Commitments And Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure

COMMITMENTS AND CONTINGENCIES

(a) Capital Purchase Obligations - Alliant Energy, IPL and WPL have entered into capital purchase obligations that contain minimum future commitments related to capital expenditures for certain of their emission controls and generation performance improvement projects. At March 31, 2013, Alliant Energy’s, IPL’s and WPL’s minimum future commitments related to capital expenditures for generation performance improvements at IPL’s Ottumwa Unit 1 and the installation of scrubbers and baghouses at WPL’s Columbia Units 1 and 2 to reduce sulfur dioxide (SO2) and mercury emissions at the generating facility were $63 million, $12 million and $51 million, respectively.

(b) Operating Expense Purchase Obligations - Alliant Energy, IPL and WPL have entered into various commodity supply, transportation and storage contracts to meet their obligations to deliver electricity and natural gas to IPL’s and WPL’s utility customers. Alliant Energy, IPL and WPL also enter into other operating expense purchase obligations with various vendors for other goods and services. At March 31, 2013, minimum future commitments related to these operating expense purchase obligations were as follows (in millions):



	Alliant Energy		IPL		WPL
Purchased power (a):
Duane Arnold Energy Center (DAEC) (IPL) (b)		$1,808		$1,808		$—
Kewaunee Nuclear Power Plant (Kewaunee) (WPL)	57		—		57
Other	52		1		51
	1,917		1,809		108
Natural gas	365		240		125
Coal (c)	235		71		42
SO2 emission allowances	34		34		—
Other (d)	47		26		15
		$2,598		$2,180		$290


(a)	Includes payments required by purchased power agreements (PPAs) for capacity rights and minimum quantities of MWhs required to be purchased.

(b)

Includes commitments incurred under an existing PPA that expires February 2014 and a new PPA completed in March 2013. The new PPA grants IPL rights to purchase 431 MWs of capacity and the resulting energy from DAEC for a term from the expiration of the existing PPA in February 2014 through December 31, 2025. If energy delivered under the new PPA is less than the targeted energy amount, an adjustment payment will be made to IPL, which will be reflected in IPL’s energy adjustment clause.


(c)	Corporate Services entered into system-wide coal contracts on behalf of IPL and WPL that include minimum future commitments of $122 million that have not been directly assigned to IPL and WPL since the specific needs of each utility were not yet known as of March 31, 2013.


(d)	Includes individual commitments incurred during the normal course of business that exceeded $1 million at March 31, 2013.

Air Permitting Violation Claims - In 2009, the EPA sent a Notice of Violation (NOV) to WPL as an owner and the operator of the Edgewater Generating Station (Edgewater), the Nelson Dewey Generating Station (Nelson Dewey) and the Columbia Energy Center (Columbia). The NOV alleges that the owners of Edgewater, Nelson Dewey and Columbia failed to comply with appropriate pre-construction review and permitting requirements and as a result violated the Prevention of Significant Deterioration (PSD) program requirements, Title V Operating Permit requirements of the Clean Air Act (CAA) and the Wisconsin state implementation plan (SIP).

In September 2010, the Sierra Club filed in the U.S. District Court for the Western District of Wisconsin (Court) a complaint against WPL, as owner and operator of Nelson Dewey and Columbia, based on allegations that modifications were made at the facilities without complying with the PSD program requirements, Title V Operating Permit requirements of the CAA and state regulatory counterparts contained within the Wisconsin SIP designed to implement the CAA. In October 2010, WPL responded to these claims related to Nelson Dewey and Columbia by filing with the Court an answer denying the Columbia allegations and a motion to dismiss the Nelson Dewey allegations based on statute of limitations arguments. In November 2010, WPL filed a motion to dismiss the Nelson Dewey and Columbia allegations based on lack of jurisdiction. In May 2012, the parties filed a Stipulation of Dismissal without Prejudice, closing the case, but permitting the Sierra Club to file a future lawsuit against WPL relating to these allegations.

In September 2010, the Sierra Club filed in the U.S. District Court for the Eastern District of Wisconsin a complaint against WPL, as owner and operator of Edgewater, which contained similar allegations regarding air permitting violations at Edgewater. In the Edgewater complaint, additional allegations were made regarding violations of emission limits for visible emissions. In February 2011, WPL responded to these claims related to Edgewater by filing with the U.S. District Court for the Eastern District of Wisconsin an answer denying the allegations and a motion to dismiss the allegations based on lack of jurisdiction.

In April 2013, WPL, along with the other owners of Edgewater and Columbia, entered into a Consent Decree with the EPA and the Sierra Club to resolve the claims relating to Edgewater, Columbia and Nelson Dewey, while admitting no liability. The Consent Decree has been lodged with, and is subject to approval by, the Court. Under the Consent Decree, WPL is required to install the following emission controls systems:


•	Selective catalytic reduction (SCR) system at Edgewater Unit 5 by May 1, 2013 (placed in-service in December 2012);


•	Scrubbers and baghouses at Columbia Units 1 and 2 by December 31, 2014;


•	Scrubber and baghouse at Edgewater Unit 5 by December 31, 2016; and


•	SCR system at Columbia Unit 2 by December 31, 2018.

WPL is also required to fuel switch or retire Nelson Dewey Units 1 and 2 and Edgewater Unit 3 by December 31, 2015, and Edgewater Unit 4 by December 31, 2018. In addition, the Consent Decree establishes emission rate limits for SO2, nitrogen oxide (NOx) and particulate matter for Columbia Units 1 and 2, Nelson Dewey Units 1 and 2 and Edgewater Units 4 and 5. The Consent Decree also includes annual plant-wide emission caps for SO2 and NOx for Columbia, Edgewater and Nelson Dewey. WPL will also pay a civil penalty of approximately $2 million and complete approximately $7 million in environmental mitigation projects.

Final recovery of the costs expected to be incurred related to the Consent Decree will be decided by the PSCW in future rate cases or other proceedings. Alliant Energy and WPL currently expect to recover any material costs incurred by WPL related to the terms of the Consent Decree from WPL’s electric customers, except for costs related to the civil penalty. As a result, Alliant Energy and WPL do not currently believe any material losses from these air permitting violation claims are both probable and reasonably estimated and therefore have not recognized any material loss contingency amounts related to these claims as of March 31, 2013.

Alliant Energy Cash Balance Pension Plan (Plan) - In February 2008, a class-action lawsuit was filed against the Plan in the Court. The complaint alleged that certain Plan participants who received distributions prior to their normal retirement age did not receive the full benefit to which they were entitled in violation of ERISA because the Plan applied an improper interest crediting rate to project the cash balance account to their normal retirement age. These Plan participants were limited to individuals who, prior to normal retirement age, received a lump-sum distribution or an annuity payment. The Court originally certified two subclasses of plaintiffs that in aggregate include all persons vested or partially vested in the Plan who received these distributions from January 1, 1998 to August 17, 2006 including: (1) persons who received distributions from January 1, 1998 through February 28, 2002; and (2) persons who received distributions from March 1, 2002 to August 17, 2006.

In June 2010, the Court issued an opinion and order that granted the plaintiffs’ motion for summary judgment on liability. In December 2010, the Court issued an opinion and order that decided the interest crediting rate that the Plan used to project the cash balance accounts of the plaintiffs during the class period should have been 8.2% and that a pre-retirement mortality discount would not be applied to the damages calculation. In May 2011, the Plan was amended and the Plan subsequently made approximately $10 million in additional payments in 2011 to certain former participants in the Plan. This amendment was required based on an agreement Alliant Energy reached with the Internal Revenue Service, which resulted in a favorable determination letter for the Plan in 2011. In November 2011, plaintiffs filed a motion for leave to file a supplemental complaint to assert that the 2011 amendment to the Plan was itself an ERISA violation. In March 2012, the Plan and the plaintiffs each filed motions for summary judgment related to the supplemental complaint, and the plaintiffs filed a motion for class certification, seeking to amend the class definition and for appointment of class representatives and class counsel.

In July 2012, the Court issued an opinion and order granting plaintiffs’ motion for class certification, but only as to the interest crediting rate and the pre-retirement mortality discount claims of lump-sum recipients. As a result of the opinion and order, two new subclasses were certified in lieu of the prior subclass certification. Subclass A involves persons who received a lump-sum distribution between January 1, 1998 and August 17, 2006 and who received an interest crediting rate of less than 8.2% under the Plan as amended in May 2011. Subclass B involves persons who received a lump-sum distribution between January 1, 1998 and August 17, 2006 and who would have received a larger benefit under the Plan as amended in May 2011 if a pre-retirement mortality discount had not been applied. In the opinion and order the Court then granted plaintiffs’ motion for summary judgment as to the two subclasses, and denied as moot the parties’ motions for summary judgment with respect to issues beyond the two subclasses.

In August 2012, as amended in September 2012, the Court entered a final judgment for the two subclasses in the total amount of $18.7 million. The judgment amount includes pre-judgment interest through July 2012 and takes into account the approximate $10 million of additional benefits paid by the Plan following the Plan amendment in 2011. In September 2012, the Plan appealed the judgment, and the interlocutory orders that led to the judgment, to the Seventh Circuit Court of Appeals. In November 2012, the Plan filed its opening brief with the Seventh Circuit Court of Appeals in which it seeks to reverse all or part of the judgment. In April 2013, the Seventh Circuit Court of Appeals heard oral arguments and has not yet issued its final decision.

The judgment discussed above did not address any award for plaintiffs’ attorney’s fees or costs. In September 2012, the plaintiffs filed a motion with the Court for payment of plaintiffs’ attorney’s fees and costs in the amount of $9.6 million, of which $4.3 million was requested to be paid out of the common fund awarded to the two subclasses in the September 2012 judgment. In February 2013, the Court awarded plaintiffs’ attorney’s fees and costs in the amount of $6.4 million. The Court ordered that all of the fees and costs be paid from the $18.7 million judgment previously awarded and not be in addition to that judgment.

Alliant Energy, IPL and WPL have not recognized any material loss contingency amounts for the final judgment of damages as of March 31, 2013. A material loss contingency for the judgment will not be recognized unless a final unappealable ruling is received, or a settlement is reached, which results in an amendment to the Plan and payment of additional benefits to Plan participants. Alliant Energy, IPL and WPL are currently unable to predict the final outcome of the class-action lawsuit or the ultimate impact on their financial condition or results of operations but believe an adverse outcome could have a material effect on their retirement plan funding and expense.

(d) Guarantees and Indemnifications -

RMT - In January 2013, Alliant Energy sold RMT. RMT provides renewable energy services including construction and high voltage connection services for wind and solar projects. As part of the sale, Alliant Energy provided indemnifications to the buyer of RMT for losses resulting from potential breach of the representations and warranties made by Alliant Energy as of the sale date and for the potential breach of its obligations under the sale agreement. These indemnifications are limited to $3 million and expire in July 2014. The dollar limit on these indemnifications is subject to increase, based on the amount, if any, of contingent consideration Alliant Energy is entitled to receive under the terms of the sale.

In addition, Alliant Energy, as part of the sale, indemnified the buyer for any claims, including claims of warranty under the project obligations that were commenced or are based on actions that occurred prior to the sale, except for liabilities already accounted for through adjustments to the purchase price. The indemnification obligations either cease to exist when the statute of limitation for such claims is met or, in the case of RMT’s projects, when the warranty period under the agreements expires. The warranty periods for RMT’s projects generally range from 12 to 60 months with the latest expiring in 2016.

Alliant Energy also continues to guarantee RMT’s performance obligations related to certain of RMT’s projects that were commenced prior to Alliant Energy’s sale of RMT. As of March 31, 2013, Alliant Energy had $617 million of performance guarantees outstanding, with $270 million, $294 million and $53 million expiring in 2013, 2014 and 2015, respectively.

Alliant Energy currently believes that no material cash payments will be made and has not recognized any material liabilities related to these matters as of March 31, 2013. Refer to Note 14 for further discussion of RMT.

Whiting Petroleum Corporation (Whiting) - In 2004, Alliant Energy sold its remaining interest in Whiting. Whiting is an independent oil and gas company. Alliant Energy continues to guarantee the obligations related to the abandonment of certain platforms off the coast of California and related onshore plant and equipment that were owned by Whiting prior to Alliant Energy’s sale of Whiting. The guarantee does not include a maximum limit. As of March 31, 2013, the present value of the abandonment obligations is estimated at $30 million. Alliant Energy believes that no payments will be made under this guarantee. Alliant Energy has not recognized any material liabilities related to this guarantee as of March 31, 2013.

(e) Environmental Matters -

Manufactured Gas Plant (MGP) Sites - IPL and WPL have current or previous ownership interests in 40 and 14 sites, respectively, previously associated with the production of gas for which they may be liable for investigation, remediation and monitoring costs. IPL and WPL have received letters from state environmental agencies requiring no further action at 13 and 9 of these sites, respectively. Additionally, IPL has met state environmental agency expectations at 3 additional sites requiring no further action for soil remediation. IPL and WPL are working pursuant to the requirements of various federal and state agencies to investigate, mitigate, prevent and remediate, where necessary, the environmental impacts to property, including natural resources, at and around the sites in order to protect public health and the environment.

Alliant Energy, IPL and WPL record environmental liabilities related to these MGP sites based upon periodic studies. Such amounts are based on the best current estimate of the remaining amount to be incurred for investigation, remediation and monitoring costs for those sites where the investigation process has been or is substantially completed, and the minimum of the estimated cost range for those sites where the investigation is in its earlier stages. There are inherent uncertainties associated with the estimated remaining costs for MGP projects primarily due to unknown site conditions and potential changes in regulatory agency requirements. It is possible that future cost estimates will be greater than current estimates as the investigation process proceeds and as additional facts become known. The amounts recognized as liabilities are reduced for expenditures incurred and are adjusted as further information develops or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted. Management currently estimates the range of remaining costs to be incurred for the investigation, remediation and monitoring of these sites to be $20 million ($17 million for IPL and $3 million for WPL) to $35 million ($31 million for IPL and $4 million for WPL). At March 31, 2013, Alliant Energy, IPL and WPL recorded $26 million, $23 million and $3 million, respectively, in other current and non-current environmental liabilities for their remaining costs to be incurred for these MGP sites.

Other Environmental Contingencies - In addition to the environmental liabilities discussed above, Alliant Energy, IPL and WPL are also monitoring various environmental regulations that may have a significant impact on their future operations. Given uncertainties regarding the outcome, timing and compliance plans for these environmental matters, Alliant Energy, IPL and WPL are currently not able to determine the complete financial impact of these regulations but do believe that future capital investments and/or modifications to their electric generating facilities to comply with these regulations could be significant. Specific current, proposed or potential environmental matters that may require significant future expenditures include, among others: Clean Air Interstate Rule (CAIR), Clean Air Visibility Rule, Utility Maximum Achievable Control Technology (MACT) Rule, Wisconsin State Mercury Rule, Wisconsin Reasonably Available Control Technology (RACT) Rule, Industrial Boiler and Process Heater MACT Rule, Ozone National Ambient Air Quality Standards (NAAQS) Rule, Fine Particle NAAQS Rule, Nitrogen Dioxide NAAQS Rule, SO2 NAAQS Rule, Federal Clean Water Act including Section 316(b), Wisconsin and Iowa State Thermal Rules, Hydroelectric Fish Passage Device, Effluent Limitation Guidelines, Coal Combustion Residuals, Polychlorinated Biphenyls, and various legislation and EPA regulations to monitor and regulate the emission of greenhouse gases (GHG), including New Source Performance Standards for GHG Emissions from Electric Utilities. Some recent developments concerning these environmental matters are included below:

Water Quality -

Effluent Limitation Guidelines are expected to require changes to discharge limits for wastewater from steam electric generating units (EGUs). In April 2013, the EPA announced proposed effluent limitation guidelines for public comment. The schedule for compliance with these guidelines has not yet been established.

IPL [Member]

Commitments and Contingencies Disclosure

COMMITMENTS AND CONTINGENCIES



	Alliant Energy		IPL		WPL
Purchased power (a):
Duane Arnold Energy Center (DAEC) (IPL) (b)		$1,808		$1,808		$—
Kewaunee Nuclear Power Plant (Kewaunee) (WPL)	57		—		57
Other	52		1		51
	1,917		1,809		108
Natural gas	365		240		125
Coal (c)	235		71		42
SO2 emission allowances	34		34		—
Other (d)	47		26		15
		$2,598		$2,180		$290


(a)	Includes payments required by purchased power agreements (PPAs) for capacity rights and minimum quantities of MWhs required to be purchased.

(b)


(c)	Corporate Services entered into system-wide coal contracts on behalf of IPL and WPL that include minimum future commitments of $122 million that have not been directly assigned to IPL and WPL since the specific needs of each utility were not yet known as of March 31, 2013.


(d)	Includes individual commitments incurred during the normal course of business that exceeded $1 million at March 31, 2013.


•	Selective catalytic reduction (SCR) system at Edgewater Unit 5 by May 1, 2013 (placed in-service in December 2012);


•	Scrubbers and baghouses at Columbia Units 1 and 2 by December 31, 2014;


•	Scrubber and baghouse at Edgewater Unit 5 by December 31, 2016; and


•	SCR system at Columbia Unit 2 by December 31, 2018.

(d) Guarantees and Indemnifications -

(e) Environmental Matters -

Water Quality -

WPL [Member]

Commitments and Contingencies Disclosure

COMMITMENTS AND CONTINGENCIES



	Alliant Energy		IPL		WPL
Purchased power (a):
Duane Arnold Energy Center (DAEC) (IPL) (b)		$1,808		$1,808		$—
Kewaunee Nuclear Power Plant (Kewaunee) (WPL)	57		—		57
Other	52		1		51
	1,917		1,809		108
Natural gas	365		240		125
Coal (c)	235		71		42
SO2 emission allowances	34		34		—
Other (d)	47		26		15
		$2,598		$2,180		$290


(a)	Includes payments required by purchased power agreements (PPAs) for capacity rights and minimum quantities of MWhs required to be purchased.

(b)


(c)	Corporate Services entered into system-wide coal contracts on behalf of IPL and WPL that include minimum future commitments of $122 million that have not been directly assigned to IPL and WPL since the specific needs of each utility were not yet known as of March 31, 2013.


(d)	Includes individual commitments incurred during the normal course of business that exceeded $1 million at March 31, 2013.


•	Selective catalytic reduction (SCR) system at Edgewater Unit 5 by May 1, 2013 (placed in-service in December 2012);


•	Scrubbers and baghouses at Columbia Units 1 and 2 by December 31, 2014;


•	Scrubber and baghouse at Edgewater Unit 5 by December 31, 2016; and


•	SCR system at Columbia Unit 2 by December 31, 2018.

(d) Guarantees and Indemnifications -

(e) Environmental Matters -

Water Quality -

- Definition

The entire disclosure for commitments and contingencies.

+ References

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+ Details