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spk01: conference call for the first quarter 2022 results. This call is being recorded for rebroadcast. At this time, all lines are in a listen-only mode. I would now like to turn the call over to your host, Zach Fields, Investor Relations at Alliant Energy.
spk08: 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. Joining me on this call are John Larson, Chair, President and CEO, and Robert Durian, Executive Vice President and CFO. Following prepared remarks by John and Robert, we will have time to take questions from the investment community. We issued a news release last night announcing Alliant Energy's first quarter 2022 financial results. This release, as well as an earnings presentation, will be referenced during today's call and are available on the investor's page of our website at www.alliantenergy.com. Before we begin, I need to remind you that 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. At this point, I'll turn the call over to John.
spk09: Thank you, Zach. Hello, everyone. Thank you for joining us. 2022 is off to a solid start with over 25% of our annual earnings achieved year-to-date. and we are reaffirming our consolidated 2022 earnings guidance of $2.67 to $2.81. I'll share some of the key highlights and then turn the call over to Robert for more details relating to our financial performance, renewable investments, and regulatory matters. First, our temperature normalized sales were ahead of forecast, continuing a trend we saw throughout most of last year, and a key indicator of the strong and diverse customer base we proudly serve. We also had increased interest and activity on the economic development front, including the recent announcement that one of the largest Amazon facilities in the country will be built near Cottage Grove, Wisconsin. The warehouse and distribution facility would total 3.4 million square feet and create approximately 1,500 jobs. And in Iowa, we're excited to partner with Vervio as they break ground on their biorefinery expansion near Ames, Iowa next month. Another item to highlight was the strong performance from our wind portfolio. We saw outstanding wind power production for the first quarter, with total production more than 15% higher than our forecast. And some of our newest wind sites achieving net capacity factors in excess of 60% in the month of March. marking one of the strongest wind periods we have seen since we began owning and operating wind nearly 15 years ago. The strong wind energy performance helps us manage the impacts of rising fuel costs and demonstrates the customer benefits of having a diverse mix of energy resources in our portfolio, another example of our clean energy blueprint in action. These solid results help us continue our long track record of delivering value for our customers, communities, and investors. And we're also continuing to monitor and adjust to the impacts of global sourcing and supply chain issues, as well as the impacts of inflation. Robert will share more about this when I turn the call over to him in a few minutes. But let me note how important it has been to have a flexible plan, talented and creative team, and our ongoing efforts to manage costs for the benefit of our customers. On the solar front, earlier this week we held a golden panel event for our local officials and community members as the first panels were installed at our North Rock Creek solar farm near Edgerton, Wisconsin. And we recently celebrated the installation of the final solar panel at our Bear Creek facility, also in Wisconsin. And yesterday we received verbal approval from the Public Service Commission of Wisconsin for our second Certificate of Authority filing for an additional 414 megawatts of solar generation in the state. This result builds on our long history of achieving constructive regulatory outcomes. Throughout the process of the filing, our team demonstrated transparency regarding the current environment of supply chain and tariff risks, and we're committed to continuing that transparency as we continue our journey towards a clean energy future. That journey is part of our broader corporate responsibility. We've been sharing stories of our commitment to the environment throughout the month of April in honor of Earth Day, including progress we've been making on our commitment to plant one million trees by 2030. We recently approved two agreements with the Wisconsin Department of Natural Resources in Sauk and Juneau counties to begin tree plantings as a part of their reforestation efforts. More than 80,000 tree seedlings will be planted this year in these Wisconsin counties through this partnership. And in Iowa, Burlington, Marshalltown, and Grinnell are just a few of the 33 Iowa communities that will soon be greener, thanks to grants from our Community Tree Program in partnership with Trees Forever. Trees Forever will provide communities with tree planting support from selecting the best species for their area to creating a care and maintenance plan to make sure the new trees have a long and healthy life. Equally important to our environmental efforts are the social commitments to our employees, customers, and the communities we serve. We know that when we embrace the diversity of our employees and continue to build upon our strong culture, we create a sense of belonging and inclusion that leads to wonderful things for our customers. And we are being noticed for our efforts. We recently were recognized by Forbes as a top mid-sized employer for the fourth year in a row. And just last week, we were named to Newsweek's first-ever most trusted companies list. We will be sharing more of our progress and highlighting new initiatives with the release of our updated corporate responsibility report later this year. In summary, 2022 is off to a solid start, and we look forward to building on that momentum throughout the year as we focus on continuing our role as a leader in advancing renewable energy, delivering solid returns for our investors, and delivering on our purpose of serving customers and building stronger communities. I want to thank you for your continued interest in Alliant Energy. I'll now turn the call over to Robert.
spk05: Thanks, John. Good morning, everyone. Yesterday, we announced first quarter 2022 gap earnings of 77 cents per share compared to 68 cents per share in 2021. First quarter earnings were 13% higher on a year-over-year basis, led by increasing rate base at our Wisconsin utility. higher AFEDC earnings largely attributable to our 2022 solar portfolio construction, and higher electric and gas sales. For the full year, we are reaffirming our earnings guidance of $2.67 to $2.81 per share. The midpoint of that range is a 6% increase over 2021 adjusted earnings per share of $2.58. Details on our quarter earnings drivers and 2022 full year guidance can be found on slide three. Our temperature normalized sales for the first quarter of 2022 were better than expected, growing more than 1% compared to the first quarter of 2021, driven by stronger residential and commercial sales. Residential sales were higher primarily due to new customer growth in both Wisconsin and Iowa, and the commercial sales growth was supported by continued pandemic recovery in the education, office, and entertainment sectors of our customer base. O&M at our utilities was flat versus the first quarter of 2021 after excluding changes in energy efficiency expenditures. In the current environment of widespread inflationary pressures across the various areas of our business, I'm proud of our team's efforts to control costs on behalf of our customers and maintain utility O&M expenses consistent with 2021 levels. Moving to our new solar developments, we have made good progress on the construction of the initial 325 megawatts of utility-scale solar in Wisconsin, that is planned to go in service this year. Slide 4 showcases some of these 2022 solar development activities. The Department of Commerce investigation that was initiated in the first quarter has a potential impact that timing and costs of our 2023 planned solar projects. However, we feel confident that our 2022 planned solar projects will progress as anticipated and be placed in service later this year. We are advocating both directly and indirectly through multiple trade organizations for an expedited and fair outcome of this investigation. While we acknowledge this investigation could impact our 2023 plan projects, we are focused on mitigating such impacts and continuing our long track record of delivering on our 5% to 7% growth targets throughout the planning period. We have included our key regulatory initiatives on slide five. We were pleased to reach another key milestone with our clean energy blueprints yesterday with the receipt of the Public Service Commission of Wisconsin's verbal approval of our second certificate authority filing for 414 megawatts of additional solar projects in Wisconsin. Looking forward in Wisconsin, we are preparing a third certificate authority filing to request approval to construct an estimated 300 megawatts of additional firm capacity to meet our customers' growing demand. We are planning to make that filing in the upcoming month. And in our Iowa jurisdiction, we recently requested to revise the procedural schedule for our advanced remaking filing for 400 megawatts of solar and 75 megawatts of battery storage in the state. This request was made to allow time for our team to ensure we are providing the most current cost estimates for the projects we are pursuing. The updated procedural schedule can be seen on slide six. We have requested a decision from Iowa regulators by the end of the third quarter. We do not anticipate this modified procedural schedule to have a material impact on the timing of the in-service dates of our projects or the timing of our overall CapEx plan. Turning to our financing plans, we have made great progress so far in 2022. In the first quarter, at our Align Energy finance subsidiary, we refinanced our $300 million term loan and issued $350 million of new long-term debt. Our remaining 2022 financing plan includes issuing up to $600 million of long-term debt or Wisconsin utility and retiring $325 million of remaining long-term debt maturities in the second half of 2022. Lastly, Iowa corporate tax reform was signed into law last month. The new tax rules are expected to phase down the corporate income tax rate from its current rate of 9.8% to as low as 5.5% over time. The amount the tax rate will decline each year is dependent on annual state income tax collections from corporations and will be announced by the fourth quarter of each year. We view this tax law change as positive for customers as it is expected to provide long-term benefits to lower customer costs and serves as another driver for economic development activities in Iowa. As a result of this tax change, we also expect to recognize a modest earnings charge later this year related to revaluing deferred tax assets at our non-regulated businesses, which we plan to recognize as an adjustment to our earnings from normal operations. Refer to slide 7 in our presentation for more information on this tax change to assist you with your modeling. We appreciate your continued support of our company and look forward to meeting with many of you virtually and in person in the coming months. As always, we will make our investor-related materials available on our website. At this time, I'll turn the call back over to the operator to facilitate the question and answer session.
spk01: Thank you, Mr. Dorian. At this time, the company will open the call to questions from members of the investment community. If you would 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 button is turned off to allow your signals to reach our equipment. Again, press star 1 to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We will take our first question from Char Parraza from Guggenheim Partners. Please go ahead.
spk10: Hey, good morning, guys.
spk09: Morning, Char.
spk10: I just want to touch a little bit on sort of the circumvention tariffs, you know, because obviously it's topical with investors and, you know, we could be in a situation we get a proposed decision from the Commerce Department in August. Just curious on, you know, sort of the language around potentially seeing a shifting out of projects, the 23 projects. I mean, a certain peer and a couple of peers actually talked about potentially having pricing uncertainty through 25. So I guess, you know, the question is, is why only with the 23 projects could we see further slippage? And then curious also what levers you have to sort of mitigate the shifting out of that sort of solar capital, you know, to reiterate the five to seven, or could we maybe see a situation where the profile of the five to seven is slightly tweaked in the near term as we're thinking about capital being potentially pushed out?
spk09: Yeah, great. Hey, Char. John here. Hey, John. I appreciate the question. It certainly is topical, no doubt about that. You know, maybe I'll start with, if you recall in the last call, we mentioned some of the planning work we did last fall, you know, when we faced a similar petition. So the team took a look at that, made some adjustments to our projects, and, you know, we accelerated some material deliveries and kept these sites moving, if you will. That's helped us. you know, put us in a really good position for our 22 and also those planned for the first part of 23. So as you noted, the focus is for those, call it in the tail end of 23. You know, so I think, Robert, maybe a little bit context around the megawatts and to your point about how we think about the capital impact of that. Good morning, Char.
spk05: As John noted, we took it Yeah, we took actions after the first petition in 2021 to mitigate the impacts of the potential tariffs. And we've made really good progress in securing panels through the first quarter of this year. So as we pivoted also to source panels from some of our projects that would not be subject to the tariffs. As a result, we do not expect significant impacts to the 325 megawatts of WPL solar projects that we expect to put into service later this year. as well as we don't expect any significant impacts to approximately 250 megawatts of the earlier projects in 2023. So we're going to continue to monitor the Department of Commerce investigation over the next couple quarters here and continue to work with our developers and our solar panels to mitigate the impacts on the timing for what I would characterize as the remaining 500 megawatts that John indicated was in the kind of the latter half of 2023.
spk10: Got it. So just to round that out, even with the shifting of some capital and megawatts, you have enough mitigation measures to sort of have enough confidence that, you know, the profile of the five to seven where you are within that range shouldn't be impacted.
spk09: Yeah, you know, Char, we certainly remain committed to that. There's clearly some I think it's a tale of some headwinds and tailwinds here. You know, we've seen some nice load growth that's there. We've had some great O&M. But as you note, the impact of that and adjustments we'd have to make, we would have to certainly factor that in as well. But off to a good start, certainly a big part of our business planning is around contingencies for that back half of 23 projects, as you noted.
spk10: Perfect. And then just one last one, John, if I may, is it's terrific seeing sort of the the flat O&M profile this year. You know, but I'm just kind of curious, if you're seeing some of the pressures in inflation, I guess, what's the level of confidence in maintaining that flat O&M profile? I mean, obviously, we saw the wage report this morning, from the employment cost index, I guess, how are you offsetting some of the known pressures here that's coming from inflation?
spk09: Yeah, certainly there are impacts of inflation and cost of goods, as you know. There's no question about it. But as you know, we put in place our cost reduction efforts and mitigation. Now, we've been on this for a few years, and we've had a lot of good momentum going into this year. So that's certainly helpful. It's a lot harder to be on that negative trajectory when you have some of those pressures. We still have, you know... Some of these cost reductions, labor and others that are yet in front of us, they will be perhaps dampened a bit by some of these inflationary costs. I don't know if you want to add anything to that, Robert, but it's certainly an area we're going to have to just keep very, very sharp focus. Got it. Got it.
spk10: Terrific. Guys, congrats on the results. It's a really good start. Appreciate it. Yeah, thank you.
spk01: We will take our next question from Julian DeMoulin-Smith from Bank of America.
spk11: Thank you. Good morning, team. Robert, John, pleasure. So I suppose just following up on Char's question on a multifold, just to be more explicit about the ability to backfill, just can you talk through what exactly you're doing on that front? It sounds like you already were moving this, but should we expect more distribution capex amongst other things here? move around on 23? And just related to that, if I can, just also, on 23, what percent of your panels have you guys procured, and where do you guys stand with counterparties to address it otherwise?
spk05: Yeah, maybe I'll take your second question here first. So as we indicated, Julian, we got about 250 megawatts of the roughly 800 megawatts that we're planning on putting into service in 2023. where we either have sourced the panels and received them into the United States before the petition was filed, or we actually sourced them from vendors or suppliers that weren't subject to the potential tariffs that we're talking about. So just to put it into context, there's about 500 megawatts still in the latter half of 2023 that we haven't identified the sourcing yet to know for sure if we're going to have any impacts from the tariffs. And so to put that into perspective, Most of those are part of our CA2 projects that we just received approval for. And we've got cost targets there, call it roughly $1,600 per KW. And so that's roughly, call it maybe $800 million of CapEx that we're talking about. A couple things to be aware of as part of that number. We'll be spending some of the project costs of that $800 million just to prepare the sites for the panels for when they do arrive. We'll continue forward with a lot of the preparation work and just be ready to go once we have the solar panel area identified as far as the source of that set of panels. The other thing I'd note is, as you guys recall, we've actually petitioned with the Commission and received approval to do tax equity partnership structures for these. And so that's another factor that limits really the impact on our earnings because About a third of these costs are going to be sourced or financed through the tax equity partnership, so it limits the amount of rate-based impacts and, therefore, earnings profile impacts when we think about that 500 megawatts in the latter half of 2023. So it's probably maybe not as big as maybe one might think when they first hear some of the megawatt numbers. And so when we think about how we're going to backfill that or take care of that, A lot of what John talked about, we tend to be a little more conservative with our sales forecast. We tend to be a little bit more conservative with what we're doing with O&M costs, and we think we can probably make up and mitigate a good chunk of that through those two different types of activities and may not really need to backfill a whole lot of capex as a result of that.
spk11: Excellent. Thank you. In fact, you kind of bring up the next question in some respects here, if you can. retail load growth of 2% in the first quarter is robust. How does that track against your internal forecast? You said specifically, I think a second ago, load forecasts are pretty conservative. And then separately on the O&M side, I think you guys talk about 3% to 5% reduction. You said a second ago that there's some more room to go on that. Again, I know that you're guiding flat this year, but more structurally 3% to 5%. There's more room to go on that 3% to 5% vis-a-vis offsetting this, if I hear you right.
spk09: Yeah, Julian, John here. I might start on the cost reduction. We still have a long-term declining O&M trajectory. In certain years, it might be more than others. I think some of the offsets with inflation, it doesn't mean that we can't still achieve declining O&M because that's our focus. And we tend to be a little conservative on that as well, as you noted. But on the sales forecast, we're probably in that 0% to 1%, but we're seeing With our internal forecast, and if you recall over the previous years, we were probably more in the zero to half, but we're starting to see that climb towards that 1% or greater. So it's a sign of some great rebound that we've seen from COVID. There's always been some great strength in our ag businesses, and we've seen some pickup in advanced manufacturing. Now we're seeing that in sectors like education, hospitality, transportation, others that had still lagged a bit during COVID have come back through the tail end of last year and into this year. So it's really a good story. And I noted a lot of great interest on the economic development front. So we tend to wait a bit before we start adjusting our internal trend lines, if you will, but it's been off to a solid start here for a number of quarters.
spk11: Excellent. Well done. And on the low trend, even the ag you mentioned here, is that something we should expect to accelerate given the global dynamics here? As best you see it?
spk09: Well, it's certainly, I think, part of that. But, you know, these businesses find a way to be very efficient in what they do as well. So I think the point is it looks like it could be even more sustainable, as maybe I would put it that way. But smart businesses and they know how to run efficiently are But it's a net positive.
spk11: Clearly. Well, best of luck. Thank you guys for the time. Cheers. Thanks, Julie.
spk01: We will take our next question from Michael Sullivan from Wolf Research.
spk04: Hey, everyone. Good morning. Good morning, Michael. Hey, guys. Yeah, just wanted to clarify kind of along the same line of questioning around the solar uncertainty from the DOC investigation. Can you just play out the scenario if this preliminary ruling is kind of a negative outcome with tariffs? And kind of what does that do to the plan? And are you still able to move things around and hit – your targets and the like.
spk09: Yeah, Michael, maybe I'll say it. I can assure you we've done a lot of scenario planning on that. And maybe it's not to get into too specific here because there's a range of outcomes. We took some early action to have some very quality panel pricing and contracts. So it's just a matter of maybe if that clarity is there, that's certainly a good outcome pricing may have to be factored in. But when you look at the range of alternatives, these projects are going to make sense. There's a strong need. We've been talking about demand growth, the need for renewables. So that path in what we do is likely not really in question. It's just a matter of probably getting the certainty of what that pricing, if any, change, and maybe a little bit more on just the scheduling. What we'll do on our end is be well prepared for the sites. So when they arrive, obviously, we can be very, very expeditious at getting them installed, which is what we did back last fall when we thought about our 22 projects. So hard to certainly handicap all of those outcomes, but maybe give you a little color on how we're thinking about it.
spk04: Okay, that's helpful. And, yeah, just on the cost, maybe if you could give us the context there. I think, Robert, you said this latest tranche is looking like $1,600 a KW, right? How does that compare to what you were seeing on some of the initial tranches of solar and how much higher could that go in some of the scenario analysis you run looking out into the future?
spk05: Maybe the best data point I can give you is compared back to the regulatory approvals and the updated information we've shared as part of the CA1 projects. Those are the ones that we're going to be putting into service here in 2022. So we did update back in July of last year the commission and let them know that we did see some cost increases roughly in that, call it 10% increase range. And that puts it likely in the, call it 1400s for KW for those projects. Since then, we've continued to see escalations in price, but we still think we're probably around that in the 1400s for those first CA projects. And then with these second CA projects that we just received verbal approval for yesterday, that's in the call it 1600 per kW range. So with that said, those prices are still very attractive for us when we think about alternatives for us to provide resources for our customers' demand growth. So we still feel very committed to doing these. moving forward with them. And that's what I would characterize as good projects with great pricing. Right now, what we're just trying to figure out is the exact timing of when we might be able to get those in service based on this Department of Commerce investigation.
spk04: Okay, great. Thanks. And my last one, just on the O&M side of things, are you seeing any potential pressure from pension expense there? I think you're kind of covered in Wisconsin, but maybe in Iowa there might be some exposure. How should we be thinking about that?
spk05: Yeah, there's interesting developments when it comes to the pension plan information. So we benefit from the fact that interest rates are rising because that lowers our obligation. But the plan performance, obviously with the stock markets being relatively flat this year, doesn't meet our expectations as far as earnings on the plan assets. So when you combine those two together, we could see some, I would say, modest increases in pension plan expenses for 2023. As you indicated, in our WPL rate case, we have a deferral mechanism such that if our pension costs exceed what was set in the 2023 rate case levels, we are able to defer those costs so we won't see any P&L impact. On the Iowa side, because we haven't been in for a rate case for a while, that would be something that we would have to offset as far as any impacts on 2023.
spk04: Okay. Thanks a lot.
spk01: We will take our next question from Andrew Wiesel from Scottia Bank. Please go ahead. Hi.
spk07: Good morning, guys. Thank you for all the color on the renewable stuff. I want to change gears a little bit, and that's about the earnings trajectory. The first quarter was very strong, obviously. If I take 77 versus the midpoint of the full year guidance, I calculate that's about 28% of the full year. That's quite high. The last several years were kind of in the low 20s. So my question is, does this mean that you're tracking toward the high end of the range, or is it more about an atypical seasonality whatever, things like AFUDC for solar or any other considerations?
spk09: Yeah. Hey, Andrew. John here. You know, I'd say this is, first of all, a large part of efforts we've been doing as we've been transitioning from specific large projects, as we've talked about having a little more kind of bite-sized in-service capital. So it's part of our planning to really have earnings more stable throughout the quarters instead of having, you know, primarily it was Q3 with just weather. So rather than translate that into, you know, Q1 times four and a different outcome, we really tried to manage that. So still feel very comfortable with the guidance range that we've had. And this is a little bit more about how we planned our investments in our rate case planning.
spk07: Okay, so in other words, the quarter wasn't necessarily stronger than you expected. It's just maybe we, you know, us on the outside didn't quite get that.
spk09: It's certainly a bit stronger, and I think I'd point to the sales was the primary, you know, positive upside on that, Andrew.
spk06: Okay.
spk05: I might add, Andrew, on the sales, there's two factors to that. One is the temperature impacts, which was about three cents per share. Okay. The other was the temperature normalized sales growth being better than expected. So when you combine those two, we're probably about five cents more than we originally expected in our initial plan. And so you're right in noticing that that was an increase. But keep in mind also on the temperature side, we normally exclude that for purposes of what we're trying to target with the midpoint of our guidance.
spk07: Sure. Okay, that's helpful. Thank you both. Then second, on the new Iowa tax change, I assume over time 100% of that savings would be passed on to customers, but what would be the mechanism? It might be too early, but would this be chewed up only after the next rate case, whenever that is, or would it be more of a fuel clause annual adjustment?
spk05: A couple different pieces to that puzzle, so to speak. When you look at our different mechanisms in Iowa right now, Where we see probably some more near-term impacts going directly back to customers is we've got a renewable energy rider, as you recall, with the 1,000 megawatts of wind that we put in service in 2019 and 2020. That tax rate change, once we see that, would actually translate into some lower costs that we would pass through that rider. We also expect some positive benefits as a result of the transmission costs that we receive and the fact that those costs will be lower and that will pass through our transmission rider immediately to customers. The remaining piece, we're currently developing plans on how we would actually address that. There's no definitive mechanisms at this point, but we'll be working with the regulators in Iowa to try and figure out a plan to be able to address that and figure out how we're going to give those back to customers by the time we get back to the next rate case.
spk07: Okay. Would it sort of accrue on the balance sheet in the meantime while that's being decided?
spk05: Still to be determined. No, we'll still be working on that. We'll not have a sense really how big this is until we get to the fourth quarter and actually see the rates. So it's still a little early to really know if we're talking about a material amount here yet or not. And so in the meantime, we'll be working on some plans to share with the regulators on how to do that.
spk07: Very good. Thank you, guys. Thank you, guys.
spk01: Thanks, Andrew. We will take our next question from Andrew Levi from Hitech.
spk03: Hey, guys. Can you hear me?
spk09: We can, Andy.
spk03: Good morning. Good morning, Andy. Good morning to you. I'm going to go one more time on the solar campaign. Just a couple of questions around that. So it's $800 million of... I guess headline CapEx, right? Is that right, Dorian? Is that correct?
spk05: Yeah, roughly that's the correct number.
spk03: Right, okay. And then 250 megawatts is then over in the source. How much CapEx is that of the 800? Or is that not including the different pieces?
spk05: That's different from the $800 million related to the 500 megawatts in the latter half.
spk03: Okay, okay. And then out of the 800, how much do you think would be backed off for tax equity? So we're trying to figure out rate-based impact.
spk05: Yeah, you're usually seeing probably somewhere in the neighborhood of 30% to 40% that's funded through tax equity partnership structures.
spk03: Okay, so would we take 30 to 40% off of the 800 to get the kind of rate-based capex effect?
spk05: Yeah, the rate-based impact, you're correct.
spk03: Okay, and that's 500 whatever million dollars. Is that over 23 and 24, or was that all by the end of 23, so really a 24 earnings impact?
spk05: Yeah, that would be CapEx in 22 and 23 with rate-based additions going in in 23.
spk03: Okay, but towards the end of 23, right, as far as the key set could be delayed. Is that correct? You're correct. Okay. So let me just cut to the chase then. I understand all the things you said about sales and other mitigation aspects and that, you know, things may be – but better. You can do, like, you know, the dumb math, the rate-based math. But kind of when this was occurring a couple quarters ago, you know, real condition was you were going to push it out and then replace it with other capex. And I don't know if that's part of the plan. I think Julian kind of asked the question, but, you know, should we expect for whatever reason, it doesn't matter what the region or what our views are, that this can't be built until, I don't know, 25 because there's so much noise or the costs go up or whatever the case is, that there is $500 million of incremental capex in 23, let's say 24, to substitute for that silver.
spk05: Yeah, so we would be looking at that as part of our, call it 24-25 rate case planning activities, Andy. So there would likely be some capital expenditures that if these things were delayed longer than expected, that we would be replacing this solar capex with different capex. To your point, it could be electric distribution spend. It could be other resources that we think about to meet the growing demand of our customers. And so That would all factor into our rate case planning activities to ensure that we put together a plan that's in the best interest of our customers and ensure that we get recovery of that as part of our next rate case process.
spk03: Okay, so it sounds like the way that you're supposed to recover the solar, if I'm not mistaken, that if there is a material delay, that there could be, I don't know, if I try to do rough math, $15 million to $20 million of net income that would need to be made up in the interim, right, through that kind of bridge year, bridge year being 23, first half of 24, to offset any major delays. So is that the other way to look at it?
spk05: Yeah, I don't think to the math on the numbers exactly, Andy, but I think you're thinking about it correctly.
spk03: Okay. Okay. And so then back to maybe Char's original question, like where you would fall within the range. So you have this 5% to 7% growth rate. You guys have done an amazing job being at the middle to the top end of that growth rate. It's reflected clearly in the way that your stock trades relative to the other peers within the sector. I guess basically it would be very difficult to kind of be taught middle to the top end, that one year, that one bridge year, whatever that year is, with that, just based on the timing? Or am I looking at that wrong?
spk05: Well, I think that's fair, Andy. I'd characterize it as a short-term, or we may be on the lower end of that range is how I'd characterize it. But over the long-term, we still feel good about the 5% to 7%.
spk03: Okay. Maybe that was the question. I should have just asked one question instead of all these other questions. That's just me. So, okay. But thank you. That, to me, clarifies it very much. Have a great weekend.
spk01: We will take our next question from Ross Fowler from UPS.
spk02: Morning, John. Morning, Robin. How are you? Good. Morning, Ross. So just not to beat a dead horse after all of Andy's questions, but just going back to the 1,600 kilowatt cost target in the CA2 process, and obviously you've let us know that you're filing with the commission for an increase in the cost cap. So when we get to the other side of this circumvention case and we actually determine if there's going to be a tariff, what that tariff looks like, you just remind us how the CA regulatory process works if your sourcing cost for those 500 megawatts of projects is going to go up? And then maybe as a corollary to that question, is there any tariff assumption in that $1,600 kilowatt cost target?
spk05: Yeah, so first off, there is no tariff assumed in the $1,600 per kW CA2 cost target. And what we would do is if we did see some additional costs above and beyond what's in the CA2 target, we'd be sharing that with the commission. Similar to what we did with CA1 and CA2 as we went through the process, we've been keeping them informed. We've been very transparent about the economic conditions and inflation impacts on these solar projects. So it would be a communication they would see throughout – the next several quarters. As we see information change, we'll share that with them. And at the end of the day, what will happen is this information will be factored into our next rate case if there are any cost increases. And we'll be going through a review of that and getting approval of that with the next rate case.
spk02: That's great, Robert. And then if by circumstance, hopefully not, but if you actually end up above the cost cap, what does that require you to do with the regulator? And then would you just say, you know, I'm above the cost cap, so I really have to maybe delay some of these projects to source the panels from somewhere else that's not subject to these tariffs to make sure I'm not increasing customer rates too much.
spk09: Yeah, Ross, John here, maybe I'd say, you know, it's not certainly atypical to go back if there's a prudent cost increase on projects. We'd go back and work that through the process with our regulators. I think the real question is, do the projects still make sense for customers, which I think Robert had noted, compared to alternatives and the need that we have, the capacity need that we have. These are very strong projects. It's not necessarily something where you want the cost to increase, but they still make sense for our customers, and we feel that's still going to be a pretty strong story. I think the point about which panels we've got to kind of take a look if there's different panels and different pricing out there, but we feel very good about the contracts we have in place, and that's kind of a to-be-determined, so I don't want to get too far ahead on that part of it.
spk02: No worries, John. Thank you. That's good color. Thank you. Thanks for the time.
spk09: Okay. Thanks much.
spk01: That concludes today's question and answer session. Mr. Fields, at this time I will turn the conference back to you for any additional or closing remarks.
spk08: Thank you. This concludes Alliant Energy's first quarter earnings call. A replay will be available on our investor website. Thank you for your continued support of Alliant Energy and feel free to contact me with any follow-up questions.
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