Susan Gille – Manager, IR Pat Kampling – Chairman, President and CEO Tom Hanson – SVP and CFO Robert Durian – Controller and Chief Accounting Officer.

Andrew Weisel – Macquarie Capital Brian Russo – Ladenburg Thalmann & Co. Inc Steve Fleishman – Wolfe Research Andrew Levi – Avon Capital Advisors.

Presentation:.

Welcome to the Alliant Energy's First Quarter 2014 Earnings Conference Call. (Operator Instructions). Today's conference is being recorded. I would now like to turn the call over to your host, Susan Gille, Manager of Investor Relations at Alliant Energy..

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

With me here today are Pat Kampling, Chairman, President and Chief Executive Officer; Tom Hanson, Senior Vice President and CFO; and Robert Durian, Controller and Chief Accounting Officer, as well as other members of the senior management team.

Following prepared remarks by Pat and Tom, we will have time to take questions from the investment community. We issued a news release this morning announcing Alliant Energy's first quarter 2014 earnings and reaffirming 2014 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 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 risks that could cause actual results to be materially different. Those risks include, among others, matters discussed in Alliant Energy's press release issued yesterday and in our filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements.

In addition, this presentation contains non-GAAP financial measures. The reconciliation between the non-GAAP and GAAP measures are provided in the supplemental slides which are available on our website at www.alliantenergy.com. At this point, I'll turn the call over to Pat..

Good morning and thank you for joining us today. The first quarter certainly goes down as one of the most memorable for those of us within, in the middle of the Polar Vortex. I must thank our men and women, who tucked it out and go to work each and every day and never lost focus on providing exceptional customer service.

I'm pleased to report that our first quarter earnings that we are discussing today are the highest in company history. Driven mostly by the reduction nuclear capacity payments and realizing increased electricity and gas sales from both economic growth in our service territory and the weather.

Tom will provide more details on the financials, but in summary those three items alone increased earnings by $0.31 per share over the first quarter of last year. However, we do recognize that this winter was typical for some of our customers. Especially in dealing the entire utility bill.

Earlier this year, we contributed $3 million to the Hometown Care Energy Fund to help our income eligible customers with their utility bills. We have also expanded our customer outreach efforts and are working with customers to help them other funds of the systems and payment plan options.

On a positive note, we are trying to continue to improve in our service territory, unemployment rates are below the national average, with Iowa's rate now at 4.5% and Wisconsin's at 5.9% five year both for the State. Some of the trends we are experiencing include our modest increase of number of retail, electric and gas customers.

Continued expansion by our industrial customers and a slight increase in the used per customers. This is certainly encouraging and we will continue to monitor sales and determine if the weather normalized sales growth experienced in the last quarter of 2013 and the first quarter of this year represent a sustainable growth trend.

We have incorporated our first quarter weather normalized sales growth and chartered by 2014 sales forecast. We are now forecasting 1.7% in retail weather normalized, electric sales for challenging your 2014 over 2013. Now let me update you on our regulatory activities.

We have made the regulatory filings proposing retail electric base rate freezes, through the end of 2016 in both Wisconsin, Iowa and have proposed low rate gas base rate in Wisconsin for 2015. For WPL electric customers, we've proposed that retail electric base rate, which was set in 2011 we may have their current levels through the end of 2016.

We also requested that retail national gas customer base rate will reduce by $5 million in 2015 followed by a freeze on those rates through 2016. We are pleased that we are able to offer set of deductibles with a input from the Citizens Utility Board, Wisconsin Industrial Energy Group and PSCW staff.

The WPL's approval includes return off and on the significant investments made in our Michigan folks office, at Columbia and Edge Water as well as in industrial and electric and natural gas system. To recovery of these investments, is to be offset with changes in the amortization of the Energy Efficiency Regulatory Liability.

We expect to have $64 million in the Electric and Gas Energy Efficiency Liability at the end of 2014 and we're hoping $17 million of it for 2015 and $32 million of it for 2016. We've also proposed the continuation of the 10.4% ROE, a common equity ratio of slightly above 50% and the ROE sharing mechanism established in the last rate case.

The Commission has requested comments on the proposal by no later than Tuesday, May 20. We anticipate the PSCW will make a decision regarding our request in the second quarter of this year. The two monitoring level will be addressed outside of this proposal and mostly changed to be set annually.

We expect to make a few only filing for 2015 in the next 90 days. In March, we're announcing unanimous retail, electric base rate settlements between IPO. The Office of Consumer Advocate, Iowa Consumer Coalition, and the Large Industrial Group to freeze retail electric base rates for Iowa customers through 2016.

This settlements includes customer billing credits of $70 million for 2014, then $25 million for 2015 and a final credit of $10 million for 2016. We have agreements from all the parties in the IUB and again to credit customer bills as of yesterday. The credits are subject to a true up based on the IUB's final decision.

We anticipate a decision on this proposed settlement on the second quarter of this year. If this settlement is approved, it will extend the retail electric base rate set in 2011, through the first quarter of 2017.

The settlement allows for continuation of the Energy Adjustment Clause, the Transmission Rider and the Electric Tax Benefit Rider through 2016.

The settlement are based, are maintained in the current authorize your term equity in common equity ratio and earning a return off and on the 2014, year in Iowa Retail base rates of approximately $3.1 billion.

Rate base additions include investments in the emissions patrols, performance improvements at a Ottumwa, George Neal, Burlington and Prairie Creek as well as investments made in our distribution systems. Pending IUB's approval of this settlement is arguably but the next retail base rate case will be filed in the first half of 2017.

The 2017 case will be a request to recover the cost associated with the Marshalltown Generating Station, which we anticipate with a place and service in the second quarter of 2017. Let me provide a quick update on our Marshalltown Generating Station.

We've recently received the air permit and have filed all the permits with the IUB and our request for the Issuance of a Generating Certificate, which we anticipate by the end of May. The community is very excited about this project and we currently expect to be in construction in July.

As a reminder, the IUB approved a return on common equity of 11% to the 35-year depreciable life of the facility and a use of 10.3% on common equities for the calculation of AFUDC. In order to establish $920 million cost cap, including AFUDC and transmission upgrade cost.

Recently that the cost cap is sufficient to complete the project including the transmission upgrade that we anticipate ITC will self-fund. We expect that ITC will build IPL directly for the relevant climate, related to the Marshalltown transmission upgrade, once the line is in service and expecting the cost to go through the transmission rider.

Now let me quickly brief you on a current emission control construction activities. This is year that the majority of our emission and coal projects will be completed. In Wisconsin, construction of the baghouse and scrubbers at Columbia units 1 and 2 is 98% complete on time and below the original budget.

Units 2 equipment was placed in service last month and preliminary test results indicate that performance guarantee are being and achieved. We anticipated in service 6 for Columbia unit 1 is in July. Also construction has already started on scrubber and baghouse with an expected completion in 2016.

The installation of baghouse and scrubber for our Ottumwa facility is on budget and anticipated to be placed in service in November 2014. In addition, MidAmerican is installing baghouses and scrubbers at Neal units 3 and 4.

The Neal 4 project was placed in service at the end of 2013 and the Neal 3 project is expected to be placed in service, this month. In addition to the progress we are making on transforming our Tier 1 units.

We are also making progress on preparing our Tier 2 units to be compliant with the utility mercury and air toxic standards by the April 2015 deadline. We are currently installing low-cost controls at our Prairie Creek and Burlington generating stations and are converting the ML Kapp generating station from coal to gas.

Through year end 2013, we spent $20 million on these facilities and our 2014 to 2017 capital expenditure plan includes additional investments of approximately $35 million. We believe, we are well positioned to ensure a balance, flexible and environmental environmentally generating fleet that will serve our customers well into the future.

Late last year, we noted planned capital expenditure, starting 2016 for additional generation of WP&L. our current forecast indicates, a need for capacity and energy in 2019 during by the plan retirement of three coal units and by sales growth.

As part of our long-term planning resource efforts, WPL is investing a feasibility study of resource options. We plan to issue a request for proposal in the second quarter of this year to determine what available options exist in the region. Following analysis of the ARP results, we anticipate making the regulatory filing with the PSCW in late 2014.

Our current capital expenditure plan includes a new 300 megawatt natural gas-fired combined cycle generating facility as a placeholder until we determine the desired resource. Let me summarize the key messages for today. We had a successful first quarter. We believe we are on track to deliver another solid year of earnings in 2014.

We will continue to manage the company, striking the balance between capital investment, operational and financial discipline and cost impacted customers. We have a plan that will continue to meet our 5% to 7% long-term earnings growth objective and 60% to 70% common dividend payout target.

We are making progress transforming our generation portfolio to one that is balanced, with lower emissions and that has the flexibility to comply with all existing and currently proposed environmental regulations. At the same time, we are focused on economically leading energy capacity needs of our customers.

We've continued to work closely with our regulators and stakeholders to receive fair and timely outcomes. And finally, I must acknowledge and give thanks to our dedicated workforce, which not only provides outstanding service to our customers, but also delivers the financial results that we are discussing today.

Thank you for your interest in Alliant Energy and I will now turn the call over to Tom..

Good morning, everyone. We announced 2014 earnings last evening, with our GAAP earnings from continuing operations of $0. 79 per share, these earnings are a $0.25 per share increase over non-GAAP earnings of $0.72 per share in the first quarter 2013.

Our non-GAAP earnings adjustments in first quarter 2013 related to the preferred stock redemptions at both utilities. Comparisons between 2014 and 2013 first quarter earnings per share are detailed on Slides 2, 3 and 4.

First quarter 2014 earnings were higher than first quarter 2013 primarily due to the estimated weather impact on electric and gas sales and lower capacity payments related to the expiration of purchase power contracts associated with the Duane Arnold Energy Center and the Kewaunee Nuclear Power Plant resulting in a cost reduction of approximately $32 million.

Those expiring capacity payments will allow us to earn a return on and off rate base increases at both utilities of keeping retail electric customer base rate stable. We experienced weather normalized sales growth in the first quarter 2014. Forecasted retail sales trends between weather normalized 2014 and 2013 are illustrated on Slide 5.

Weather normalized sales grew as result of an increase in number of customers, use per customer and we believed customers utilized space heater, due to coping cost increases in shortages. In addition, several industry customers expanded their operations which increased weather normalized sales at both utilizes.

Industrial segment experiencing electric sales growth due to planned or production expansion include chemical, health services and manufacturing. In November, we issued our consolidated 2014 earnings guidance of $3.25 to $3.55 earnings per share. The 2014 guidance assumes normal weather and modest sales growth.

Due to the strong first quarter earnings resulting from the higher than expected sales, we currently anticipate full year 2014 earnings will be toward the top end of our range.

Third quarter results are significant driver of our full year earnings and in light of the first quarter results, we now have flexibility to accelerate operations and maintenance projects that were scheduled for later periods. For these reasons, we are changing guidance at this time.

IPL's tax benefit rides resulted in a $0.01 per share quarter-over-quarter variation in the first quarter 2014, when comparing to the first quarter 2013. The actual and projected quarterly earnings impact of 2014 tax benefit riders are provided on Slide 6. The tax benefit riders are not expected to impact full year 2014 results.

The walk from the 2013 to the 2014 projected affected tax rates are provided on Slide 7. Please note that the 2014 effective tax rates include electric and gas bill credit of $97 million through IPL tax benefit riders. Cash flows from operations are expected to be strong. Given the earnings generated by the business.

We also expected benefit given, we do not expect to make any material federal income tax payments until 2016 nor do we expect to make any contributions to our qualified pension plans over the next two years, since they were approximately 95% funded at the end of 2013.

We believe that with our strong cash flows and financing plan, we can maintain our targeted liquidity, capitalization ratios and credit metrics. Our financing plan assumes that the sale of our Minnesota distribution assets closes in 2014.

The estimated growth sales proceeds of approximately $130 million are expected to be used to reduce IPL's financing needs. The sale requires State and Federal Regulatory approvals. We filed for the approval of both the electric and gas sale with the MPUC earlier this year. These transactions will also require IUB and FERC approvals.

Our current financing plan anticipates issuing up to $300 million of long-term debt at both utilities in the latter half of 2014. We also plan on refinancing the $250 million 4% debt at the parent and the $60 million at the Franklin County Wind Farm.

We currently anticipate issuing approximately $150 million in aggregate of new common equity in 2015 and 2016. We do not plan to issue any material new common equity this year. We may adjust plans as deemed appropriate, if market conditions warrant and as our equity needs continue to be reassessed.

We have several current and planned regulatory dockets for 2014, which are summarized on Slide 8. We will wait the decision on both the IPL unanimous proposal settlement through 2016 and the WPL retail proposal for calendar year 2015 and 2016. We file IPL's Emission Plan and Budget in April.

As you may recall the Emission Plan and Budget is the regulatory evaluation process for major environmental projects in Iowa. The plan we filed, is consistent with our current capital expenditure plan. In Minnesota, we recently filed the Bi-annual 15-year integrated resource plan for IPL.

Included in the plan is the anticipated 10-year whole contract IPL will have Southern Minnesota Electric co-op as a result of the proposed electric distribution sales in Minnesota. Further, [indiscernible] a need for additional energy later this decade. We will continue to evaluate our options to meet these future energy needs.

In Wisconsin, we plan to request in the second quarter, 2014 a certificate of authority to install an SCR at Columbia Energy Center's unit 2, as well as a filing for the proposed generation investment at WPL in the fourth quarter, 2014.

We very much appreciate your continued support of our company and look forward to meeting with you throughout this year. At this time, I will turn the call back over to the operator to facilitate the question-and-answer session..

Thank you, Mr. Hanson. (Operator Instructions) We'll take our first question from Andrew Weisel with Macquarie Capital..

My first question is, after the rate settlement in both states, what is – is there any impact to the rate base outlook? You haven't confirmed them in the slide but are there any big or small changes to the growth outlook..

No, Andrew the slides were provided in IR deck are still the latest..

Okay and that's consistent with the settlements?.

Yes, it is absolutely yes..

Then next question is, if I heard you right Tom I think you said that you're going to accelerate some O&M.

thanks to the strong winter, is that stuff mostly from the next few quarters or is it more structural program that might have a long-term impact?.

Well, first of all we certainly have flexibility in terms of looking at the expenditures. Some of those could be expenses that we were originally planning for next year could be pulled into this year..

Okay, great and then my last question. I think your commentary on the equity need was unchanged.

Is there any opportunity that if, the rest of the year has normal weather and you're able to sort of keep the benefit from the strong first quarter, any chance to postpone that or is that sort of independent of the near-term trends?.

Certainly, we will continue to evaluate that the exit that we are forecasting is more driven because of the incremental CapEx but certainly with the level, we will have stronger cash flows. So that will be so the input as we continue to assess the equity needs..

We will go next to Brian Russo with Ladenburg Thalmann..

I'm sorry, if I missed this earlier but could you just elaborate on the weather normalized sales growth forecast that we should be using for 2014 and beyond?.

Yes, Pat said right now we're targeting approximately 1.7% in both jurisdictions recognizing that we did have a strong fourth quarter and strong first quarter, but we want to be careful that there were few events in both of those quarters that might suggest that sustainable maybe not be at those two levels.

So certainly, we are very pleased with the growth recognizing that we are seeing this across all sectors in both states, but until we really have more insights with second quarter. We will continue to certainly focus on the sales, but as Pat and I highlighted in the script.

We are seeing additional customers as well as additional usage and with the industrial sector expansion as well as list additional needs. We are certainly encouraged by that..

Okay, great and can you comment maybe on the O&M expense trends that you're seeing to kind of put prospective with your sales growth?.

If you can go back and look at our O&M, it's been fairly flat, we have been able to manage that with one exception you'll note that with the energy conservation in Wisconsin that does fluctuate a little bit, so you'll see that moving but in terms of as we look on a going forward basis.

You should expect kind of similar profile of O&M from what we've seen in the past. So what we are looking at in terms of potential bringing into 2014 would be nothing that I would characterize is being as unusual..

Okay and then lastly could you just comment on the $0.03 positive impact on the optimization of gas capacity contracts at IPL?.

Sure, first of all we've had this program in place for many, many years. if I say, we – it's the other utilities in Iowa, as well it allows us to optimize our gas utility assets and just given the significant in terms of market volatility and the opportunities presented to us.

We were able to capture additional benefits in the first quarter of 2014 and in fact that represents about almost twice of what we captured calendar last year. So it was $0.03, the other thing it's important. This is also an opportunity to continue to help our gas customers and they get the benefit of this program as well..

Okay and one more question, at the high end of your guidance.

Do you break through any of your sharing bands or now?.

Well, we'll be close but recognizing as you know Brian third quarter is the big quarter for us. So until we get to that level, it's probably premature but certainly our forecast assuming weather normal, would suggest that we are close to the top end..

We will go next to Steve Fleishman with Wolfe Research..

So, just generally on your rate proposal or your settlements.

Do you expect that you'll be able to earn the allowed returns under each of these?.

Yes, absolutely Steve again that's assuming the rate base assumption, I'm giving you in the IR deck..

Okay and is there something that would indicate that those rate base assumptions are going to change?.

Not materially in the two-year capital expenditure profile that we re-provided. These are well-known projects with pre-approvals so that should remain basically within those ranges..

And then I believe in Wisconsin the equity ratio is higher than it had been in this current proposal, is that correct?.

Just slightly, though..

Okay, so that doesn't really change your kind of overall plan, in terms of putting more equity in there in terms of your financing plan?.

No, it doesn't change..

We will go next to Andrew Levi with Avon Capital Advisors..

Just a couple of questions, first; can we just go a little bit more in detail over the Iowa settlement relative to Duane Arnold and kind of have the numbers, kind of work as far as the capacity savings?.

Sure, I mean Susan can give you more details with you, on this if you like but the real takeaway for this settlement is that, we are giving customer credits back over the next job of years.

When the customer credits decline and that's what's helping us achieve the increase in returning on our rate base because the rate base is going up? So keep in mind, the 2014 the customer billing credit is $70 million. [Duane] $25 million in 2015 and [indiscernible] $10 million in 2016..

So, they're the basically – they're replacing what would be rate increases without obviously effecting the customer but benefitting the bottom line, is that currently how you look at it?.

The base rate is getting frozen and the credits are going through the fuel clog..

That's great, then I guess as I kind of work through the numbers. Well actually let me just step back, so as you look at 2014 you're saying you're at the top of the range. Obviously there was weather included in that but at the same time. You're accelerating O&M from 2015, so I guess absent even the weather there was a good chance.

You were going to be at top end of the range, based on what you're seeing thus far again assuming normal weather.

Is that a fair statement?.

Andy, just to be clear. You know with the weather that we saw in the first quarter. It's definitely pushing us through the top end of the range and Tom's statement is that we actually have flexibility to move some O&M projects from future years. If necessary depending on how the rest of the year plays out..

Okay, but I guess what I'm saying, if you assume normal weather and you're going to move the O&M already and there was what $0.12 of weather I think, I'm not mistaken, there's normal.

You probably would have been at the top end of your range, regardless?.

Yes, it was a very large impact in the first quarter on weather..

And again, I know you don't have and giving guidance for 2015 or 2016 and that's going to come towards the end of this year as you always do, but seems to me looking at kind of consensus estimate for 2015, 2016 they're probably about $0.10 to low. So the question I have is, if you end up coming in at the top end of your range.

It's kind of normal earnings, not caused by weather of course would that be kind of the base that we would grow off of?.

You know, I think we'll have to wait till the end of the year to make that decision. Right now, we are looking at whether normalized from last year as our base. This year has started out to be little unusual and we'll just have to evaluate that as we go throughout the year..

Okay and then another question, I have is if bonus depreciation works ended at the end of the year.

How would that affect your need to issue equity?.

As I said, currently we are not forecasting to be a federal taxpayer until the first quarter, 2016. So obviously we have some impact and as I said at the equity needs are for calendar year 2015, 2016..

Right, but if bonus depreciation was extended. I would assume that your construction program would benefit from that and I guess the question is, would it possibly lessen the amount of equity that will need to be issued in 2015 and 2016..

Well certainly it will be a key consideration, as we continue to analyze the need. So rest assured that, if the extenders get approved that you will be analyzing the impact of the equity needs..

Okay, I mean I guess you guys are going to be at this comp so I can go over some now, longer term numbers with you, but it seems to me that the earnings [indiscernible], the company and again you're going to get these settlements kind of done and sealed.

But it seems that are there are these other companies probably lot greater than the people, who are forecasting right now, but I guess they'll be patient and wait for the year and kind of finish out first..

Thank you..

Appreciate that. Thank you, Andy..

And Ms. Gille there are no further questions at this time..

With no more questions, this concludes our call. A replay will be available through May 9, 2014, at (888) 203-1112(888) 203-1112 for US and Canada or (719) 457-0820(719) 457-0820 for international. Callers should reference conference ID 8244179.

In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the Investors section of the company's website later today. We thank you for your continued support of Alliant Energy, and feel free to call me with any follow-up questions..