Alliant Energy Corporation

Good afternoon and welcome to Align Energy's conference call for fourth quarter and year-end 2020 results. This call is being recorded for rebroadcast. At this time, all lines are in listen-only mode. I would now like to turn the call over to your host, Susan Gill, Investor Relations Manager at Align Energy. Please go ahead.

Good afternoon. I would like to thank all of you on the call and on the webcast for joining us today. We appreciate your participation. Joining me on this call are John Larson, Chairman, President, and Chief Executive Officer, and Robert Durian, Executive Vice President and CFO. Following prepared remarks by John and Robert, we will take time for questions from the investment community. We issued a news release last night announcing Alliant Energy's fourth quarter and year-end 2020 financial results and affirmed our 2021 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 risk 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 references to non-GAAP financial measures. The reconciliation between non-GAAP and GAAP measures are provided in the earnings release and our 10-K, which are available on our website. At this point, I'll turn the call over to John.

Thank you Susan. Hello everyone and thank you for joining us. 2020 was a year we will all remember. It was also another successful year of growth and solid operations for Alliant Energy. We continue to consistently deliver on our purpose to serve customers and build stronger communities. I'm proud of what our team accomplished and how we delivered on our purpose in a year with many challenges from the ongoing global pandemic to racial injustice and a destructive derecho windstorm. In the face of these challenges, we finished near the top of our original earnings guidance range with a 2020 consolidated earnings per share of $2.47. Our non-GAAP temperature normalized earnings grew more than 7% over 2019. This was the 10th year in a row of achieving our 5% to 7% growth objective. This consistent growth, solid execution, and operational results showcases the resiliency and flexibility of our company. I'll highlight a few of our many strategic and operational achievements from the year, then I'll turn it over to Robert who will provide more details on our solid financial and regulatory outcomes. I'd like to start by mentioning a few of our recognitions from 2020. I mentioned earlier the August derecho windstorm. I'm proud that our efforts to restore electricity to our customers was recognized by receiving the Edison Electric Institute's Emergency Response Award. Alliant Energy was also included in Bloomberg's Gender Equality Index, highlighting just 380 companies from around the world who are committed to supporting gender equality in the workplace. And we were recently named to Newsweek's Most Responsible Companies list, where we ranked 12th overall for our social responsibility efforts. And to top it off, for the fourth year in a row, Alliant Energy has earned a perfect score in the Corporate Equality Index issued by the Human Rights Campaign Foundation. As I reflect on these achievements, they each showcase how we live our values as we care for others, do the right thing, and act for tomorrow. I'm proud of our Alliant Energy team and thankful for all they do. From an ESG perspective, we've made incredible progress on our goals and objectives. We ended 2020 with 42% less carbon emissions than our 2005 levels, well on our way to our goal of a 50% reduction by 2030. This result is largely driven by the completion of our major wind expansion, making us the third largest owner-operator of regulated wind in the U.S. It was also achieved by building our highly efficient West Riverside Generating Station. To further support our efforts to advance a clean energy future, we joined the Low Carbon Resource Initiative through the Electric Power Research Institute. This initiative is designed to identify, test, and develop technologies to enable a low carbon future. The results of this important work will help guide our company and our industry as we look toward our aspirational goal of net zero carbon dioxide emissions from the electricity we generate by 2050. 2020 was another great year in advancing our clean energy blueprints. which serve as our guide to create a cleaner energy future for our customers and communities. Last fall, we advanced our Iowa Clean Energy Blueprint with our announcement to add approximately 400 megawatts of new solar energy by 2023. This follows our very successful one gigawatt wind energy expansion in Iowa, all delivered on time and on budget. When the 400 megawatts of planned new solar combined with our 1,300 megawatts of own wind, our existing solar farms, and purchased renewable resources, we're on a path to have more than 50% of Alliant Energy's Iowa generation to come from renewables by 2030. We also continue to advance battery storage in the state. We plan to add 100 megawatts of distributed energy resources in the next several years. The additional distributed energy resources follows the successful completion of battery storage systems near Marshalltown and Wellman, Iowa, and a storage facility in Decorah, Iowa, that includes a partnership with the United States Department of Energy and the Iowa Economic Development Authority. Turning to Wisconsin, our Clean Energy Blueprint helps advance the Badger State to a clean energy future. Our plans to add at least 1,000 megawatts of new solar power is on schedule. Last spring, we announced our first phase of this effort, identifying six future solar sites totaling 675 megawatts. That's enough to power 175,000 homes. Later this spring, we plan to announce the second phase of our solar expansion, which will include three projects we purchased in the last five months, as well as our self-developed sites. As we carefully plan the closure of our remaining coal-powered units in Wisconsin, our plans will include ways to support our employees and our communities. Our clean energy blueprints are comprehensive and transparent and designed to follow our proven track record of a thoughtful energy transition. And our solar story in Wisconsin doesn't stop there. We recently announced a community solar project in Fond du Lac County where a portion of the energy generated from the one megawatt site will be donated to Habitat for Humanity to reduce electric bills of residents. We're also partnering with Dane County on a 17 megawatt solar development. which will help bring the county to 100% renewable offset to the electricity consumed at their own facilities. And we're partnering with the city of Sheboygan to install a one megawatt solar facility in the Sheboygan Business Center. As we advance our clean energy blueprints, we'll continue to seek solutions that serve our customers' growing demand for sustainable solutions to help build stronger communities. We also remain focused on our continued investments in our connected energy network across Iowa and Wisconsin by advancing the deployment of an advanced distribution management system, a fiber optic network, and expanding the use of smart energy systems and automated metering. In addition, our customer-focused investments in the energy grid will result in more of our electric lines placed underground, a major part of our efforts to improve grid resiliency, energy efficiency, and reliability. Speaking of reliability, I'm proud of the efforts by our team during the extended polar vortex that gripped much of the country these past two weeks. Our customer-focused investments are designed to ensure that we will continue to provide our customers with safe, reliable, and affordable energy for decades to come. We remain committed to advancing our clean energy vision through this balanced approach. In summary, 2020 was an excellent year for our company, and we look forward to building on that momentum in 2021 as we focus on continuing our role as a leader in advancing renewable energy, completing customer-focused investments on time and on budget, delivering solid returns for our investors, and living our values. Thank you for your interest in Alliant Energy. I'll now turn the call over to Robert.

Thanks, John. Good afternoon, everyone. Yesterday, we announced 2020 gap earnings of $2.47 per share. compared to $2.33 per share in 2019. Excluding non-gap adjustments and temperature impacts, earnings per share were up more than 7% year over year, driven by higher revenue requirements due to increasing rate base, partially offset by the higher depreciation and financing expenses from these rate base additions. As John noted earlier, our dedicated employees rose to the challenge in 2020 by reducing O&M expenses to offset the impact of lower sales caused by that pandemic and derecho storm. These efforts allowed us to finish the year in the upper half of our earnings guidance range. We provided additional details on the earnings variance drivers on slides four and five. Our temperature normalized retail electric sales declined 2% in 2020 when compared to 2019, primarily driven by the impacts of the COVID-19 pandemic, as well as the August derecho storm in our Iowa service territory. While the pandemic-related sales impacts were heaviest in the second quarter, sales recovered quickly and were roughly flat to 2019 levels in the second half of the year. The sales recovery we experienced is a direct result of the strength and resiliency of the economies and the states we serve. Wisconsin's unemployment rate is a 4% less than the U.S. unemployment rate, and the state is experiencing population growth as neighboring states' residents are moving to Wisconsin. And in Iowa, the economy has been recovering even faster, with an unemployment rate that is second lowest in the country, as well as strengthening grain prices due to increasing demand from foreign countries. Turning to our future year's earnings, we see a solid path to delivering our earnings guidance for 2021. And as we look further into the future, we believe our strong capital investment plan will allow us to continue to deliver solid returns for our shareholders including an expected 5% to 7% annual EPS growth rate through at least 2024. The key drivers of the 6% growth in our 2021 EPS guidance over 2020 are related to investments in our core utility business, including our recently completed wind projects for Iowa and Wisconsin customers. These investments were reflected in WPL's approved electric rates for 2021. and IPL's Renewable Energy Rider approved with its test year 2020 rate review. Currently, renewables make up approximately 20% of our total rate base, which is one of the highest percentages of renewable rate base among all U.S. utilities. We expect renewables will make up an even larger portion of our rate base as we invest in solar projects for our Iowa and Wisconsin customers over the next three years. A walk from our 2020 non-GAAP temperature normalized earnings to the midpoint of our 2021 earnings guidance range as provided on slide six. The 2021 earnings guidance assumed a 1% growth in retail electric sales over 2020 levels. This forecast assumes continued economic improvement and recovery from the COVID-19 pandemic. Additionally, our employees have been working to add new customers and load to our system. One recent example of success is our new wholesale customer in Wisconsin. Consolidated Water Power Company. This new customer came online at the beginning of this year and brings up to 60 megawatts of new load to our system. Line Energy's strategy focuses on providing affordable energy to our customers while continuing our decade-long track record of growing earnings 5% to 7%. As a reminder, we reached settlement in our Wisconsin jurisdiction to hold rates flat in 2021 by using excess deferred taxes and fuel savings to offset a higher revenue requirement due to growth in rate base. This settlement enables us to earn a return on our investments we've made on behalf of our Wisconsin customers without increasing their base rates in 2021. In our Iowa jurisdiction, we expect to manage our business to allow us to stay out of rate cases for the next couple of years. This has been made possible through collaboration with our regulators and stakeholders in Iowa on key items such as deferring costs associated with the August derecho storm and the addition of the renewable energy rider. The renewable energy rider will allow IPL to recover costs of the incremental rate base from our recently completed one gigawatt of wind while also passing on significant incremental production tax credits and fuel cost savings to our customers. Additionally, our Iowa customers began seeing savings in the fall of 2020 as a result of our decision to terminate the purchase power agreement related to the Duane Arnold Energy Center five years early. IPL is forecasting the gate recovery of and return on the buyout payment associated with this termination through a rider over the next five years, while customers benefit from tens of millions of dollars in energy savings each year. Slide 7 has been provided to assist you in modeling the effective tax rates for our two utilities and our consolidated group. We estimate a consolidated effective tax rate of negative 20% for 2021. The primary drivers of the lower tax rate are the additional production tax credits from the new wind projects that were placed in service throughout 2020 and the return of excess deferred taxes from federal tax reform to our customers. The production tax credits and excess deferred tax benefits will fall back to customers resulting in lower electric margins. Thus, the decreases in the effective tax rate is largely earnings neutral. Turning to our financing plans. In November 2020, we accelerated a $200 million debt offering at our Align Energy Finance subsidiary, originally planned for 2021, to capture historically low interest rates. As a result, our 2021 financing plan is currently limited to one long-term debt issuance of up to $300 million at our Wisconsin utility. And the only common equity activity we are expecting in 2021 is approximately $25 million to be issued gradably during the year through our Share and Redirect Plan. And lastly, some key regulatory developments in our two states. In Iowa, current chair Jerry Heuser was recently appointed for an additional six-year term. And Josh Burns was recently appointed as a new member to the Iowa Utilities Board. We welcome Board Member Burns and congratulate Chair Heuser on her additional term. And in Wisconsin, the PSCW recently issued its final written order approving WPL's rate stabilization plan in December. The PSCW also issued a procedural schedule for our first Solar Certificate of Authority filing in late 2020, as shown on slide eight. The docket for our Solar CA filing is proceeding as expected, including the constructive public hearing held yesterday. We anticipate a decision on this first 675 megawatts of solar from the PSUW in April. Our 2021 key regulatory initiatives are listed on slide 9. In the first half of this year, we expect to make an Advanced Framemaking Principles filing in Iowa for our planned 400 megawatts of solar generation for IPL. As a reminder, a key benefit to the Advanced Framemaking Principles process in Iowa is the certainty it provides for the authorized returns we have earned on these assets. In our three most recent advanced rate-making filings, we were authorized an 11% ROE for new generation assets. The ROEs decided with each filing are fixed for the life of the assets. In Wisconsin, we expect to file our second certificate of authority request in the first half of this year for the remainder of our announced solar generation at WPL. In addition, we expect to file a retail electric and gas rate review in Wisconsin in the second quarter for either one, two, or three years beginning in 2022. We are thankful for the privilege to work in two states that are well known for constructive regulatory outcomes and plan to continue our longstanding practice of working collaboratively with stakeholders towards constructive regulatory outcomes on these key regulatory initiatives in 2021. As we conclude another successful year, I'm excited about our flexible and thoughtful strategy at Align Energy. As John described earlier, we are a leading utility in renewable energy and environmental stewardship, and we look forward to maintaining that leadership status into the future. We will continue to deliver on a clean energy vision that will best serve our customers and shareholders, as well as our environment. We very much appreciate your continued support of our company and look forward to meeting with many of you virtually in the coming months. As always, we will make our investor-related materials available on our websites. At this time, I'll turn the call back over to the operator to facilitate the question and answer session.

Thank you, Mr. Durian. At this time, the company will open the call to questions from members of the investment community. If you'd like to ask a question, please signal by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, that is going to be star 1 to ask a question. I'll pause for just a moment to allow everyone that opportunity. And it does look like we have some questions on the phone line. We'll take our first question from Andrew Weissel with Scotiabank. Please go ahead.

Thank you. Good afternoon, everyone. Hey, good afternoon, Andrew. My first question is, can you repeat that stat? I think I heard you say that Iowa will reach 50% of generation from renewables by 2030. I know you have the overall target of 53% from renewables. So does that include both Iowa and Wisconsin, and does that include owned and PPA'd?

I think you've got all that right on there, Andrew. So the first one, the 50, was Iowa, and I think you've got all the rest, so spot on.

Okay, great. Are you able to break out how much of that is owned, or said differently, what percent of your owned capacity will be renewables?

You know, I'll give you, I think rough numbers were around 70% is owned and 30% purchased. Of course, that's going to change a bit as we're bringing units online and we renew, but that's a high-level split for you, Andrew.

Okay, great. Thank you. Next, on O&M's impressive year after several other previous impressive years, Am I right? What's your outlook for 2021 and beyond, and how much of the savings you identified in 2020 would you consider to be sustainable versus one-time?

Yeah, Andrew, great question. This is Robert. First off, it's a key component to providing affordable energy for our customers, so we're very focused on that. We're currently targeting sustainable O&M reductions of approximately 3% to 5% on an annual basis off of a 2019 baseline. really to support that customer affordability. Our employees did an excellent job in 2020 as they captured some additional savings, largely to offset the COVID and the derecho impacts. And I'd say it's a pretty even mix between sustainable savings and temporary savings that we saw in 2020. Some of the temporary items were things like travel, healthcare, and insurance. But we also saw some great progress with sustainable savings. Largely, I'd put it probably into three main areas. One is technology. We continue to advance technology including things like the AMI that we put into service in early 2020 that really helped reduce some of the meter reading costs. Saw great improvements with automation and self-service that helped us reduce some of our call center costs. And then we also obviously have some enhanced connectivity through the pandemic here that we think we'll be able to leverage into the future. So that's one category. Second is probably on the generation side. Really, we've seen some pretty strong efficiency gains at some of our existing coal plants that allows us to operate with fewer employees. And then lastly, on the distribution side, as we talked about with our strategy, we continue to focus on trying to move from overhead to underground, and that's really going to position us well to have fewer O&M costs in the future. So back to your specific question, I'd say it's probably a pretty even mix between the two. But think of it on a longer-term basis. We're really trying to achieve maybe a 3% to 5% reduction in sustainable savings over the long term.

Great call today. That's very helpful and a very impressive target. Last question is, you've had a very good track record in Wisconsin of keeping rates stable and you mentioned you're planning to file again in the second quarter. Is there any potential to further delay that or find creative ways to keep rates stable? And then you mentioned that the case could cover one, two or three years. What would determine that? What would that depend on?

Yeah, Andrew, great question. We entered last year, as you recall, well-positioned for a rate filing, which we have some capex and other things that we have to put forward and found a path for stabilization and executed quite well under that. We're well-positioned again, but we have a very clear opportunity to put a filing in front of the commission. The I guess I'd say that will it cover one, two, or three years? That's still an area that we're continuing to evaluate. We'll share more as we get closer to the second quarter call. So I appreciate that. Robert, anything you'd like to add?

Maybe one thing to note, Andrew, one of the components of this case will be the expiration of some of the larger amounts of excess deferred taxes that we're giving back to customers currently. And those are pretty well set in stone, so we don't have a lot of flexibility with those and fairly straightforward, so I don't think it'll be anything that'll be controversial with the case itself. And then, as John indicated, the other key component is the solar projects that we'll be advancing, so we'll have more insight to that when we get the decision back from the PCW in that April timeframe for inclusion of that, most likely, like we talked about, a second quarter filing. The third and probably the last piece of that rate filing is really to address the anticipated recovery for the Edgewater Coal Facility that will be retired by the end of 2022. So we think this is the appropriate time for us to come in for our rate filing, and we'll give you some more indication of the one, two, or three years, most likely when we get to the next earnings call in May.

Okay, certainly a lot of issues to discuss there. Thank you very much. Appreciate it. Thanks, Andrew.

Okay, and we'll take our next question from Julian D. Mullen, I'm sorry, Smith with Bank of America.

It's okay. Thank you. It's okay.

Thanks. It's all good.

Thank you, team. I appreciate it. So perhaps if I can jump in here, You know, on the Columbia announcement, obviously a fairly large unit here. Can you talk about the recovery of undepreciated plants, securitization prospects, and whether or not you see legislation as being part of that conversation? It's not obvious. Obviously, some of your peers haven't necessarily pursued that route, but I'm curious on how you think about that avenue specifically, and then also the timing and resource requirements planning as part of the replacement, you know, whatever that may eventually be around it.

Sure. Great to hear from you, Julian. Good afternoon. So, you know, it's clearly with the announced retirement, you know, we look at the flexibility that we have in our CapEx plan, so we do have some opportunity as we think about between distribution and generation, but There's no question there'll be some additional need. We don't have the details of the size and timing of that quite yet. That's probably an area for later in the year. But we do have an opportunity for additional renewables likely to be coupled with storage. We've been working on our development plans anticipating that we'll need additional renewables. So as you know, we've got a lot of development efforts in place for what we did on wind in Iowa and then our solar efforts plus storage in Wisconsin, so we're going to lean heavily on a lot of the great work we've done over the last few years on that. As it relates to securitization, there is a provision that currently exists, and I'm sure there's going to be discussion about the securitization and the potential for that to be another tool, if you will, in the process. But as we think about it, Julian, it's really about having the right balance between investor outcomes and customer cost and affordability. Our path forward with our tax equity, we see our solar projects to be perhaps the lowest, if not among the very lowest cost projects that you're going to see on solar and renewables. So we feel very good about having that right balance with our tax equity. certainly the process going forward, I'm sure all of that will be in discussion relative to what's the best path for that balance between customers and share owners. So, you know, we expect reasonable outcomes. We have for many, many years. We're very confident in the filings we put forward, but certainly more work to come on that. Robert, anything you'd like to add on to those two items?

Maybe just one brief item to help with the clarification on the timing. So we have obviously announced the timing for the Edgewater facility retirement by the end of 2022 and now the Columbia by the end of 2024. The other piece of the puzzle is the West Riverside options. And we're still working through the exact timing on those. So once we have that, like John said, we expect to have better clarity by the end of the year. And so think of it, you'll get some more updates on the CapEx implication, the timings of these resources sometime in the second half of 2021 here.

Got it. Okay, so maybe to clarify that, would the stars align effectively to get that for the next 4Q21 call if you have all these elections through the course of the back half of this year? And then secondly, if you can clarify, it's sort of related to the long-term outlook. The 5-7 is off what base here? Just what's the baseline for that again? Sorry for the nuance here. Yeah, it's a

First one, you've got that spot on with the timing, and the second question was? Yeah, I'll take that one, Julian.

For the base here, it's off the 2020. Oh, right. It's normalized at $2.42, so the 5% to 7% is off that base. Awesome.

Thank you guys for the time. Really do appreciate it. Best of luck. Speak soon. Yep, thanks.

Okay, and we'll take our next question from Michael Sullivan with Wolf Research.

Hey, everyone. Hope you're all doing well. First question, just following on the Wisconsin rate filing there, I think you alluded to one of the potential rate offsets that you may have in taxes, which has been consistent with the past. Is there anything else in the form of regulatory liabilities and Can you help quantify those at all in terms of rate offsets?

Yeah, Michael, good to hear from you. So, yeah, we do still have some regulatory liabilities remaining for the excess deferred taxes. They're just not at the same level that we're experiencing here in refunds for 2021. We do have some other regulatory liabilities that were actually approved as part of the rate stabilization plan that we received approval from for the WPL. jurisdiction in December. One more notable one was some liquidated damages that we received as part of the West Riverside facility. Think of that as roughly $35 to $40 million. And there's some various other benefits that we've been accumulating over time, whether it was from excess earnings above our authorized returns that we have a sharing mechanism for. But think of it as probably in the neighborhood of somewhere between probably $60 and $80 million of total regulatory liabilities that are available to us to be able to use over the next several years to help us at some of the rate implications.

Got it. Okay. That's super helpful. And then switching over to Iowa, I just wanted to check in. I thought in your last deck you had on the calendar there a filing related to the 2020 test period that was going to be made in Q2 of this year, and I didn't see that in the updated deck, so just wondering where that kind of stands.

Yeah, I think what you're referring to is there is a subsequent proceeding process. So as part of the 2020 rate filing, there are rules that are still being drafted, so they're not completely final yet. But the IEB recently decided that we would be coming in for what they call a subsequent proceeding. And really what that's intended to do is to make sure that the rates that we put into effect into 2020 were reasonable and just. And we believe they were. We don't expect any refunds or any potential changes in the future. And that's largely gonna be based on where our earned ROEs came out for the end of 2020. We actually under-earned in 2020 below the 10% authorized level. So we don't expect any impacts of that, but we'll still be working through the process with the IWEE Utilities Board over the next several months. And then there's also be some processes to finalize those rules and exactly what needs to be filed over the next several months.

Okay, great. And my last one was just you gave that data point of, I think, 20% renewables in rate base right now. Any parameters you can help give on where that could potentially go over the next four to five years, given the plan that you've laid out?

Well, I'll give you a directional area of north, Michael, but probably no additional specifics for right now, but it's certainly growing.

Okay, great. Thanks a lot.

You bet. Thanks, Michael.

Okay, and we have one last question on the phone lines, and we'll take it from Andy Levi with Hype Hedge. Please go ahead.

Hey, guys. How are you doing out there? Great. Everything's running well, I hope. I'm like Texas, but...

So first, just in both Iowa and Wisconsin, as you go through the two regulatory processes there, what's the opportunity and timing, if the answer is there is one, on potential settlements in both states?

Yeah, maybe think of Iowa as we're probably a couple of years away from a rate filing, a formal rate filing, if you will, in Iowa. So that's a little bit out there. You know, in Wisconsin, we've had a good track record of working very collaboratively, and we'll put a very solid case together. So there's always that potential. I don't want to handicap it beyond that, but we've had some very recent success in achieving that type of settlement outcome. But other than that, I'd say it's... As we have in the past years, I think that opportunity exists.

Okay. And then just focusing on the clean energy blueprint, you know, the focus always, you know, on investor calls or just, you know, in sell-side reports seems to always be on the fleet transition, which obviously is a great opportunity. But then, you know, you talk to, you know, some of my peers, and they're like, well, then what happens after that? And I guess, you know, conversations I've had with you guys in the past, there seems to be a lot of runway beyond the food transition. I think on the T&D side, that needs to be done to, one, help the food transition, but also help your service territory, both in Wisconsin and Iowa, Can you kind of talk about the runway opportunities there and what is in the CapEx already and what is not in the longer-term opportunities there?

Sure. You know, happy to. I'll probably have – if Robert wants to add any of the numbers there, but if you think about the clean energy future, it's – really got to make sure that we think about how that fits transmission generation and it really doesn't happen unless the distribution grid is also moving that way. So we've got, as I noted, opportunities for resiliency to put our systems from more overhead to underground. We're starting that out and there's opportunity to grow that area as well as having a stronger distribution grid at a voltage that allows for more distributed energy resources to connect. So that's also an opportunity for us. It's in our current, but there's certainly an opportunity as we get more efficient for those two areas to grow. So we do see the distribution areas having plenty of growth potential for us. As we do in many cases, we start kind of walk before we run and make sure that we get very efficient as we deploy capital. Maybe if there's anything on categories and growth numbers, Robert, I'll ask you to weigh in.

Sure, Andy. Good to hear from you. Yeah, I characterize our rate-based growth as much in line with our earnings growth. We're not expecting any new common equity for the foreseeable future, so we think we can manage the business appropriately to achieve our 5% to 7% EPS targets without... having much of an impact on customer bills over the long run. Maybe just to add a couple more categories to the information John shared, we still have repowering opportunities on our wind sites that I'd say is probably more in the second half of this decade. We really don't have much of any storage built into our CapEx planes at this point. We do have some smaller, I would say, pilot programs that we're using, but there's also some further opportunities there. And then lastly is We've got a series of coal plants still in Iowa that we haven't announced the timing of any potential retirements. So if we think of that over the next 10 or 15 years, that will likely create some capacity needs for us that could provide some additional growth for us.

I have two more questions. Actually, the storage thing, I'm glad that you actually brought up because I think Sue and I were discussing that a few weeks ago, actually debating it as far as timing. Okay. I guess, what is your thinking on storage? Because obviously, you know, based on what you're installing, as far as, you know, solar and wind, storage would be a good incremental addition to those assets. And, you know, if you kind of look at what Nextera, you know, is already doing with storage, there's, you know, a great opportunity in those areas of software for storage. It's really a benefit to your customers. So why have you guys not kind of rolled out a storage plan yet, would be a way to put it?

Yeah, great question on that, Andy. And certainly, as I had shared, we do have storage facilities. I'll call them small. We kind of prove those technologies out and then scale them up. We've done some grid deferral storage work up to this point and tied it in with some of our community efforts and community solar size. So think of that as a little bit smaller size. We do have development work going on right now to size that up. So think of that as grid deferral, but as we're putting larger scale wind and and solar out there, we also have development plans to look at adding larger scale storage to help with the front and back end of how those units introduce into the market. So I completely agree. We're making sure that it's always got to make sense to our customers, so we're eager to add those when it makes sense for our customers, and we're in heavy development work right now.

So what, I guess, maybe in the third quarter when you roll out your new CapEx plan, we may see the numbers around storage, is that possible?

Yep, you know as well, Andy.

Okay. And then the other thing, just on the folks who have the line, the community line, isn't there a large opportunity, and maybe we can talk about it, Doesn't the voltage on your lines need to begin to increase from like 3 kV to a much higher kV? Can you maybe talk about that and kind of where you are? Because I think you've already begun the process on that. And maybe some numbers around how much, I mean, I don't know if you want to do miles, but how much of your system needs to be converted and if there's any type of measurement that you can give us as far as, you know, capex per conversion, you know, whether it's mileage or whatever it may be.

Yeah, certainly as we think about that, Andy, I think you're referring to our efforts to put a 25 kV backbone system out there and that's what I had referred to earlier that allows us to put more distributed energy resources or customer-connected resources to our grid. We're in the beginning stages of that. I think we're roughly, I'll use numbers around 5% of our system. But think of it as that's something you want to have condensed to certain areas where you convert smartly in certain areas as you're doing other work. It makes sense. And as we look for areas that have higher growth for some of those DER penetration, You know, the cost per unit and capex, I don't have those readily available, but that would refer back to our opportunities for additional distribution grid spend as we think about getting more and more efficient in that space. So think about it as the tail end of our current capex, and I think you'll see more of that as we refresh our capex going forward.

Let me ask it this way. Maybe Robert would know. So you said you're, you know... Right now it's just, you know, 5% of your system that you're kind of doing work on for the upgrade. Robert, do you have any clue how much you're spending on that? Just that one, you know, whether it's, you know, project, I don't know if it's one big project that equals 5% or any type of kind of numbers around that?

I mean, right now we're, we're probably replacing our system at the normal replacement rate of maybe 2% of the total system on an annual basis. We have roughly about 43,000 miles of line. About a fourth of it is underground and about three-fourths of it is overhead at this point. And like John said, only about 5% of it is at the 25 kV level at this point in time. So when you think about costs for putting stuff For example, underground, you're probably talking a couple hundred thousand dollars a mile at least, depending on whether it's in town or in the country. So a lot of opportunity for us. We don't have a specific quantification of the exact dollars that you'll see in the future, but that's really part of the flexible plan that we have. But as we have all of these generation opportunities in the near term, we've pushed some of that out, but we see a great opportunity maybe in the second half of this decade into the following decade for those types of expenditures and a good long runway to the growth that we're targeting.

Great. Thank you guys very much. I'll stop asking questions because it's 1.45 on Friday and people probably want to go skiing or something.

Thanks, Andy. Good to hear from you.

And it does look like we have an additional question on the phone line from Andrew Weisel with Scotiabank. Please go ahead.

Thanks for the follow-up. After Andy just tried to send everyone a happy hour, I felt kind of guilty grabbing one more question here. But if I may, so you've got in the slide that your carbon emissions were down 42% in 2020 versus 2005. Do you have any way to quantify how much of that was due to the impact of the pandemic? You know, volumes obviously, dispatch was a bit abnormal last year to say the least. Are you expecting that number to go up a little bit before it resumes the downward trend?

Yeah. Andrew, when you think of that, it's one of those numbers that will cycle up and down a bit. We look at the overall trajectory of that getting to our stated goal when we reach 2030. We like the path that we're on. I'm sure there's a contributor from a number of those factors, but we also look at the transitions we're making with some of our planned retirements of coal facilities, the high-efficient West Riverside. So don't have the specifics. That number will bounce around a bit, but we look at kind of the overall trend line, and it's really on track with what our stated objectives are.

Okay, so on target for the 50% reduction by 2030, as in net zero by 2050, right? On target, not necessarily better?

Yeah, I'd say on target for right now, but I appreciate the question.

Okay, great. Thank you.

Thanks, Andrew.

And it does appear that there are no further questions at this time. Ms. Gill, I'd like to turn the conference back to you for any additional or closing remarks.

This concludes Alliance Energy's fourth quarter and year-end earnings call. A replay will be available through February 26, 2021 at 888-203-1112 for U.S. and Canada or 719-457-0820 for international. Callers should reference conference ID 417-5543 and PIN of 9578. In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the investor 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.