Derivative Instruments

9 Months Ended

Sep. 30, 2011

Derivative Instruments

(10) DERIVATIVE INSTRUMENTS

Commodity and Foreign Exchange Derivatives -

Purpose—Alliant Energy, IPL and WPL periodically use derivative instruments for risk management purposes to mitigate exposures to fluctuations in certain commodity prices, transmission congestion costs and currency exchange rates. Alliant Energy's, IPL's and WPL's derivative instruments as of Sep. 30, 2011 and Dec. 31, 2010 were not designated as hedging instruments. Alliant Energy's, IPL's and WPL's derivative instruments as of Sep. 30, 2011 and Dec. 31, 2010 included electric physical forward purchase contracts and swap contracts to mitigate pricing volatility for the electricity purchased to supply to their customers; electric physical forward sale contracts to offset long positions created by reductions in electricity demand forecasts; natural gas swap contracts to mitigate pricing volatility for the fuel used to supply to the natural gas-fired electric generating facilities they operate; natural gas options to mitigate price increases during periods of high demand or lack of supply; FTRs acquired to manage transmission congestion costs; natural gas physical forward purchase and swap contracts to mitigate pricing volatility for natural gas supplied to their retail customers; and embedded foreign currency derivatives related to Euro-denominated payment terms included in the wind turbine supply contract with Vestas.

Notional Amounts—As of Sep. 30, 2011, Alliant Energy, IPL and WPL had notional amounts related to outstanding swap contracts, physical forward contracts and FTRs that were accounted for as derivative instruments as follows (units in thousands):

	2011		2012		2013		2014		Total
Alliant Energy
Commodity:
Electricity (megawatt-hours (MWhs))		820		2,460		658		—		3,938
FTRs (MWs)		15		23		—		—		38
Natural gas (dekatherms (Dths))		25,049		31,914		6,897		450		64,310
IPL
Commodity:
Electricity (MWhs)		299		1,120		254		—		1,673
FTRs (MWs)		9		14		—		—		23
Natural gas (Dths)		17,288		16,479		3,415		225		37,407
WPL
Commodity:
Electricity (MWhs)		521		1,340		404		—		2,265
FTRs (MWs)		6		9		—		—		15
Natural gas (Dths)		7,606		15,435		3,482		225		26,748

The notional amounts in the above table were computed by aggregating the absolute value of purchase and sale positions within commodities for each year.

Financial Statement Presentation—Alliant Energy, IPL and WPL record derivative instruments at fair value each reporting date on the balance sheet as assets or liabilities. At Sep. 30, 2011 and Dec. 31, 2010, the fair values of current derivative assets were included in "Derivative assets," non-current derivative assets were included in "Deferred charges and other," current derivative liabilities were included in "Derivative liabilities" and non-current derivative liabilities were included in "Other long-term liabilities and deferred credits" on the Condensed Consolidated Balance Sheets as follows (in millions):

	Alliant Energy				IPL				WPL
	Sep. 30,		Dec. 31,		Sep. 30,		Dec. 31,		Sep. 30,		Dec. 31,
	2011		2010		2011		2010		2011		2010
Current derivative assets
Commodity contracts	$	22.3	$	14.3	$	15.5	$	7.8	$	6.8	$	6.5
Foreign exchange contracts		0.4		4.8		—		4.8		—		—
	$	22.7	$	19.1	$	15.5	$	12.6	$	6.8	$	6.5
Non-current derivative assets
Commodity contracts	$	2.4	$	1.8	$	1.2	$	0.3	$	1.2	$	1.5
Current derivative liabilities
Commodity contracts	$	41.3	$	55.2	$	17.3	$	23.0	$	24.0	$	32.2
Foreign exchange contracts		—		0.1		—		—		—		0.1
	$	41.3	$	55.3	$	17.3	$	23.0	$	24.0	$	32.3
Non-current derivative liabilities
Commodity contracts	$	11.1	$	12.0	$	3.4	$	1.0	$	7.7	$	11.0

Alliant Energy, IPL and WPL generally record gains and losses from IPL's and WPL's derivative instruments with offsets to regulatory assets or regulatory liabilities, based on their fuel and natural gas cost recovery mechanisms, as well as other specific regulatory authorizations. For the three and nine months ended Sep. 30, 2011 and 2010, gains and losses from derivative instruments not designated as hedging instruments were recorded as follows (in millions):

		Gains (Losses)
	Location Recorded on Balance Sheets	Alliant Energy						IPL						WPL
		2011			2010			2011			2010			2011			2010
Three months ended Sep. 30
Commodity contracts	Regulatory assets	$	(23.8	)	$	(43.9	)	$	(13.3	)	$	(22.5	)	$	(10.5	)	$	(21.4	)
Commodity contracts	Regulatory liabilities		3.7			4.5			2.2			2.2			1.5			2.3
Nine months ended Sep. 30
Commodity contracts	Regulatory assets		(33.1	)		(83.1	)		(18.7	)		(48.3	)		(14.4	)		(34.8	)
Commodity contracts	Regulatory liabilities		8.6			10.5			5.4			9.5			3.2			1.0
Foreign exchange contracts	Regulatory liabilities		—			3.8			—			3.8			—			—

Losses from commodity contracts during the nine months ended Sep. 30, 2011 and 2010 were primarily due to impacts of decreases in electricity and natural gas prices during such period.

Credit Risk-related Contingent Features —Alliant Energy, IPL and WPL have entered into various agreements that contain credit risk-related contingent features including requirements for them to maintain certain credit ratings from each of the major credit rating agencies and limitations on their liability positions under the various agreements based upon their credit ratings. In the event of a downgrade in their credit ratings or if their liability positions exceed certain contractual limits, Alliant Energy, IPL or WPL may need to provide credit support in the form of letters of credit or cash collateral up to the amount of their exposure under the contracts, or may need to unwind the contracts and pay the underlying liability positions.

Certain of these agreements with credit risk-related contingency features are accounted for as derivative instruments. The aggregate fair value of all derivatives with credit risk-related contingent features that were in a net liability position on Sep. 30, 2011 was $52.4 million, $20.7 million and $31.7 million for Alliant Energy, IPL and WPL, respectively. At Sep. 30, 2011, Alliant Energy, IPL and WPL all had investment-grade credit ratings. However, IPL exceeded its liability position with one counterparty requiring it to post $2.0 million of cash collateral. If the most restrictive credit risk-related contingent features for derivative agreements in a net liability position were triggered on Sep. 30, 2011, Alliant Energy, IPL and WPL would be required to post an additional $50.4 million, $18.7 million and $31.7 million, respectively, of credit support to their counterparties.

IPL [Member]

Derivative Instruments

(10) DERIVATIVE INSTRUMENTS

Commodity and Foreign Exchange Derivatives -

Purpose—Alliant Energy, IPL and WPL periodically use derivative instruments for risk management purposes to mitigate exposures to fluctuations in certain commodity prices, transmission congestion costs and currency exchange rates. Alliant Energy's, IPL's and WPL's derivative instruments as of Sep. 30, 2011 and Dec. 31, 2010 were not designated as hedging instruments. Alliant Energy's, IPL's and WPL's derivative instruments as of Sep. 30, 2011 and Dec. 31, 2010 included electric physical forward purchase contracts and swap contracts to mitigate pricing volatility for the electricity purchased to supply to their customers; electric physical forward sale contracts to offset long positions created by reductions in electricity demand forecasts; natural gas swap contracts to mitigate pricing volatility for the fuel used to supply to the natural gas-fired electric generating facilities they operate; natural gas options to mitigate price increases during periods of high demand or lack of supply; FTRs acquired to manage transmission congestion costs; natural gas physical forward purchase and swap contracts to mitigate pricing volatility for natural gas supplied to their retail customers; and embedded foreign currency derivatives related to Euro-denominated payment terms included in the wind turbine supply contract with Vestas.

Notional Amounts—As of Sep. 30, 2011, Alliant Energy, IPL and WPL had notional amounts related to outstanding swap contracts, physical forward contracts and FTRs that were accounted for as derivative instruments as follows (units in thousands):

	2011		2012		2013		2014		Total
Alliant Energy
Commodity:
Electricity (megawatt-hours (MWhs))		820		2,460		658		—		3,938
FTRs (MWs)		15		23		—		—		38
Natural gas (dekatherms (Dths))		25,049		31,914		6,897		450		64,310
IPL
Commodity:
Electricity (MWhs)		299		1,120		254		—		1,673
FTRs (MWs)		9		14		—		—		23
Natural gas (Dths)		17,288		16,479		3,415		225		37,407
WPL
Commodity:
Electricity (MWhs)		521		1,340		404		—		2,265
FTRs (MWs)		6		9		—		—		15
Natural gas (Dths)		7,606		15,435		3,482		225		26,748

The notional amounts in the above table were computed by aggregating the absolute value of purchase and sale positions within commodities for each year.

Financial Statement Presentation—Alliant Energy, IPL and WPL record derivative instruments at fair value each reporting date on the balance sheet as assets or liabilities. At Sep. 30, 2011 and Dec. 31, 2010, the fair values of current derivative assets were included in "Derivative assets," non-current derivative assets were included in "Deferred charges and other," current derivative liabilities were included in "Derivative liabilities" and non-current derivative liabilities were included in "Other long-term liabilities and deferred credits" on the Condensed Consolidated Balance Sheets as follows (in millions):

	Alliant Energy				IPL				WPL
	Sep. 30,		Dec. 31,		Sep. 30,		Dec. 31,		Sep. 30,		Dec. 31,
	2011		2010		2011		2010		2011		2010
Current derivative assets
Commodity contracts	$	22.3	$	14.3	$	15.5	$	7.8	$	6.8	$	6.5
Foreign exchange contracts		0.4		4.8		—		4.8		—		—
	$	22.7	$	19.1	$	15.5	$	12.6	$	6.8	$	6.5
Non-current derivative assets
Commodity contracts	$	2.4	$	1.8	$	1.2	$	0.3	$	1.2	$	1.5
Current derivative liabilities
Commodity contracts	$	41.3	$	55.2	$	17.3	$	23.0	$	24.0	$	32.2
Foreign exchange contracts		—		0.1		—		—		—		0.1
	$	41.3	$	55.3	$	17.3	$	23.0	$	24.0	$	32.3
Non-current derivative liabilities
Commodity contracts	$	11.1	$	12.0	$	3.4	$	1.0	$	7.7	$	11.0

Alliant Energy, IPL and WPL generally record gains and losses from IPL's and WPL's derivative instruments with offsets to regulatory assets or regulatory liabilities, based on their fuel and natural gas cost recovery mechanisms, as well as other specific regulatory authorizations. For the three and nine months ended Sep. 30, 2011 and 2010, gains and losses from derivative instruments not designated as hedging instruments were recorded as follows (in millions):

		Gains (Losses)
	Location Recorded on Balance Sheets	Alliant Energy						IPL						WPL
		2011			2010			2011			2010			2011			2010
Three months ended Sep. 30
Commodity contracts	Regulatory assets	$	(23.8	)	$	(43.9	)	$	(13.3	)	$	(22.5	)	$	(10.5	)	$	(21.4	)
Commodity contracts	Regulatory liabilities		3.7			4.5			2.2			2.2			1.5			2.3
Nine months ended Sep. 30
Commodity contracts	Regulatory assets		(33.1	)		(83.1	)		(18.7	)		(48.3	)		(14.4	)		(34.8	)
Commodity contracts	Regulatory liabilities		8.6			10.5			5.4			9.5			3.2			1.0
Foreign exchange contracts	Regulatory liabilities		—			3.8			—			3.8			—			—

Losses from commodity contracts during the nine months ended Sep. 30, 2011 and 2010 were primarily due to impacts of decreases in electricity and natural gas prices during such period.

Credit Risk-related Contingent Features —Alliant Energy, IPL and WPL have entered into various agreements that contain credit risk-related contingent features including requirements for them to maintain certain credit ratings from each of the major credit rating agencies and limitations on their liability positions under the various agreements based upon their credit ratings. In the event of a downgrade in their credit ratings or if their liability positions exceed certain contractual limits, Alliant Energy, IPL or WPL may need to provide credit support in the form of letters of credit or cash collateral up to the amount of their exposure under the contracts, or may need to unwind the contracts and pay the underlying liability positions.

Certain of these agreements with credit risk-related contingency features are accounted for as derivative instruments. The aggregate fair value of all derivatives with credit risk-related contingent features that were in a net liability position on Sep. 30, 2011 was $52.4 million, $20.7 million and $31.7 million for Alliant Energy, IPL and WPL, respectively. At Sep. 30, 2011, Alliant Energy, IPL and WPL all had investment-grade credit ratings. However, IPL exceeded its liability position with one counterparty requiring it to post $2.0 million of cash collateral. If the most restrictive credit risk-related contingent features for derivative agreements in a net liability position were triggered on Sep. 30, 2011, Alliant Energy, IPL and WPL would be required to post an additional $50.4 million, $18.7 million and $31.7 million, respectively, of credit support to their counterparties.

WPL [Member]

Derivative Instruments

(10) DERIVATIVE INSTRUMENTS

Commodity and Foreign Exchange Derivatives -

Purpose—Alliant Energy, IPL and WPL periodically use derivative instruments for risk management purposes to mitigate exposures to fluctuations in certain commodity prices, transmission congestion costs and currency exchange rates. Alliant Energy's, IPL's and WPL's derivative instruments as of Sep. 30, 2011 and Dec. 31, 2010 were not designated as hedging instruments. Alliant Energy's, IPL's and WPL's derivative instruments as of Sep. 30, 2011 and Dec. 31, 2010 included electric physical forward purchase contracts and swap contracts to mitigate pricing volatility for the electricity purchased to supply to their customers; electric physical forward sale contracts to offset long positions created by reductions in electricity demand forecasts; natural gas swap contracts to mitigate pricing volatility for the fuel used to supply to the natural gas-fired electric generating facilities they operate; natural gas options to mitigate price increases during periods of high demand or lack of supply; FTRs acquired to manage transmission congestion costs; natural gas physical forward purchase and swap contracts to mitigate pricing volatility for natural gas supplied to their retail customers; and embedded foreign currency derivatives related to Euro-denominated payment terms included in the wind turbine supply contract with Vestas.

Notional Amounts—As of Sep. 30, 2011, Alliant Energy, IPL and WPL had notional amounts related to outstanding swap contracts, physical forward contracts and FTRs that were accounted for as derivative instruments as follows (units in thousands):

	2011		2012		2013		2014		Total
Alliant Energy
Commodity:
Electricity (megawatt-hours (MWhs))		820		2,460		658		—		3,938
FTRs (MWs)		15		23		—		—		38
Natural gas (dekatherms (Dths))		25,049		31,914		6,897		450		64,310
IPL
Commodity:
Electricity (MWhs)		299		1,120		254		—		1,673
FTRs (MWs)		9		14		—		—		23
Natural gas (Dths)		17,288		16,479		3,415		225		37,407
WPL
Commodity:
Electricity (MWhs)		521		1,340		404		—		2,265
FTRs (MWs)		6		9		—		—		15
Natural gas (Dths)		7,606		15,435		3,482		225		26,748

The notional amounts in the above table were computed by aggregating the absolute value of purchase and sale positions within commodities for each year.

Financial Statement Presentation—Alliant Energy, IPL and WPL record derivative instruments at fair value each reporting date on the balance sheet as assets or liabilities. At Sep. 30, 2011 and Dec. 31, 2010, the fair values of current derivative assets were included in "Derivative assets," non-current derivative assets were included in "Deferred charges and other," current derivative liabilities were included in "Derivative liabilities" and non-current derivative liabilities were included in "Other long-term liabilities and deferred credits" on the Condensed Consolidated Balance Sheets as follows (in millions):

	Alliant Energy				IPL				WPL
	Sep. 30,		Dec. 31,		Sep. 30,		Dec. 31,		Sep. 30,		Dec. 31,
	2011		2010		2011		2010		2011		2010
Current derivative assets
Commodity contracts	$	22.3	$	14.3	$	15.5	$	7.8	$	6.8	$	6.5
Foreign exchange contracts		0.4		4.8		—		4.8		—		—
	$	22.7	$	19.1	$	15.5	$	12.6	$	6.8	$	6.5
Non-current derivative assets
Commodity contracts	$	2.4	$	1.8	$	1.2	$	0.3	$	1.2	$	1.5
Current derivative liabilities
Commodity contracts	$	41.3	$	55.2	$	17.3	$	23.0	$	24.0	$	32.2
Foreign exchange contracts		—		0.1		—		—		—		0.1
	$	41.3	$	55.3	$	17.3	$	23.0	$	24.0	$	32.3
Non-current derivative liabilities
Commodity contracts	$	11.1	$	12.0	$	3.4	$	1.0	$	7.7	$	11.0

Alliant Energy, IPL and WPL generally record gains and losses from IPL's and WPL's derivative instruments with offsets to regulatory assets or regulatory liabilities, based on their fuel and natural gas cost recovery mechanisms, as well as other specific regulatory authorizations. For the three and nine months ended Sep. 30, 2011 and 2010, gains and losses from derivative instruments not designated as hedging instruments were recorded as follows (in millions):

		Gains (Losses)
	Location Recorded on Balance Sheets	Alliant Energy						IPL						WPL
		2011			2010			2011			2010			2011			2010
Three months ended Sep. 30
Commodity contracts	Regulatory assets	$	(23.8	)	$	(43.9	)	$	(13.3	)	$	(22.5	)	$	(10.5	)	$	(21.4	)
Commodity contracts	Regulatory liabilities		3.7			4.5			2.2			2.2			1.5			2.3
Nine months ended Sep. 30
Commodity contracts	Regulatory assets		(33.1	)		(83.1	)		(18.7	)		(48.3	)		(14.4	)		(34.8	)
Commodity contracts	Regulatory liabilities		8.6			10.5			5.4			9.5			3.2			1.0
Foreign exchange contracts	Regulatory liabilities		—			3.8			—			3.8			—			—

Losses from commodity contracts during the nine months ended Sep. 30, 2011 and 2010 were primarily due to impacts of decreases in electricity and natural gas prices during such period.

Credit Risk-related Contingent Features —Alliant Energy, IPL and WPL have entered into various agreements that contain credit risk-related contingent features including requirements for them to maintain certain credit ratings from each of the major credit rating agencies and limitations on their liability positions under the various agreements based upon their credit ratings. In the event of a downgrade in their credit ratings or if their liability positions exceed certain contractual limits, Alliant Energy, IPL or WPL may need to provide credit support in the form of letters of credit or cash collateral up to the amount of their exposure under the contracts, or may need to unwind the contracts and pay the underlying liability positions.

Certain of these agreements with credit risk-related contingency features are accounted for as derivative instruments. The aggregate fair value of all derivatives with credit risk-related contingent features that were in a net liability position on Sep. 30, 2011 was $52.4 million, $20.7 million and $31.7 million for Alliant Energy, IPL and WPL, respectively. At Sep. 30, 2011, Alliant Energy, IPL and WPL all had investment-grade credit ratings. However, IPL exceeded its liability position with one counterparty requiring it to post $2.0 million of cash collateral. If the most restrictive credit risk-related contingent features for derivative agreements in a net liability position were triggered on Sep. 30, 2011, Alliant Energy, IPL and WPL would be required to post an additional $50.4 million, $18.7 million and $31.7 million, respectively, of credit support to their counterparties.