Wind business. We’ve been very pleased with the performance of the Whispering Willow, East and Bent Tree Wind Farms. For the second quarter of this year, Whispering Willow experienced a capacity factor of 38%, which is up from the 15% capacity factor experienced in the second quarter of 2010. Being increased is largely due to transmission upgrades in the area.

The Bent Tree Wind project experienced a capacity factor of 29% for the second quarter of this year. This two exceeded our expectations. And finally we have decided to utilize the remaining 100 megawatts of turbines under our 2008 Wessex agreement to build a non-regulated wind project in Franklin county, Iowa near the Whispering Willow, East site. This site is a great location based on the high wind regime and transmission upgrade were already in progress. To accomplish this IPL sold the 1000 megawatts of turbines and land rights to a subsidiary of Alliant Energy resources for $150 million which represented the book value of the payments made to-date.

We will complete construction of the Franklin County wind project by the end of 2012 to maximize tax benefits available from this project. In the coming months, we will be pursuing options for the sale of the power generated by this facility. Options include a purchase power agreement with one and more independent third-parties a purchase power agreement with one or both of our utilities.

And the sales of the power into the MISO market as a merchant generator. The total estimated cost of the project is about $235 million excluding capitalized interest costs. So in closing let me recap the priorities as we execute our plan.

First, we continue to provide safe, reliable service to our customers through a very hot and stormy summer. Second, we’re working to obtain a balance generation portfolio well trying to mitigate rate increases. Third, we will execute our environmental control programs as part of our plan and our ongoing commitment to agree in our future. And finally, we will work closely with our regulators and stakeholders to receive all remaining approvals of our strategic plan proposals in a timely manner.

We appreciate your continued support of our company. And at this time I’ll turn the call over to Tom.

Thomas Hanson

Thanks, Bill and good morning to everyone. My remarks this morning will recap the second quarter results affirm our 2011 earnings guidance and provide details of our financing and regulatory plans.

Let’s start with a recap of second quarter results. We released earnings this morning with our GAAP earnings from continuing operations of $0.46 per share. However, adjusting for items we typically exclude from the guidance second quarter 2011 adjusted or non-GAAP earnings were $0.44 per share which matches second quarter 2010 non-GAAP earnings. Comparisons between second quarter 2011 and 2010 earnings per share are detailed on supplemental slides two, three and four.

The second quarter 2011 adjustments include tax benefits from Wisconsin tax legislation, regulatory related charges and credits from IPL’s Minnesota electric retail rate case decision a cash balance plan pension plan, charge and regulatory asset impairments.

The biggest drivers of the second quarter 2011 adjusted utility results compared to those of 2010 were higher revenues due to implementation of new base rates at WPL, the effective tax rate adjustments at parent, and lower capacity payments due to a scheduled outage at Kewaunee. These positive EPS drivers were offset by higher depreciation and operating expenses for the Bent Tree wind project and accounting for IPL’s tax benefit writer which gives rise to a considerable quarter-over-quarter variation in EPS but is not expected to have a material impact on 2011 total year earnings.

On supplemental slide five, we have provided an estimate of the reduction of revenues and increased in tax benefits for each quarter in 2011 then looking at the full year the tax benefit writer also referred to as the customer cost management plan is not expected to have a material impact to earnings.

Looking at the economy for our service territory overall retail electric sales increased 1% during the first half of 2011 compared to the first half of 2010. Sales to our industrial customers rose 3%, while residential and commercial customer class’s sales were flat for the first half of 2011 compared to the same period last year.

We are pleased with the performance of generating fleet this summer, especially when IPL set a new peak of approximately 3150 megawatts on July 18. The hot humid weather tests our plants and electrical grid. But we are pleased to report that we met the demand of our customers and kept outages to minimum storms notwithstanding.

Today, we affirmed Alliant Energy’s 2011 earnings guidance with the midpoint at $2.88 per share comprise the utility’s midpoint of $2.73 per share and the non-regulated and parent at $0.15 per share. The guidance provided includes a forecasted weather normalized retail electric sales growth of approximately 1% to 1.5%. The guidance assumes normal weather for the second half of 2011.

Although, we did expect July weather to provide an additional $0.12 to $0.14 to earnings but we are not at this time revising guidance to reflect weather experience thus far in the third quarter. As stated in previous years, we are a second half company, it is important to remember that due to the summer versus winter, normal sales volumes and pricing differentials IPL is forecasted to earn over one half and WPL is forecast almost one-third of their total 2011 net income during the third quarter.

When reviewing the 2011 guidance please note we are revising our effective tax rate assumption at AEC due to the tax benefit from the Wisconsin 2011 to 2013 Budget Bill guide into law on June 26, 2011. The law allows Alliant Energy to share pre 2009 Wisconsin net operating losses among the combined group to offset future taxable income over the next 20 years which is estimated to decrease the effective tax rate assumption at AEC for 2011 from approximately 22% to 18% as highlighted in supplemental slide six.

Turning to our non-regulated businesses our transportation business is on track to contribute $0.11 to our 2011 guidance and for the second quarter of 2011 it increased earnings by $0.01 when comparing it to the result of the second quarter of 2010. For RMT we affirm the 2011 earnings guidance above $0.04 per share. RMT increased their earnings by $0.02 when comparing the result of second quarter 2011 versus 2010.

We are encouraged with the pipeline of wind and solar projects RMT for the balance of this year as well as 2012. As we believe there will be a raise to complete wind projects priors to the exploration of the federal renewable energy incentives currently slated to end in December 2012. Financing utilities capital expenditure plan includes a combination of internally generated funds, equity infusions from cash experiment and debt. Our current 2011 financing plans do not include the issuance of long-term debt however that can change based on market conditions.

At this time, we do not expect to issue any material equity through 2013. Our liquidity position is strong, totaling approximately $650 million priced of over $20 million of cash in marketable securities and over $630 million of available capacity under our credit facility and sale of receivable program.

We currently have no commercial paper outstanding at IPL or WPL. We are forecasting approximately $750 million to $800 million in operating cash flows during 2011 due to the combined benefits of rate release and tax strategies, bonus depreciation, repair expenditures and mixed service cost additions, deductions taken on prior year tax returns contribute to taxable losses.

Federal legislation passed in 2010 allows for bonus depreciation to continue in to 2011 and 2012. These additional bonus depreciation deductions are expected to add to our current net operating loss position through 2012. We have several current and planned regulatory dockets of note.

In Wisconsin we filed a retail field only rate case in May 2011. The rate filing included a fuel plan for the 2010 under – 2012 under Wisconsin new field rules which became effective in January 1st of this year.

The new field rules allow for recovery of emission control chemical and allowances within the fuel recovery mechanism. We plan to update our filing later this month after assessing the Cross-State Air Pollution Rule impact on expected 2012 emission control costs.

We are currently evaluating the need to file a Wisconsin retail based rate case in 2012 with a 2013 test year. The primary drivers of a 2013 test year case would be partial recovery of the construction and working progress balance for emission control projects at Edgewater 5 and Columbia units. The anticipated gas facility acquisition discussed by Bill earlier is expected to have a minimal customer rate impact. We will eliminate the current recovery of the capacity payments under the existing Riverside PPA and replace that cost of service with an addition to rate case and associated depreciation and OEM expense.

In 2010, IPL requested a rate increase of approximately $50 million in Minnesota and in July 6, 2010 was granted interim rates that increased annual electric revenues by approximately $40 million. On June 16, 2011 the MPUC issued its oil decision approving annual estimated electric retail rate increase of approximately $11 million with a return on equity of 10.35% and a regulatory capital structure of 47.7% common equity.

In the oil decision the MPUC approved a renewable energy writer allowing IPL to recover $51 per megawatt hour from the Minnesota portion of the energy generated by Whispering Willow-East Wind farm. Also the MPUC authorized an additional amount to be refunded to customers for the transmission sale which concluded in 2007.

Interim rates will remain in effect until the MPUC issues a final written decision and the difference between the interim and the final rates will be refunded to customers with interest. We anticipate the MPUC will issue the final written decision later this quarter.

We are in the process of finalizing the regulatory filing calendar related to the capital expenditures outlined in Bill’s remark. We plan to provide more clarity concerning the future of coal-fired facilities and update our capital forecasted capital expenditures by the end of the year. At that time we will provide our regulatory filing calendar related to our capital expenditure plan.

At this time I will turn the call back to the operator to facilitate the Q&A session.

Question-and-Answer Session

Operator

Thank you. 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). And we’ll take our first question from Brian Russo with Ladenburg Thalmann.

Brian Russo – Ladenburg Thalmann

Hi. Good morning.

William Harvey

Good morning Brian.

Unidentified Company Representative

Good morning Brian.

Brian Russo – Ladenburg Thalmann

I apologize because I got on the call a little bit late, but could you just reiterate the comments you made earlier. I think about the Duane Arnold’s nuclear contract and then the timing of a potential CCGT?

William Harvey

Sure, the what I said Brian is that we currently think it is unlikely that we will be able to re-negotiate and extension of the Duane Arnold PPA with NextEra and if we factor the absence of that PPA together with currently anticipated retirements of coal-fired capacity at IP&L we envisioned a need for incremental generating resource of about 700 megawatts in the 2016 or later timeframe.

One of the alternatives that we are considering for fulfilling that need is the construction of a new combined cycle facility at IP&L and what I’ve indicated was that would costs between $650 million and $750 million it would not go into service earlier than 2016 and if we elect to proceed with that alternative we would make regulatory filings in Iowa in the middle part of 2012.

Brian Russo – Ladenburg Thalmann

Okay. It’s my understanding that the Duane Arnold PPA that expires in ‘14. So why don’t you need the, to make up that capacity until ‘16?

William Harvey

We have experienced an economic recession which did have, did have an impact on our load profiles in the State of Iowa, that’s certainly contributes to a sliding backwards in terms of requirements plus the actual timing of retirements is ambiguous and uncertain. At this point in time all of that said Brian the physical reality is that it would be a very unlikely that you could get a combined cycle facility through the regulatory process and constructed before 2013 as well. So ‘16, 2016 as well. So all of those variables leads to that signaled timing.

Brian Russo – Ladenburg Thalmann

Okay, and then on the tax benefit rider, is this kind of a – is this just the 2011 event or is this something that we’re going to experience in ‘12 and ‘13?

William Harvey

Yeah Brian that’s part of the rate case in Iowa. The expectation is that we would have benefits that would crew back to the rate peers in Iowa in ‘11, ‘12 and ‘13. and the estimate for 2011 is $61 million and if you take a look at bottom of slide, supplemental slide 5, we’ve tried to identify the impact by quarter.

Brian Russo – Ladenburg Thalmann

Right, okay. And on the Vestas turbine redeployment as an unreg asset what type of returns on your investment do you expect from that?

William Harvey

Well it will depend on the nature of the off-take, the arrangements that are put in place. We can’t really estimate that with any meaningful certainty. At this juncture, obviously we’re going to capture as good and consistent the return as we can on that investment. But, it would be facetious of me to suggest that we know what it is today without having the off-take arrangements in place.

Brian Russo – Ladenburg Thalmann

When would you expect off-takes and when do you think that plan would be operational?

William Harvey

Well it should be operational in end of 2012. We want to get it in service, so that we capture all of the tax benefits.

Brian Russo – Ladenburg Thalmann

That’s right.

William Harvey

In fact we want to get it in service so that we can exploit the wonderful wind regime and transmission environment that exists at that site as I indicated in the remarks. We are seeing capacity factors out of Whispering Willow, East approaching 40% that’s pretty cosmic.

Brian Russo – Ladenburg Thalmann

And then lastly, I think correct me if I’m wrong but there is no equity needed through 2013 and that’s compares to your previous guidance of no equity through 2012?

William Harvey

That’s correct.

Brian Russo – Ladenburg Thalmann

Okay. Thank you very much.

Operator

And we’ll take our next question from Jay Dobson with Wunderlich Securities.

James Dobson – Wunderlich Securities

Hey, good morning Bill.

William Harvey

Good morning, Jay.

James Dobson – Wunderlich Securities

Question for you continuing on the Vestas turbine decision. Could you give us a little background I know in the first quarter call you sort of said you’re looking at a number of options one you chose obviously building at yourself and selling the assets or the turbine that might require rate down. I’m just wondering how you came about the decision to just sort of go forward with this on your own. It certainly gives us the uncertainty you mentioned in a moment ago?

William Harvey

Sure, happy to give you a sort of abbreviated color on that decision making process. It starts off – if we had our overwhelming preference obviously we’d be deploying these turbines as a utility asset at either IP&L or WP&L. That sort of goes without saying because we’re regulated utility business but the reality is that we’ve got sufficient positions in place to meet our renewable portfolio standards in Wisconsin and we have sufficient positions in place to meet existing renewable portfolio standards in Iowa.

And I think it’s fair to say that the cost of the economic situation that pervades in nation today there is an increased sensitivity to the cost of renewable energy and the impact that those cost could have on customer rates. And so I guess not deploying them as strictly utility-owned assets is heavily influenced by those two variables.

We did consider selling the turbines outright, but rejected that as an alternative because we like the technology, we have the technology deployed throughout our owned wind farm portfolio. And so we like to deploy that turbine in our projects. And finally four better ways we think for better. We own rights to develop incremental wind generation capacity in and around the Whispering Willow East site. And the reality is number one it’s a great wind site, wonderful wind regime.

Number two because of the construction of Whispering Willow East. The transmission infrastructure necessary to liberates sales from that area is either completed or near completion. And the reality is if anybody reads the trade press today one of the greatest constraints to the development of more wind resource in this country is transmission. And we’ve got a great site with good transmission.

And frankly we’re covered this, we want to use that site up before developments in the rest of the system and area create new current transmission constraints which would make it difficult to take energy out of that wonderful wind sites. So we want to take advantage of it and capture the access from that site to the market place while it’s still exist that really is the in a nutshell the decision making process we went through.

James Dobson – Wunderlich Securities

Got you. That’s very, very helpful but in light of the regulatory constraints you mentioned is not make a contract either of your owned utilities somewhat less likely so that you will be looking as you mentioned for sort of a third-party contract?

William Harvey

Yes, no I don’t think so Jay and the reason I say that is contracts don’t have to be 10 years long or 20 years long or 30 years long they can be three years long, they can be five years long. And it is not at all illogical to need to see the energy from this wonderful wind site fit very nicely into the energy supply portfolio of either of our utilities because as you know both of our utilities are energy short.

James Dobson – Wunderlich Securities

Got it. That’s helpful.

William Harvey

Okay.

James Dobson – Wunderlich Securities

And RMT would have an inside track on hoping you build this too. So there is a I believe in the family. Bill with the 235 you mentioned as total costs include the 115 so the additional capital we’re talking about like 120 or there is apples and oranges?

William Harvey

Yes, you are correct it includes the 115.

James Dobson – Wunderlich Securities

Got you. So incremental capital you will need to spend as Alliant Energy will be a 120 on top of that excluding any capitalized interest costs?

William Harvey

That’s correct.

James Dobson – Wunderlich Securities

Okay. Great.

William Harvey

That’s correct.

James Dobson – Wunderlich Securities

Thank you very much. I appreciate the insights.

William Harvey

You are welcome.

Operator

And we’ll go next to Jim Bellessa with D.A. Davidson.

Jim Bellessa – D.A. Davidson

Hey, good morning guys.

William Harvey

Good morning Jim.

Jim Bellessa – D.A. Davidson

Most of my questions have been answered. This is actually Mike here for Jim by the way. I got curious about the additional land you have near the Whispering Willow-East location. How much more could you support at that site in addition to that?

William Harvey

The total site capability is 500 megawatts Mike. We already have 200 there. This would be an incremental 100, so there is an extra 200 megawatts of developed siting capability at Whispering Willow East. We also have additional developed siting capability at the Bent Tree site too is a 500 megawatt – 400megawatt site I’m being corrected – correctly so. That’s a 400 megawatt site that we have 200 megawatts constructed upon already. So we’ve got undeveloped – developed capacity at both of those sites.

Jim Bellessa – D.A. Davidson

All right. Thank you very much.

Operator

We’ll go next to Alex Kania with Bank of America.

Alex Kania – Bank of America

Hey. Good morning.

William Harvey

Good morning.

Unidentified Company Representative

Good morning.

Alex Kania – Bank of America

I got a couple questions, the first is the follow-up on the wind. Have you guys figured it out what type of tax stream you want to use for that asset? I am just thinking that you have – pretty recently you’ve done a lot of work on kind of reducing your federal cash tax obligations, so I’m wondering if maybe the convertible ITC or ITC grant would be profitable to the TTC.

William Harvey

Yeah, this time we are most likely going to pursue the grant option.

Alex Kania – Bank of America

The grant, okay, TTC great. And then you talked about the Duane Arnold I mean I guess not likelihood of signing a long term contract there, how you – what you’re really speaking on Kewaunee in Wisconsin, is it – do you feel like you have an opportunity to extend that contract with Dominion or do you think you’d also want to let that one expire and look at the market?

William Harvey

We very much like to reach an agreement with Dominion that we think is good for our customers. I would say that I’m more optimistic certainly about the prospects of doing that at Kewaunee than I am about Duane Arnold. That said Kewaunee remains a work in progress.

Alex Kania – Bank of America

Great.

William Harvey

We continue to discuss.

Alex Kania – Bank of America

Great. And last question is just little bit more clarity on the comments you had on guidance. It sounded like so far in Q3 with getting some pretty good weather that you’re running I guess ahead of what’s the midpoint of your guidance range, but you’re kind of waiting to see towards the end of the quarter to see if those trends continued before you make any changes with respect to guidance?

William Harvey

I think that’s right. Obviously, for us and for most of the country, July was a doozy. It’s been very hot and as Tom indicated we currently estimate earnings in excess of those associated with normal weather of would I say $0.11 to $0.13...

Unidentified Company Representative

Yeah.

William Harvey

Or $0.12 to $0.14 or even want to understate it, but yet obviously at substantial and so far in August it’s the heat has continued but to Tom’s point we are a third quarter company and Lord knows we could end up having the balance of August and September through the expiration of our seasonal rates.

It could get cold. Who knows and they are drifting on more fairly conservative lot and we don’t want to bank the third quarter yet just because of the extraordinarily hot weather in July. We want to wait and see the way the quarter plays out.

Alex Kania – Bank of America

Great. And then last question is just you talked about updating your or giving a kind of an update on CapEx I guess into ‘14 by the end of the year would it be fair to assume that you’d give a kind of a look on 2012 at that time as well.

William Harvey

That is correct.

Alex Kania – Bank of America

Okay, great. Thanks very much guys.

William Harvey

Thank you.

Operator

(Operator Instructions). We’ll go next to John Alley with Decade Capital.

John Alley – Decade Capital

Good morning.

William Harvey

Good morning, John.

Unidentified Company Representative

Good morning.

John Alley – Decade Capital

Just a quick question, if you could elaborate a little bit more on why you don’t think you could come to another PPA with NextEra or Duane Arnold because I joined the call later I don’t know if you already hit that?

William Harvey

No, no. no it’s okay, I think the pricing for both sites have attacked the issue in the very best of faith. We harbor no negative feelings as it relates to NextEra at all. The reality is an extension of the PPA relating to Duane Arnold is a commercial and economic and financial negotiation. And I don’t think the parties were able to get into the same ballpark in the conversation and at some point in time you have to fisher, cut bait and move on to make sure that we take whatever steps are necessary to meet our obligations to customers. And that really in a nutshell is where we are and what happened.

John Alley – Decade Capital

Great. And as far as the new wind project goes I know your preference is do it within the utility, but how open are you, do you keeping those merchant?

William Harvey

Keeping those what.

John Alley – Decade Capital

Merchant.

Susan Gille

As a merchant.

William Harvey

As a merchant.

John Alley – Decade Capital

Merchant facility.

William Harvey

It will all depend upon what happens in the marketplace number one, number two what kind of optic arrangements we’re able to put in place. Concerning the power produced by the facility. If that yields something that is attractive to us we’d be completely opened to keeping these resources as unregulated assets for a very long time. It is all about economics and frankly all about exploiting the value of that tremendous win site.

John Alley – Decade Capital

Excellent. Thank you very much.

Operator

And we’ll go next to Brian Russo with Ladenburg Thalmann.

Brian Russo – Ladenburg Thalmann

Hi, just a follow-up on the CapEx update that we’re expecting, based on your most recent CapEx disclosures, would you say that the updated CapEx is going to be more or less on the multiyear basis relative to what you previously laid out?

William Harvey

It’s probably going to be a little higher Brian, but it’s not going to be significantly different from what the existing guidance is out there.

Brian Russo – Ladenburg Thalmann

Okay. Thank you.

William Harvey

And then Brian, as we said before, we will be showing that later in the year in terms of our CapEx plan for the next several years and then the corresponding financing plan to achieve that CapEx expenditure profile.

Brian Russo – Ladenburg Thalmann

Thank you.

Operator

And there are no other questions at this time. I’d like to turn the conference back to our speakers for any closing remarks.

Susan Gille

With no more questions, this concludes our call. A replay will be available through August 11, 2011, at 888-203-1112 for U.S. and Canada, or 719-457-0820 for international. Callers should reference pass code 8244179.

In addition, an archive of our conference call and a script of the prepared remarks made on the call will be available on the Investors section 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

Thank you everyone. That does conclude today’s conference. We thank you for your participation.

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