REGULATORY MATTERS

Regulatory Assets - Alliant Energy, IPL and WPL assess whether IPL’s and WPL’s regulatory assets are probable of future recovery by considering factors such as applicable regulations, recent orders by the applicable regulatory agencies, historical treatment of similar costs by the applicable regulatory agencies and regulatory environment changes. Based on these assessments, Alliant Energy, IPL and WPL believe the regulatory assets recognized as of December 31, 2019 are probable of future recovery. However, no assurance can be made that IPL and WPL will recover all of these regulatory assets in future rates. If future recovery of a regulatory asset ceases to be probable, the regulatory asset will be charged to expense. At December 31, regulatory assets were comprised of the following items (in millions):



	Alliant Energy				IPL				WPL
	2019		2018		2019		2018		2019		2018
Tax-related		$817.6		$820.6		$776.8		$783.1		$40.8		$37.5
Pension and OPEB costs	524.0		542.3		262.5		274.0		261.5		268.3
Assets retired early	134.0		111.6		87.9		55.4		46.1		56.2
AROs	111.8		110.8		76.2		76.3		35.6		34.5
IPL’s DAEC PPA amendment	108.2		—		108.2		—		—		—
Derivatives	39.5		28.0		18.3		15.1		21.2		12.9
Emission allowances	21.1		23.6		21.1		23.6		—		—
Other	88.5		100.4		48.3		51.5		40.2		48.9
		$1,844.7		$1,737.3		$1,399.3		$1,279.0		$445.4		$458.3

At December 31, 2019, IPL and WPL had $78 million and $6 million, respectively, of regulatory assets that were not earning a return. IPL’s regulatory assets that were not earning a return consisted primarily of certain assets retired early, emission allowances, debt redemption costs and costs for clean air compliance projects. WPL’s regulatory assets that were not earning a return consisted primarily of environmental-related costs and costs for future expansion projects. The other regulatory

assets reported in the above table either earn a return or the cash has not yet been expended, in which case the assets are offset by liabilities that also do not incur a carrying cost.

Tax-related - IPL and WPL record regulatory assets for certain temporary differences (primarily related to utility property, plant and equipment at IPL) that result in a decrease in current rates charged to customers and an increase in future rates charged to customers based on the timing of income tax expense that is used to determine such rates. These temporary differences for IPL include the impacts of qualifying deductions for repairs expenditures, allocation of mixed service costs, and Iowa accelerated tax depreciation, which all contribute to lower current income tax expense during the first part of an asset’s useful life and higher current income tax expense during the latter part of an asset’s useful life. These regulatory assets will be recovered from customers in the future when these temporary differences reverse resulting in additional current income tax expense used to determine customers’ rates.

Pension and other postretirement benefits costs - The IUB, PSCW and FERC have authorized IPL and WPL to record the previously unrecognized net actuarial gains and losses, and prior service costs and credits, as regulatory assets in lieu of accumulated other comprehensive loss on the balance sheets, as these amounts are expected to be recovered in future rates. These regulatory assets will be increased or decreased as the net actuarial gains or losses, and prior service costs or credits, are subsequently amortized and recognized as a component of net periodic benefit costs. Regulatory assets are also increased or decreased as a result of the annual defined benefit plan measurement process. Pension and OPEB costs are included within the recoverable cost of service component of rates charged to IPL’s and WPL’s retail and wholesale customers, which are based upon pension and OPEB costs determined in accordance with GAAP and are calculated in accordance with IPL’s and WPL’s respective regulatory jurisdictions.

Assets retired early - IPL and WPL have retired various natural gas- and coal-fired EGUs, and IPL has retired certain analog electric meters. As a result, the remaining net book value of these assets was reclassified from property, plant and equipment to a regulatory asset on their respective balance sheets. Details regarding the recovery of the remaining net book value of these assets from IPL’s and WPL’s customers are as follows:

Entity

Asset

Retirement Date

Regulatory Asset Balance as of Dec. 31, 2019

Recovery

Regulatory Approval

IPL

Sutherland Units 1 and 3

2017

$28.5

Return of and return on remaining net book value over 10 years (return on effective with new rates expected to be implemented by the end of the first quarter of 2020)

IUB and FERC

IPL

M.L. Kapp Unit 2

2018

23.6

Return of and return on remaining net book value over 10 years

IUB and FERC

IPL

Analog electric meters

2019

35.8

Return of remaining net book value over 10 years (effective with new rates expected to be implemented by the end of the first quarter of 2020)

IUB

WPL

Nelson Dewey Units 1 and 2 and Edgewater Unit 3

2015

20.2

Return of and return on remaining net book value over 10 years

PSCW and FERC

WPL

Edgewater Unit 4

2018

25.9

Return of and return on remaining net book value over 10 years

PSCW and FERC

AROs - Alliant Energy, IPL and WPL believe it is probable that certain differences between expenses accrued for legal AROs related to their utility operations and expenses recovered currently in rates will be recoverable in future rates, and are deferring the differences as regulatory assets.

IPL’s DAEC PPA Amendment - In January 2019, IPL incurred an obligation to make a September 2020 buyout payment of $110 million in exchange for shortening the term of IPL’s DAEC nuclear generation PPA by 5 years. The IUB approved recovery of the buyout payment with IPL’s 2020 Test Period retail electric rate review, which will be recovered from IPL’s retail customers over a 5-year period following the payment. The offsetting obligation has been discounted and is recorded in “Other current liabilities” on Alliant Energy’s and IPL’s balance sheets.

Derivatives - In accordance with IPL’s and WPL’s fuel and natural gas recovery mechanisms, prudently incurred costs from derivative instruments are recoverable from customers in the future after any losses are realized, and gains from derivative instruments are refundable to customers in the future after any gains are realized. Based on these recovery mechanisms, the changes in the fair value of derivative liabilities/assets resulted in comparable changes to regulatory assets/liabilities on the balance sheets.

Emission allowances - IPL entered into forward contracts in 2007 to purchase sulfur dioxide emission allowances with vintage years of 2014 through 2017 from various counterparties to meet expected future emission reduction standards. Alliant Energy and IPL have recorded a regulatory asset for amounts paid under the forward contracts and are authorized to recover these amounts from its retail customers over a 10-year period.

Regulatory Liabilities - At December 31, regulatory liabilities were comprised of the following items (in millions):



	Alliant Energy				IPL				WPL
	2019		2018		2019		2018		2019		2018
Tax-related		$835.6		$890.6		$350.9		$390.1		$484.7		$500.5
Cost of removal obligations	387.7		401.2		257.0		273.3		130.7		127.9
Electric transmission cost recovery	88.6		104.0		51.3		47.7		37.3		56.3
Commodity cost recovery	24.2		16.8		8.8		11.9		15.4		4.9
WPL’s earnings sharing mechanism	21.9		25.4		—		—		21.9		25.4
Derivatives	19.9		18.5		17.4		10.2		2.5		8.3
Other	45.7		36.7		29.3		21.7		16.4		15.0
		$1,423.6		$1,493.2		$714.7		$754.9		$708.9		$738.3

Tax-related regulatory liabilities reduce revenue requirement calculations utilized in IPL’s and WPL’s respective rate proceedings. Cost of removal obligations, to the extent expensed through depreciation rates, reduce rate base. A significant portion of the remaining regulatory liabilities are not used to adjust revenue requirement calculations.

Tax-related - Alliant Energy’s, IPL’s and WPL’s tax-related regulatory liabilities are primarily related to excess deferred tax benefits resulting from the remeasurement of accumulated deferred income taxes caused by Federal Tax Reform. The majority of these benefits related to accelerated depreciation are subject to tax normalization rules. These rules limit the rate at which these tax benefits are allowed to be passed on to customers.

Cost of removal obligations - Alliant Energy, IPL and WPL collect in rates future removal costs for many assets that do not have associated legal AROs. Alliant Energy, IPL and WPL record a regulatory liability for the amounts collected in rates for these future removal costs and reduce the regulatory liability for amounts spent on removal activities.

Electric transmission cost recovery - Refer to Note 1(g) for details of IPL’s and WPL’s electric transmission cost recovery mechanisms. Beginning in March 2018, amounts billed by transmission providers decreased due to the impacts from Federal Tax Reform. During 2018, Alliant Energy, IPL and WPL recorded the benefits associated with lower transmission expense as regulatory liabilities. In May 2018, IPL began providing these benefits back to its retail electric customers utilizing the transmission cost rider. WPL is currently reflecting these benefits for its retail electric customers in 2019 and 2020 through transmission expense amortizations as authorized in its retail electric rate review (2019/2020 Test Period).

Commodity cost recovery - Refer to Note 1(g) for details of IPL’s and WPL’s commodity cost recovery mechanisms.

WPL’s earnings sharing mechanism - Pursuant to PSCW orders, WPL must defer a portion of its earnings if its annual regulatory return on common equity exceeds certain levels during the related test periods. The timing of the refund to customers for the majority of these regulatory liabilities will be determined in a future WPL regulatory proceeding.

Utility Rate Reviews -

IPL’s Retail Electric Rate Review (2020 Forward-looking Test Period) - In March 2019, IPL filed a request with the IUB to increase annual electric base rates for its Iowa retail electric customers based on a 2020 forward-looking Test Period. The key drivers for IPL’s request included recovery of capital projects, including new wind generation. IPL concurrently filed for interim retail electric rates based on 2018 historical data as adjusted for certain known and measurable changes occurring in the first quarter of 2019. An interim retail electric base rate increase of $90 million, on an annual basis, was implemented effective April 1, 2019. In October 2019, IPL reached a settlement agreement with certain intervenor groups for an annual retail electric base rate increase of $127 million. The agreement includes both the recovery of and a return on IPL’s early retired EGUs, and the recovery of IPL’s retired analog electric meters. In addition, as discussed in Note 1(g), the net impact of certain costs and benefits resulting from IPL’s 1,000 MW expansion of wind generation in 2019 and 2020 will be recovered from its retail electric customers through a new renewable energy rider. The settlement agreement also includes IPL providing retail electric billing credits over a 12-month period beginning with final rates, including $27 million of excess deferred tax benefits and $8 million from a partial refund of interim rates implemented in 2019. In January 2020, the IUB issued an order approving the settlement with final rates, which are expected to be effective by the end of the first quarter of 2020.

IPL’s Retail Gas Rate Review (2020 Forward-looking Test Period) - In March 2019, IPL filed a request with the IUB to increase annual gas base rates for its Iowa retail gas customers based on a 2020 forward-looking Test Period. In October 2019, IPL reached a settlement agreement with intervenor groups for an annual retail gas base rate increase of $12 million. In December 2019, the IUB issued an order approving the settlement with final rates, which were effective January 10, 2020.

IPL’s Retail Electric Rate Review (2016 Test Year) - In April 2017, IPL filed a request with the IUB to increase annual electric base rates for its Iowa retail electric customers based on a 2016 historical Test Year. An interim retail electric base rate increase of $102 million, on an annual basis, was implemented effective April 13, 2017. In September 2017, IPL reached a partial, non-unanimous settlement agreement with intervenor groups for an annual retail electric base rate increase of $130 million. In February 2018, the IUB issued an order approving the settlement with final rates effective May 1, 2018.

WPL’s Retail Electric and Gas Rate Review (2019/2020 Test Period) - In December 2018, the PSCW issued an order approving WPL’s proposed settlement for its retail electric and gas rate review covering the 2019/2020 Test Period, which was based on a stipulated agreement between WPL and intervenor groups. Under the settlement, WPL retail electric and gas base rates will not change from current levels through the end of 2020.

Regulatory Matters [Line Items]

Regulatory Matters

REGULATORY MATTERS

Regulatory Assets - Alliant Energy, IPL and WPL assess whether IPL’s and WPL’s regulatory assets are probable of future recovery by considering factors such as applicable regulations, recent orders by the applicable regulatory agencies, historical treatment of similar costs by the applicable regulatory agencies and regulatory environment changes. Based on these assessments, Alliant Energy, IPL and WPL believe the regulatory assets recognized as of December 31, 2019 are probable of future recovery. However, no assurance can be made that IPL and WPL will recover all of these regulatory assets in future rates. If future recovery of a regulatory asset ceases to be probable, the regulatory asset will be charged to expense. At December 31, regulatory assets were comprised of the following items (in millions):



	Alliant Energy				IPL				WPL
	2019		2018		2019		2018		2019		2018
Tax-related		$817.6		$820.6		$776.8		$783.1		$40.8		$37.5
Pension and OPEB costs	524.0		542.3		262.5		274.0		261.5		268.3
Assets retired early	134.0		111.6		87.9		55.4		46.1		56.2
AROs	111.8		110.8		76.2		76.3		35.6		34.5
IPL’s DAEC PPA amendment	108.2		—		108.2		—		—		—
Derivatives	39.5		28.0		18.3		15.1		21.2		12.9
Emission allowances	21.1		23.6		21.1		23.6		—		—
Other	88.5		100.4		48.3		51.5		40.2		48.9
		$1,844.7		$1,737.3		$1,399.3		$1,279.0		$445.4		$458.3

At December 31, 2019, IPL and WPL had $78 million and $6 million, respectively, of regulatory assets that were not earning a return. IPL’s regulatory assets that were not earning a return consisted primarily of certain assets retired early, emission allowances, debt redemption costs and costs for clean air compliance projects. WPL’s regulatory assets that were not earning a return consisted primarily of environmental-related costs and costs for future expansion projects. The other regulatory

assets reported in the above table either earn a return or the cash has not yet been expended, in which case the assets are offset by liabilities that also do not incur a carrying cost.

Tax-related - IPL and WPL record regulatory assets for certain temporary differences (primarily related to utility property, plant and equipment at IPL) that result in a decrease in current rates charged to customers and an increase in future rates charged to customers based on the timing of income tax expense that is used to determine such rates. These temporary differences for IPL include the impacts of qualifying deductions for repairs expenditures, allocation of mixed service costs, and Iowa accelerated tax depreciation, which all contribute to lower current income tax expense during the first part of an asset’s useful life and higher current income tax expense during the latter part of an asset’s useful life. These regulatory assets will be recovered from customers in the future when these temporary differences reverse resulting in additional current income tax expense used to determine customers’ rates.

Pension and other postretirement benefits costs - The IUB, PSCW and FERC have authorized IPL and WPL to record the previously unrecognized net actuarial gains and losses, and prior service costs and credits, as regulatory assets in lieu of accumulated other comprehensive loss on the balance sheets, as these amounts are expected to be recovered in future rates. These regulatory assets will be increased or decreased as the net actuarial gains or losses, and prior service costs or credits, are subsequently amortized and recognized as a component of net periodic benefit costs. Regulatory assets are also increased or decreased as a result of the annual defined benefit plan measurement process. Pension and OPEB costs are included within the recoverable cost of service component of rates charged to IPL’s and WPL’s retail and wholesale customers, which are based upon pension and OPEB costs determined in accordance with GAAP and are calculated in accordance with IPL’s and WPL’s respective regulatory jurisdictions.

Assets retired early - IPL and WPL have retired various natural gas- and coal-fired EGUs, and IPL has retired certain analog electric meters. As a result, the remaining net book value of these assets was reclassified from property, plant and equipment to a regulatory asset on their respective balance sheets. Details regarding the recovery of the remaining net book value of these assets from IPL’s and WPL’s customers are as follows:

Entity

Asset

Retirement Date

Regulatory Asset Balance as of Dec. 31, 2019

Recovery

Regulatory Approval

IPL

Sutherland Units 1 and 3

2017

$28.5

Return of and return on remaining net book value over 10 years (return on effective with new rates expected to be implemented by the end of the first quarter of 2020)

IUB and FERC

IPL

M.L. Kapp Unit 2

2018

23.6

Return of and return on remaining net book value over 10 years

IUB and FERC

IPL

Analog electric meters

2019

35.8

Return of remaining net book value over 10 years (effective with new rates expected to be implemented by the end of the first quarter of 2020)

IUB

WPL

Nelson Dewey Units 1 and 2 and Edgewater Unit 3

2015

20.2

Return of and return on remaining net book value over 10 years

PSCW and FERC

WPL

Edgewater Unit 4

2018

25.9

Return of and return on remaining net book value over 10 years

PSCW and FERC

AROs - Alliant Energy, IPL and WPL believe it is probable that certain differences between expenses accrued for legal AROs related to their utility operations and expenses recovered currently in rates will be recoverable in future rates, and are deferring the differences as regulatory assets.

IPL’s DAEC PPA Amendment - In January 2019, IPL incurred an obligation to make a September 2020 buyout payment of $110 million in exchange for shortening the term of IPL’s DAEC nuclear generation PPA by 5 years. The IUB approved recovery of the buyout payment with IPL’s 2020 Test Period retail electric rate review, which will be recovered from IPL’s retail customers over a 5-year period following the payment. The offsetting obligation has been discounted and is recorded in “Other current liabilities” on Alliant Energy’s and IPL’s balance sheets.

Derivatives - In accordance with IPL’s and WPL’s fuel and natural gas recovery mechanisms, prudently incurred costs from derivative instruments are recoverable from customers in the future after any losses are realized, and gains from derivative instruments are refundable to customers in the future after any gains are realized. Based on these recovery mechanisms, the changes in the fair value of derivative liabilities/assets resulted in comparable changes to regulatory assets/liabilities on the balance sheets.

Emission allowances - IPL entered into forward contracts in 2007 to purchase sulfur dioxide emission allowances with vintage years of 2014 through 2017 from various counterparties to meet expected future emission reduction standards. Alliant Energy and IPL have recorded a regulatory asset for amounts paid under the forward contracts and are authorized to recover these amounts from its retail customers over a 10-year period.

Regulatory Liabilities - At December 31, regulatory liabilities were comprised of the following items (in millions):



	Alliant Energy				IPL				WPL
	2019		2018		2019		2018		2019		2018
Tax-related		$835.6		$890.6		$350.9		$390.1		$484.7		$500.5
Cost of removal obligations	387.7		401.2		257.0		273.3		130.7		127.9
Electric transmission cost recovery	88.6		104.0		51.3		47.7		37.3		56.3
Commodity cost recovery	24.2		16.8		8.8		11.9		15.4		4.9
WPL’s earnings sharing mechanism	21.9		25.4		—		—		21.9		25.4
Derivatives	19.9		18.5		17.4		10.2		2.5		8.3
Other	45.7		36.7		29.3		21.7		16.4		15.0
		$1,423.6		$1,493.2		$714.7		$754.9		$708.9		$738.3

Tax-related regulatory liabilities reduce revenue requirement calculations utilized in IPL’s and WPL’s respective rate proceedings. Cost of removal obligations, to the extent expensed through depreciation rates, reduce rate base. A significant portion of the remaining regulatory liabilities are not used to adjust revenue requirement calculations.

Tax-related - Alliant Energy’s, IPL’s and WPL’s tax-related regulatory liabilities are primarily related to excess deferred tax benefits resulting from the remeasurement of accumulated deferred income taxes caused by Federal Tax Reform. The majority of these benefits related to accelerated depreciation are subject to tax normalization rules. These rules limit the rate at which these tax benefits are allowed to be passed on to customers.

Cost of removal obligations - Alliant Energy, IPL and WPL collect in rates future removal costs for many assets that do not have associated legal AROs. Alliant Energy, IPL and WPL record a regulatory liability for the amounts collected in rates for these future removal costs and reduce the regulatory liability for amounts spent on removal activities.

Electric transmission cost recovery - Refer to Note 1(g) for details of IPL’s and WPL’s electric transmission cost recovery mechanisms. Beginning in March 2018, amounts billed by transmission providers decreased due to the impacts from Federal Tax Reform. During 2018, Alliant Energy, IPL and WPL recorded the benefits associated with lower transmission expense as regulatory liabilities. In May 2018, IPL began providing these benefits back to its retail electric customers utilizing the transmission cost rider. WPL is currently reflecting these benefits for its retail electric customers in 2019 and 2020 through transmission expense amortizations as authorized in its retail electric rate review (2019/2020 Test Period).

Commodity cost recovery - Refer to Note 1(g) for details of IPL’s and WPL’s commodity cost recovery mechanisms.

WPL’s earnings sharing mechanism - Pursuant to PSCW orders, WPL must defer a portion of its earnings if its annual regulatory return on common equity exceeds certain levels during the related test periods. The timing of the refund to customers for the majority of these regulatory liabilities will be determined in a future WPL regulatory proceeding.

Utility Rate Reviews -

IPL’s Retail Electric Rate Review (2020 Forward-looking Test Period) - In March 2019, IPL filed a request with the IUB to increase annual electric base rates for its Iowa retail electric customers based on a 2020 forward-looking Test Period. The key drivers for IPL’s request included recovery of capital projects, including new wind generation. IPL concurrently filed for interim retail electric rates based on 2018 historical data as adjusted for certain known and measurable changes occurring in the first quarter of 2019. An interim retail electric base rate increase of $90 million, on an annual basis, was implemented effective April 1, 2019. In October 2019, IPL reached a settlement agreement with certain intervenor groups for an annual retail electric base rate increase of $127 million. The agreement includes both the recovery of and a return on IPL’s early retired EGUs, and the recovery of IPL’s retired analog electric meters. In addition, as discussed in Note 1(g), the net impact of certain costs and benefits resulting from IPL’s 1,000 MW expansion of wind generation in 2019 and 2020 will be recovered from its retail electric customers through a new renewable energy rider. The settlement agreement also includes IPL providing retail electric billing credits over a 12-month period beginning with final rates, including $27 million of excess deferred tax benefits and $8 million from a partial refund of interim rates implemented in 2019. In January 2020, the IUB issued an order approving the settlement with final rates, which are expected to be effective by the end of the first quarter of 2020.

IPL’s Retail Gas Rate Review (2020 Forward-looking Test Period) - In March 2019, IPL filed a request with the IUB to increase annual gas base rates for its Iowa retail gas customers based on a 2020 forward-looking Test Period. In October 2019, IPL reached a settlement agreement with intervenor groups for an annual retail gas base rate increase of $12 million. In December 2019, the IUB issued an order approving the settlement with final rates, which were effective January 10, 2020.

IPL’s Retail Electric Rate Review (2016 Test Year) - In April 2017, IPL filed a request with the IUB to increase annual electric base rates for its Iowa retail electric customers based on a 2016 historical Test Year. An interim retail electric base rate increase of $102 million, on an annual basis, was implemented effective April 13, 2017. In September 2017, IPL reached a partial, non-unanimous settlement agreement with intervenor groups for an annual retail electric base rate increase of $130 million. In February 2018, the IUB issued an order approving the settlement with final rates effective May 1, 2018.

WPL’s Retail Electric and Gas Rate Review (2019/2020 Test Period) - In December 2018, the PSCW issued an order approving WPL’s proposed settlement for its retail electric and gas rate review covering the 2019/2020 Test Period, which was based on a stipulated agreement between WPL and intervenor groups. Under the settlement, WPL retail electric and gas base rates will not change from current levels through the end of 2020.