Recent Press Release
Alliant Energy-IP&L Announces Agreement to Sell Transmission Assets to ITC Holdings Corp.; Introduces Energy for a New Generation Plan
” plan enhances energy reliability and results in:
- in energy infrastructure in next 7 years
- More than 65 new permanent jobs and hundreds of construction jobs
- As much as $1.7 million annually in new generation tax payments to the Marshalltown-area
- 100 megawatts of new wind power in Iowa
- nsmission assets to a company committed to invest in upgrading reliability and access
Cedar Rapids, Iowa - January 19, 2007 - Interstate Power and Light Company (IP&L), a subsidiary of Alliant Energy Corporation (NYSE: LNT), today announced a major electric utility infrastructure development plan for the states of Iowa and Minnesota designed to advance economic development, enable renewable energy, and support the Midwest's burgeoning alternative fuels industry.
A key component of this plan is the signing of a definitive agreement to sell IP&L's transmission assets located in Iowa, Minnesota, and Illinois to ITC Midwest LLC, a newly-formed subsidiary of ITC Holdings Corp. (NYSE: ITC), for approximately $750 million, subject to adjustment. Net proceeds from the sale, after taxes, transaction related costs and regulatory outcomes are estimated to be in the range of $475 million to $525 million.
ITC Holdings has announced its commitment to build transmission to meet the needs of its customers while supporting increasing electricity demand and growing interest in renewable energy resources in Iowa and Minnesota, including the states' growing ethanol and wind power industries.
At this time, IP&L anticipates that the proceeds from the sale will be used to help fund IP&L's infrastructure development plan, Energy for a New Generation. This infrastructure development plan includes investments in a coal baseload power plant and additional wind power to be built in Iowa. “Combined with the sale of IP&L's transmission assets, the
Tom Aller, president of IP&L, re-affirmed the utility's commitment and role in providing reliable energy to support the economic growth of our service territories. “We believe our plans announced today - a new power plant, expanded wind power and sale of our transmission system to a committed transmission system builder - exhibit our dedication to providing energy for the next generation and fulfilling our responsibility to the economic health of the communities we are privileged to serve,” said Aller.
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The company's Energy for a New Generation plan includes:
Sale of Transmission Assets to ITC Holdings
Pursuant to the purchase agreement, subject to customary closing conditions, ITC Midwest will acquire all of IP&L's transmission assets at 34.5 kilovolts and higher for approximately $750 million in cash, subject to regulatory approval. The purchase price is subject to various adjustments at closing, including an adjustment based on the value of the ratebase assets delivered as of closing. Net proceeds from the sale, after taxes, transaction related costs and regulatory outcomes are estimated to be in the range of $475 million to $525 million.
The transmission rates that ITC Holdings' subsidiaries charge their utility customers for transmission service are fully regulated by the Federal Energy Regulatory Commission (FERC). After the transaction closes, IP&L will pay the regulated rates to ITC Midwest for transmission needed to serve its customers.
Pending all appropriate state and federal regulatory approvals and satisfaction of other closing conditions, the transaction is expected to be concluded in late fourth quarter 2007. The transaction is subject to approvals by various regulatory agencies -- including the Iowa Utilities Board (IUB), the Minnesota Public Utilities Commission (MPUC), the Illinois Commerce Commission (ICC) and the FERC - as well as antitrust review under the Hart-Scott-Rodino Act.
As a fully independent transmission company, ITC Holdings is focused on improving electric reliability of the transmission system by making the necessary upgrades needed to enhance the transmission system. This investment is expected to benefit IP&L's customers by providing improved pathways to bring in lower cost energy and allow both Iowa and Minnesota to advance their plans for renewable energy and alternative fuels. “Limitations on the current electric transmission system could soon limit both Iowa's and Minnesota's ability to move power, including renewable energy, to customers,” said Aller. Further development of wind energy and other renewable ventures such as ethanol production will require millions of dollars of additional investment in the electric transmission system.
“The acquisition of IP&L's transmission assets supports ITC Holdings' continued mission to rebuild and invest in the electric transmission infrastructure for the benefit of customers through improved reliability and enhanced access to the competitive energy marketplace,” said Joseph L. Welch, president and CEO of ITC Holdings. “End-use consumers will be the true beneficiaries of this acquisition as we remain steadfast in our commitment to enhance electric reliability and further enable the development and growth of renewable energy resources.”
As an added benefit, an independent electricity transmission highway is expected to encourage greater flow of energy between generation facilities and customers, encouraging further investment in generation and ability to buy competitively-priced power to keep costs low for IP&L customers. “We believe this package of actions provides benefits to our customers, communities and our service territory states,” Aller said. “The expected result will be reliable energy for the next generation of customers.”
Baseload Coal Plant
In mid-2007, IP&L plans to request approval from the Iowa Utilities Board to build a new baseload coal-fired generation plant. Pending regulatory approval and further due diligence, IP&L plans to build the new plant next to the existing 140-megawatt Sutherland Generating Station in Marshalltown, Iowa. The anticipated new 600-megawatt plant will be designed for continuous operation. IP&L expects to utilize at least 40 percent of the plant's capacity. It is anticipated that other utilities will utilize the remaining capacity through co-ownership or purchased power agreements. Ownership partners are expected to be announced later this year.
The plant would take advantage of proven state-of-the art technologies to mitigate environmental impact, while ensuring maximum reliability. In addition, it is possible that construction of the new generating facility could open the door for a biofuels producer to operate a near-by facility utilizing the low-pressure steam from the power plant.
The power plant is anticipated to cost IP&L and its partners approximately $1 billion and is expected to be operational in 2013. This cost estimate is in current year dollars and excludes allowances for funds used during construction (AFUDC). The new plant is expected to employ 60-85 employees when operational. While under construction, the workforce is expected to average 300-400 people per day and, at the height of the effort, 1,000 workers are expected to be at the site each day. The community of Marshalltown is expected to receive annual tax payments of as much as $1.7 million from the new plant.
Wind Energy Facilities
IP&L is actively pursuing sites for the development of at least 100 megawatts of renewable wind energy in Iowa. With the outstanding wind profiles in the IP&L service territory, the company expects to add wind energy in the future.
“We believe there is significant potential for further development of wind generation in our service territory,” Aller said. “Customers appreciate the home-grown nature of wind energy and our communities benefit from the growing wind energy industry in our state and service territory.”
IP&L is currently reviewing sites in Emmett, Dickinson and Franklin counties for possible development. In addition, Wisconsin Power and Light, another Alliant Energy subsidiary, is pursuing sites in Iowa and Minnesota for the development of at least 200 MW of renewable wind energy. The companies are evaluating site locations and plans to select a site or sites early in 2007 with commercial operation expected in 2009, subject to regulatory approvals.
Energy Efficiency and Demand-Side Management
IP&L's new generation and the transmission asset sale will help meet the growing demands of IP&L's customers, which is expected to increase between one and two percent each year, and to serve communities with electric capacity that will help entice economic development. IP&L continues to encourage energy efficiency through its aggressive demand-side management programs, which include incentives and rebates for residential and commercial customers. Since 2000, the accumulated savings from our energy efficiency programs is greater than 1.7 million megawatt hours.
Alliant Energy Corporation is an energy-services provider with subsidiaries serving approximately 1.5 million customers. Providing its customers in the Midwest with regulated electricity and natural gas service is the company's primary focus. Interstate Power and Light, the company's Iowa utility subsidiary, serves 535,000 electric and 238,000 natural gas customers. Alliant Energy, headquartered in Madison, Wis., is a Fortune 1000 company traded on the New York Stock Exchange under the symbol LNT. For more information, visit the company's Web site at www.alliantenergy.com.
Media Contact: Scott Drzycimski (319) 786-7500
Investor Contact: Becky Johnson (608) 458-3267
This press release includes forward-looking statements. These forward- looking statements can be identified as such because the statements include words such as “expect" or "expects" or “expected,” “anticipated,” “plans,” “believe” or other words of similar import. Similarly, statements that describe future plans or strategies are also forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Actual results could be affected by such factors as: state or federal regulatory actions or local government actions which delay or prevent the transmission sale or new generation construction, including inability to obtain all necessary approvals and permits; the ability to complete the sale of the transmission assets on a timely basis and for anticipated proceeds; in the ability of the purchaser of the transmission assets to finance purchase price; unanticipated construction issues, delays or expenditures; changes to IP&L's access to capital markets; political conditions in IP&L's service territories; current or future litigation, regulatory investigations, proceedings or inquiries that could impede the implementation of the IP&L's plans; inability to find utility partners for co-ownership or purchased power arrangements; failure of equipment and technology to perform as expected; and economic conditions in IP&L's service territory. These factors should be considered when evaluating the forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements included herein are made as of the date hereof and Alliant Energy, IP&L and WP&L undertake no obligation to update publicly such statements to reflect subsequent events or circumstances.