-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TjI/buy7usEdklHbbXohPVoLWYP5GupER4tXPRONsqZBj4bGvzzEW6Cq59GXQJ0Y Bim9NAa0QJwzXeasaFOvrg== 0000950120-04-000184.txt : 20040309 0000950120-04-000184.hdr.sgml : 20040309 20040309114918 ACCESSION NUMBER: 0000950120-04-000184 CONFORMED SUBMISSION TYPE: POS AMC PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20040309 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERSTATE POWER & LIGHT CO CENTRAL INDEX KEY: 0000052485 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC & OTHER SERVICES COMBINED [4931] IRS NUMBER: 420331370 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: POS AMC SEC ACT: 1935 Act SEC FILE NUMBER: 070-09375 FILM NUMBER: 04656503 BUSINESS ADDRESS: STREET 1: 200 FIRST ST SE STREET 2: ALLIANT ENERGY TOWER CITY: CEDAR RAPIDS STATE: IA ZIP: 52401 BUSINESS PHONE: 3193984411 FORMER COMPANY: FORMER CONFORMED NAME: IES UTILITIES INC DATE OF NAME CHANGE: 20020103 FORMER COMPANY: FORMER CONFORMED NAME: IES UTILITIES INC DATE OF NAME CHANGE: 19940107 FORMER COMPANY: FORMER CONFORMED NAME: IOWA ELECTRIC LIGHT & POWER CO DATE OF NAME CHANGE: 19920703 POS AMC 1 dc159540posamc.txt POST-EFFECTIVE AMENDMENT NO. 5 (As filed March 9, 2004) File No. 70-9375 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 POS-AMC Post-Effective Amendment No. 5 to APPLICATION OR DECLARATION UNDER THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935 INTERSTATE POWER AND LIGHT COMPANY (F/K/A IES UTILITIES INC.) Alliant Energy Tower 200 First Street, S.E. Cedar Rapids, IA 52401 (Name of company filing this statement and address of principal executive offices) --------------------------------------------------- ALLIANT ENERGY CORPORATION (Name of top registered holding company parent) ---------------------------------------------------- F. J. Buri, Corporate Secretary Alliant Energy Corporation 4902 N. Biltmore Lane Madison, Wisconsin 53718 (Name and address of agent for service) ---------------------------------------------------- The Commission is requested to send copies of all notices, orders and communications in connection with this Application or Declaration to: Kent M. Ragsdale, Managing Attorney William T. Baker, Jr., Esq. Alliant Energy Corporate Services, Inc. Thelen Reid & Priest LLP 200 First Street, S.E. 40 West 57th Street Cedar Rapids, Iowa 52401 New York, New York 10019 ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION. ----------------------------------- 1.1. Background. Interstate Power and Light Company ("IP&L") is a wholly-owned public-utility subsidiary of Alliant Energy Corporation ("Alliant Energy"), a registered holding company under the Public Utility Holding Company Act of 1935, as amended (the "Act"). IP&L is engaged principally in the generation, purchase, transmission, distribution and sale of electric power and the purchase, distribution, transportation and sale of natural gas in portions of Iowa, Minnesota and Illinois. At December 31, 2003, IP&L provided electric service to approximately 529,000 customers and gas service to approximately 236,000 customers (excluding transportation and other customers). IP&L also provides steam service in selected markets in Iowa. IP&L is subject to regulation as a public utility as to retail electric and gas rates, service rules, issuance of securities, construction of new facilities, transactions with affiliates and various other matters by the Iowa Utilities Board, the Minnesota Public Utilities Commission ("MPUC"), and the Illinois Commerce Commission ("ICC"). It is also subject to regulation by the Federal Energy Regulatory Commission and by the Nuclear Regulatory Commission. For the year ended December 31, 2002, IP&L had operating revenues of $1,211,608,000, of which $964,854,000 (79.6%) were derived from electric operations, $214,895,000 (17.8%) from gas operations, and $31,859,000 (2.6%) from steam sales and other operations. At September 30, 2003, IP&L had total assets of $3,241,895,000, including net utility and steam plant assets of $2,120,616,000. As of September 30, 2003, IP&L had 24,000,000 authorized shares of common stock, 13,370,788 of which were issued and outstanding and held by Alliant Energy. IP&L's consolidated capitalization at September 30, 2003 was as follows: - --------------------------------- -------------------------- ---------------------- Common Equity $984,645,000 46.9% - --------------------------------- -------------------------- ---------------------- Preferred Stock $183,840,000 8.7% - --------------------------------- -------------------------- ---------------------- Long-term Debt (including $929,333,000 44.2% current maturities) - --------------------------------- -------------------------- ---------------------- Short-term Debt $ 4,000,000 0.2% - --------------------------------- -------------------------- ---------------------- Total $2,101,818,000 100.0% - --------------------------------- -------------------------- ----------------------
1.2. IP&L's Current Authorization to Issue Long-term Debt Securities. By orders in this proceeding dated November 25, 1998 (Holding Co. Act Release No. 26945) and December 15, 2000 (Holding Co. Act Release No. 27306), as subsequently modified by order dated October 24, 2001 in File No. 70-9837 -2- (Holding Co. Act Release No. 27456)/1/ (such orders being hereafter referred to as the "Prior Orders"), the Commission has authorized IP&L to (1) issue and sell from time to time through June 30, 2004 (the "Authorization Period"), in one or more series, any combination of (a) collateral trust bonds ("Trust Bonds"), (b) senior unsecured debentures ("Senior Debentures"), and (c) unsecured subordinated debentures ("Subordinated Debentures"); and (2) enter into an agreement or agreements for the issuance and sale of one or more series of tax-exempt bonds ("Tax-Exempt Bonds") for the financing or refinancing of air and water pollution control facilities and sewage and solid waste disposal facilities ("Facilities"). As security for IP&L's obligations under any agreement relating to the Tax-Exempt Bonds, IP&L is authorized to (1) issue its non-negotiable promissory note or notes to evidence the loan to IP&L of the proceeds of the Tax-Exempt Bonds by the issuer thereof, (2) convey a subordinated security interest in any Facilities that are financed through the issuance of Tax-Exempt Bonds, (3) issue and pledge one or more new series of Trust Bonds ("Tax-Exempt Collateral Bonds"), (4) acquire and deliver letters of credit guaranteeing payment of the Tax-Exempt Bonds and enter into reimbursement agreements with respect to any such letters of credit, (5) acquire insurance policies guaranteeing payment of the Tax-Exempt Bonds, and (6) provide a direct guarantee of payment of the principal of and premium, if any, and interest on the Tax-Exempt Bonds. Under the Prior Orders, the aggregate principal amount of the Trust Bonds, Senior Debentures, Subordinated Debentures, and Tax-Exempt Bonds issued during the Authorization Period shall not exceed $300 million, provided that such amount excludes the principal amount of any Tax-Exempt Collateral Bonds issued as collateral security for Tax-Exempt Bond obligations and any other forms of collateral related to the Tax-Exempt Bonds. IP&L may not issue any long-term debt securities unless such securities are rated at the investment grade level as established by at least one nationally recognized statistical rating organization, as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the Securities Exchange Act of 1934. Under the October 24, 2001 order, the Commission reserved jurisdiction over the issuance by IP&L of any such securities that are rated below investment grade. Through December 31, 2003, IP&L had issued and sold a total of $200 million principal amount of long-term debt securities in accordance with the authorization under the Prior Orders. IP&L currently plans to issue an additional $100 million principal amount of Trust Bonds or Senior Debentures in the second quarter of 2004, the proceeds of which will be used to repay short-term debt that was incurred principally to finance IP&L's construction - ---------- 1 In the October 24, 2001 order, the Commission approved the merger of Interstate Power Company into IES Utilities Inc., which then changed its name to Interstate Power & Light Company. The Commission also approved an increase from $200 million to $300 million in the aggregate amount of long-term debt securities that IP&L may issue through June 30, 2004. -3- program and for other corporate purposes./2/ As shown in the table in Exhibit D-3, assuming the completion of this offering and an additional $100 million common equity investment by Alliant Energy, IP&L's projected capitalization ratios at December 31, 2004 would be 45.9% common equity, 7.5% preferred stock, 41.6% long-term debt (including current portion), and 5.0% short-term debt. In addition, IP&L currently plans to cause the redemption of approximately $20 million principal amount of Tax-Exempt Bonds, also during the second quarter of 2004. The Prior Orders provide that no series of Trust Bonds will be issued at interest rates in excess of the lower of 15% per annum or those interest rates generally obtainable at the time of pricing for first mortgage bonds having reasonably similar maturities, issued by companies of the same or reasonably comparable credit quality and having reasonably similar terms, conditions and features (the "Ceiling Rate"). Further, the Prior Orders provide that no series of Senior Debentures or Subordinated Debentures will be sold if their fixed interest rate or initial adjustable interest rate exceeds the Ceiling Rate. 1.3 Requested Authorizations. IP&L requests that the Commission issue a further supplemental order in this proceeding to (a) extend the Authorization Period under the Prior Orders from June 30, 2004 to December 31, 2004, (b) increase the maximum aggregate principal amount of the Trust Bonds, Senior Debentures, Subordinated Debentures, and Tax-Exempt Bonds that IP&L may issue during the Authorization Period from $300 million to $350 million, such that, taking into account previous issuances of such securities totaling $200 million, IP&L would have authority to issue up to an additional $150 million of long-term debt securities during the remainder of 2004, and (c) authorize IP&L to enter into and perform interest rate hedging transactions in order to manage interest rate risk associated with outstanding long-term indebtedness and anticipated long-term debt offerings. IP&L is not requesting any other change or modification to the terms, conditions or limitations under the Prior Orders. (a) Extension of Authorization Period. IP&L is requesting a six-month extension in the Authorization Period in order to make the expiration date under the Prior Orders coterminous with the expiration date under orders issued in File 70-10052 that grant IP&L authorization to issue and sell short-term indebtedness./3/ The extension will also provide IP&L greater financing flexibility in the event that its currently planned offering of Trust Bonds or Senior Debentures and redemption of Tax-Exempt Bonds are delayed beyond the second quarter of 2004. IP&L intends to file an Application/Declaration later in 2004 to restate and renew its authorization for all external financing. - ---------- 2 IP&L intends to issue these debt securities in a public offering utilizing its "shelf" registration statement on Form S-3 in File No. 333-104273 (incorporated by reference herein as Exhibit C). A more complete description of the Trust Bonds and the Senior Debentures is contained in the amended registration statement. 3 By orders dated June 21, 2002 (Holding Co. Act Release No. 27542), October 10, 2002 (Holding Co. Act Release No. 27575), and December 13, 2002 (Holding Co. Act Release No. 27615) in File No. 70-10052, IP&L is authorized to issue and sell short-term debt securities from time to time through December 31, 2004. -4- (b) Increase in Long-term Debt Limit. The proposed $50 million increase (from $300 million to $350 million) in the limit on new long-term debt securities that IP&L may issue will allow IP&L to complete in 2004 both its planned offering of Trust Bonds or Senior Debentures ($100 million) and redemption of approximately $20 million Tax-Exempt Bonds. (c) Interest Rate Hedging Transactions.IP&L requests authorization to enter into interest rate hedging transactions with respect to its outstanding long-term indebtedness ("Interest Rate Hedges") in order to reduce or manage interest rate cost. Interest Rate Hedges will involve the use of financial instruments commonly used in today's capital markets, such as futures, interest rate swaps, caps, collars, floors, and structured notes (i.e., a debt instrument in which the principal and/or interest payments are indirectly linked to the value of an underlying asset or index), or transactions involving the purchase or sale, including short sales, of U.S. Treasury or Agency (e.g., FNMA) obligations or LIBOR-based swap instruments. The transactions would be for fixed periods and stated notional amounts. In no case will the notional principal amount of any Interest Rate Hedge exceed that of the underlying debt instrument and related interest rate exposure. In addition, IP&L requests authorization to enter into interest rate hedging transactions with respect to anticipated debt offerings (the "Anticipatory Hedges"). Such Anticipatory Hedges would be utilized to fix and/or limit the interest rate risk associated with any new issuance through (i) a forward sale of exchange-traded U.S. Treasury futures contracts, U.S. Treasury obligations and/or a forward swap (each a "Forward Sale"), (ii) the purchase of put options on U.S. Treasury obligations (a "Put Options Purchase"), (iii) a Put Options Purchase in combination with the sale of call options on U.S. Treasury obligations (a "Collar"), (iv) transactions involving the purchase or sale, including short sales, of U.S. Treasury obligations, or (v) some combination of a Forward Sale, Put Options Purchase, Collar and/or other derivative or cash transactions, including, but not limited to structured notes, caps and collars, appropriate for the Anticipatory Hedges. Interest Rate Hedges and Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades") with brokers through the opening of futures and/or options positions traded on the Chicago Board of Trade ("CBOT") or other designated contract markets, the establishment of over-the-counter positions with one or more counterparties ("Off-Exchange Trades"), or a combination of On-Exchange Trades and Off-Exchange Trades. IP&L will determine the optimal structure of each Interest Rate Hedge or Anticipatory Hedge transaction at the time of execution. Interest Rate Hedges and Anticipatory Hedges in the over-the-counter market would only be entered into with counterparties ("Approved Counterparties") whose senior debt ratings, or the senior debt ratings of the parent companies of the counterparties, as published by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an equivalent rating from Moody's Investors Service or Fitch, Inc. Fees, commissions and other amounts payable to a counterparty or exchange (excluding, however, the swap or option payments) in connection with any Interest Rate Hedge or Anticipatory Hedge will not exceed those generally obtainable in competitive markets for parties of comparable credit quality. -5- IP&L will comply with Statement of Financial Accounting Standard ("SFAS") 133 (Accounting for Derivative Instruments and Hedging Activities) and SFAS 138 (Accounting for Certain Derivative Instruments and Certain Hedging Activities) or other standards relating to accounting for derivative transactions as are adopted and implemented by the Financial Accounting Standards Board ("FASB"). IP&L represents that each Interest Rate Hedge and each Anticipatory Hedge will qualify for hedge accounting treatment under the current FASB standards in effect and as determined as of the date such Interest Rate Hedge or Anticipatory Hedge is entered into. IP&L will also comply with any future FASB financial disclosure requirements associated with hedging transactions./4/ ITEM 2. FEES, COMMISSIONS AND EXPENSES. ------------------------------ The fees, commissions and expenses, paid or incurred in connection with filing this Post-Effective Amendment are estimated not to exceed $5,000. Fees, commissions and expenses paid or incurred by IP&L in connection with any offering of long-term debt securities authorized in this proceeding will be within the limitations specified in the Prior Orders. ITEM 3. APPLICABLE STATUTORY PROVISIONS. ------------------------------- Sections 6(a), 7 and 12(b) of the Act and Rules 23, 24 and 45 thereunder are applicable to the issue and sale of long-term debt securities and related transactions by IP&L. Sections 6(a) and 7 of the Act are also applicable to Interest Rate Hedges and Anticipatory Hedges entered into by IP&L. The transactions proposed herein are also subject to Section 32(h)(4) of the Act and Rule 54 thereunder. Rule 54 provides that, in determining whether to approve any transaction that does not relate to an "exempt wholesale generator" ("EWG") or "foreign utility company" ("FUCO"), as defined in Sections 32 and 33, respectively, the Commission shall not consider the effect of the capitalization or earnings of any subsidiary which is an EWG or FUCO upon the registered holding company system if paragraphs (a), (b) and (c) of Rule 53 are satisfied. Alliant Energy currently does not meet all of the conditions of Rule 53(a). As of September 30, 2003, Alliant Energy's "aggregate investment," as defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $465.1 million, or approximately 60.9% of Alliant Energy's average "consolidated retained earnings," also as defined in Rule 53(a)(1), for the four quarters ended September 30, 2003 ($764.0 million). Although this exceeds the 50% "safe harbor" limitation contained in Rule 53(a), the Commission has authorized Alliant Energy in an order dated October 3, 2001 (Holding Co. Act Release No. 27448) to increase its "aggregate investment" in EWGs and FUCOs to an amount equal to 100% - ---------- 4 The proposed terms and conditions of the Interest Rate Hedges and Anticipatory Hedges are substantially the same as the Commission has approved in other cases. See FirstEnergy Corp., et al., Holding Co. Act Release No. 27694 (June 30, 2003); and NiSource Inc., et al., Holding Co. Act Release No. 27789 (Dec. 30, 2003). -6- of Alliant Energy's average "consolidated retained earnings." Even if the Commission takes into account the capitalization of and earnings from EWGs and FUCOs in which Alliant Energy has an interest, there would be no basis for withholding approval of the proposed transaction. With regard to capitalization, Alliant Energy has experienced an increase in consolidated common stock equity since September 30, 2001, the end of the quarterly period immediately preceding the issuance of the October 3, 2001 order, due in part to the sale of certain non-regulated businesses (including the sale of its FUCO investments in Australia in April 2003, the sale of its affordable housing business in mid-2003, and the sale of its oil and gas exploration and production business in November 2003) and the application of the proceeds thereof to retire more than $800 million of debt; halving the targeted dividend on common stock from $2.00 per share to $1.00 per share; reducing anticipated capital expenditures in 2002 and 2003 (including no new investments in Brazil through 2003); completion of a public offering of 17,250,000 shares of common stock in July 2003, the net proceeds of which (approximately $318.4 million) were used to make capital contributions to IP&L and Wisconsin Power and Light Company; and implementation of other cost control measures./5/ Finally, the proposed transactions will have no material impact on Alliant Energy's consolidated capitalization. Since the issuance of the October 3, 2001 order, Alliant Energy has experienced a modest increase in its level of losses from its portfolio of FUCOs. As described in the Application/Declaration in File No. 70-9891, Alliant Energy's share of losses associated with its portfolio of FUCOs in fiscal year 2000 (the last fiscal year prior to issuance of the October 3, 2001 order) totaled approximately $17.7 million, after interest expense, taxes and currency transaction losses. In fiscal year 2001, Alliant Energy's share of losses totaled approximately $25.3 million./6/ Alliant Energy's losses on its Brazil investments were unexpectedly large in 2002, resulting primarily from the impact of a decline in currency translation rates, as well as from charges related to recovery of the impacts of electricity rationing in Brazil and other prior costs. Since then, energy demand has increased and several rate increases have been approved. Alliant Energy satisfies all of the other conditions of paragraphs (a) and (b) of Rule 53. With reference to Rule 53(a)(2), Alliant Energy maintains books and records in conformity with, and otherwise adheres to, the requirements - ---------- 5 At September 30, 2003, Alliant Energy's consolidated capitalization consisted of 43.9% common equity, 4.6% preferred stock, 44.6% long-term debt (including variable rate demand bonds classified as current), and 6.9% short-term debt (including current maturities of long-term debt), versus 36.3% common equity, 2.6% preferred stock, 51.2% long-term debt (including variable rate demand bonds classified as current), and 9.9% short-term debt (including current maturities of long-term debt) at September 30, 2001 (the end of the quarter immediately preceding the October 3, 2001 order). 6 Source: Alliant Energy's Annual Report on Form U5S for the year ended December 31, 2001 (Alliant Energy's share only). -7- thereof. With reference to Rule 53(a)(3), no more than 2% of the employees of Alliant Energy's domestic public utility companies render services, at any one time, directly or indirectly, to EWGs or FUCOs in which Alliant Energy directly or indirectly holds an interest. With reference to Rule 53(a)(4), Alliant Energy will continue to provide a copy of each application and certificate relating to EWGs and FUCOs and relevant portions of its Form U5S to each regulator referred to therein, and will otherwise comply with the requirements thereof concerning the furnishing of information. In addition, none of the adverse conditions specified in Rule 53(b) exists./7/ ITEM 4. REGULATORY APPROVAL. ------------------- The issuance and sale of long-term debt securities by IP&L is subject to approval by the MPUC and the ICC./8/ A copy of the order issued by the ICC is filed herewith as Exhibit D-4 and a copy of the order of the MPUC will be filed by amendment hereto as Exhibit D-2. No other state commission, and no federal commission, other than this Commission, has jurisdiction over the proposed transaction. ITEM 5. PROCEDURE. --------- The Commission is requested to publish a notice under Rule 23 with respect to the filing of this Post-Effective Amendment as soon as practicable and to issue a supplemental order in this proceeding not later than May 1, 2004. IP&L requests that there not be a 30-day waiting period between issuance of the Commission's supplemental order and the date on which the supplemental order is to become effective. IP&L hereby waives a recommended decision by a hearing officer or any other responsible officer of the Commission and consents to the assistance of the Division of Investment Management in the preparation of the Commission's decision and/or order, unless the Division opposes the matters proposed herein. ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS. --------------------------------- (a) Exhibits: -------- A None. - ---------- 7 With regard to Rule 53(b)(3), operating losses on Alliant Energy's investments in EWGs and FUCOs were less than 5% of consolidated retained earnings in 2002. 8 IP&L, which is incorporated in Iowa, cannot use the exemption under Rule 52(a) because the Iowa Utilities Board does not have jurisdiction over the issuance of securities by utilities. In accordance with Minnesota law, IP&L is seeking approval for its capital structure for the fiscal year ending March 31, 2005 (see Exhibit D-1). The ICC has authorized IP&L to issue and sell up to $125 million principal amount of long-term debt securities during the period ending June 30, 2004 (see Exhibit D-4). -8- B None. C Registration Statement on Form S-3 ("shelf" registration) filed by IP&L on April 2, 2003, as amended (incorporated by reference to File No. 333-104273). D-1 Application to the MPUC. D-2 MPUC Order (to be filed by amendment). D-3 Application to the ICC. D-4 ICC Order. E None. F Opinion of Counsel (to be filed by amendment). G Form of Federal Register Notice. (b) Financial Statements: FS-1 Consolidated Balance Sheet of Interstate Power and Light Company as of September 30, 2003 (incorporated by reference to the Quarterly Report on Form 10-Q of Interstate Power and Light Company for the period ended September 30, 2003) (File No. 0-4117-1). FS-2 Consolidated Statement of Income of Interstate Power and Light Company for the nine months ended September 30, 2003 (incorporated by reference to the Quarterly Report on Form 10-Q of Interstate Power and Light Company for the period ended September 30, 2003) (File No. 0-4117-1). ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS. --------------------------------------- The transaction that is the subject of this Post-Effective Amendment does not involve a "major federal action" nor does it "significantly affect the quality of the human environment" as those terms are used in section 102(2)(C) of the National Environmental Policy Act. Such transaction will not result in changes in the operation of IP&L that will have an impact on the environment. IP&L is not aware of any federal agency that has prepared or is preparing an environmental impact statement with respect to the transaction that is the subject of this Post-Effective Amendment. -9- SIGNATURE Pursuant to the requirements of the Public Utility Holding Company Act of 1935, the undersigned company has duly caused this Post-Effective Amendment to be signed on its behalf by the undersigned thereunto duly authorized. INTERSTATE POWER AND LIGHT COMPANY By: /s/ F. J. Buri ---------- Name: F. J. Buri Title: Corporate Secretary Dated: March 9, 2004 -10- EX-99 3 e163511.txt EX. D-1 - APPLICATION TO THE MPUC EXHIBIT D-1 BEFORE THE MINNESOTA PUBLIC UTILITIES COMMISSION LEROY KOPPENDRAYER CHAIR ELLEN GAVIN COMMISSIONER MARSHALL JOHNSON COMMISSIONER PHYLLIS A. REHA COMMISSIONER GREGORY SCOTT COMMISSIONER AMENDED Petition of INTERSTATE POWER AND LIGHT ) COMPANY for Approval of Proposed Capital ) Structure for 2004 ) Docket No.E,G 001/S-04-109 INTRODUCTION - ------------ TO THE MINNESOTA PUBLIC UTILITIES COMMISSION: On January 21st, 2004, the Petitioner, INTERSTATE POWER AND LIGHT COMPANY (IPL or the Company), filed in accordance with Minnesota Statutes, Section 216B.49 and Minnesota Rules, Parts 7825.1000 to 7825.1500, petitions the Minnesota Public Utility Commission ("Commission") for approval of its proposed capital structure for the year 2004. IPL respectfully requests that the Commission accept its Amended Application to reflect IPL adjusted numbers for the limits of short-term and long-term debt. An error has been discovered in the data used for the original application. Consequently, IPL hereby submits its Amended Application to reflect an increased limit in short-term debt from $250 million to $300 million. In addition, IPL has increased its anticipated issuance of long-term debt in 2004 from $100 million to $125 million. IPL's adjusted request is reflected in its amended petition below, and in the attached Exhibits C, D, E, F, and M. IPL hereby waives a hearing on any and all matters covered by this Petition and respectfully requests that, in accordance with the authority granted to the Commission under Minnesota Statutes, Section 216B.26, the Order of the Commission in this matter be declared in force and effective immediately upon its being filed and served. 1 CONTEMPLATED CHANGES TO CAPITAL STRUCTURE: - ------------------------------------------ The following Table 1 shows the actual and estimated capital structure for Petitioner for 12/31/2002, 9/30/2003, 12/31/2003, 12/31/2004, and March 31, 2005:
TABLE 1 Interstate Power and Light Company Capital Structure (e) ($millions) (1) (2) (3) (4) (5) (6) Actual 12/31/2002 Actual 9/30/2003 Estimated 12/31/2003 ------------------------ ------------------------ ------------------------ (1) Common Equity $ 866.7 46.3% $ 984.6 46.9% $ 1,034.8 46.3% (2) Preferred Stock 145.1 7.7% 183.8 8.7% 183.8 8.2% (3) Long-Term Debt(a) 860.5 46.0% 929.3 44.2% 910.5 40.7% (4) Short-Term Debt 0.0 0.0% 4.0 0.2% 107.5 4.8% --------- ------ --------- ------ --------- ------ (5) Total Capitalization $ 1,872.3 100.0% $ 2,101.7 100.0% $ 2,236.6 100.0% Estimated 03/31/2005 With Maximum Estimated 12/31/2004 Estimated 03/31/2005 Short-Term Notes ------------------------ ------------------------ ------------------------ (6) Common Equity $ 1,121.4 (b) 45.9% $ 1,116.2 43.5% $ 1,116.2 41.9% (7) Preferred Stock 183.8 7.5% 183.8 7.2% 183.8 6.9% (8) Long-Term Debt 1,017.1 (c) 41.6% 1,063.3 41.4% 1,063.6 39.9% (9) Short-Term Debt 121.5 5.0% 204.8 8.0% 300.0 (d) 11.3% --------- ------ --------- ------ --------- ------ (10) Total Capitalization $ 2,443.8 100.0% $ 2,568.1 100.0% $ 2,663.6 100.0% FOOTNOTES --------- (a) Includes obligations under capital leases. (b) Reflects a planned equity contribution of $100 million by Alliant Energy Corporation during 2004. (c) Reflects the planned issuance of $125 million of additional long-term debt during 2004. (d) Reflects the issuance of additional unsecured short-term debt not to exceed, at any one time, $ 300 million, which includes a contingency of $50.0 million to back-up the issuance of letters-of-credit, which may be required in connection with certain purchased power, purchased gas and other similar agreements, and a general contingency of approximately $21.0 million. (e) Pro-forma journal entries for the issuance of securities are shown on Exhibit C, pages 1-2.
2 IPL presently contemplates the following changes to its capital structure during the period ending March 31, 2004: a. Short-term Unsecured Debt ------------------------- The Company plans to issue short-term unsecured debt not to exceed, at any one time, $300 million outstanding, which includes a contingency for backing up the issuance of $50.0 million of letters of credit and a general contingency of approximately $21 million. Short-term debt as a percentage of total capitalization for the period ending March 31, 2005 is estimated to range from 0.2% to 8.0%, with an estimate of 8.0% at the end of that period. If the maximum level of short-term debt were outstanding at the end of March 31, 2005, the ratio of short-term debt to total capitalization is estimated to be 11.3%. b. Long-term Debt -------------- The company plans to issue up to $125 million of long-term debt during the period ending March 31, 2005. Long-term debt, including obligations under capital leases, as a percentage of total capitalization for the period, is expected to range from approximately 40.7% to 46.1%, with an estimate of 41.4% at the end of that period. If the maximum level of short-term debt were outstanding at March 31, 2005, long-term debt as a percentage of capitalization would be around 39.9%. c. Preferred Equity ---------------- The company does not plan to issue any new preferred equity securities during the period ending March 31, 2005. Preferred equity, as a percentage of total capitalization, is expected to range from approximately 7.2% to 8.2% during the period ending March 31, 2005. If the maximum level of short-term debt were outstanding on March 31, 2005, preferred equity as a percentage of total capitalization would be around 6.9%. d. Common Equity ------------- The company has no plans to issue common equity; however, the company's parent plans to make an equity contribution to the company of up to $100 million during the period ending March 31, 2005. The change in common equity for the period reflects the contributions from the Petitioner's 3 parent, earnings and dividends paid during the year. Common equity as a percent of total capitalization for the period is expected to range from approximately 42.8 to 48.2%, with an estimate of 43.5% at the end of that period. If the maximum level of short-term debt were outstanding at March 31, 2005, common equity as a percent of total capitalization would be approximately 41.9%. The following Table 2 shows the forecasted range of percentages of total capitalization expected for common equity, preferred equity, and long-term debt for the pre-and post-equity infusion periods.
TABLE 2 Forecast Range for Capital Structure Percentages (a) PRE- AND POST EQUITY INFUSION ----------------------------- PRE-Equity Infusion Period POST-Equity Infusion Period -------------------------- --------------------------- Low High Low High --- ---- --- ---- Common Equity 42.8% 45.9% 43.5% 48.2% Preferred Equity 7.8% 8.2% 7.2% 7.9% Long-Term Debt (b) 40.7% 46.1% 41.4% 43.8% (a) As a percentage of total capitalization, including short-term debt. (b) Includes capital lease obligations
PRIOR APPROVAL OF CAPITAL STRUCTURE - ----------------------------------- The Minnesota Public Utilities Commission, by Amended Order in Docket E,G-001/S-03-187, entered August 7, 2003, approved the proposed capital structure of Petitioner for calendar year 2003 and the first three months of 2004. The Order provided that total capitalization for the order period not exceed $2,446.3 million, and that short-term debt not exceed $300 million outstanding at any one time. PROPOSED ORDER - -------------- The Company petitions the Minnesota Public Utilities Commission to issue an Order approving the Company's proposed capital structure for the period ending March 31, 2005. Due to the affect of an expected $100 million equity infusion by the Company's parent, Alliant Energy Corporation, the Company petitions the Commission to issue an Order approving a pre-equity infusion capital structure and a post-equity infusion capital structure. The pre-equity infusion capital structure for the Company consists of the average percentages for the pre-equity infusion period, as shown below, with a 10 percent contingency range above and 4 below the average percentages for common equity, preferred stock, and long-term debt. The post-equity infusion capital structure for the Company consists of the average percentages for the post-equity infusion period, as shown below, with a 10 percent contingency range above and below the average percentages for common equity, preferred stock, and long-term debt. The Company also requests that the Commission approve a maximum total capitalization not to exceed $2,770.5 million. (The $2,770.5 million maximum total capitalization consists of the maximum expected capitalization as of March 31, 2005 of $2,638.6 million, including the maximum $ 300 Million outstanding of short-term debt, plus a contingency equal to 5 percent of total capitalization.) The following Table 3 shows the average pre-equity infusion percentages for common equity, preferred equity and long-term debt, along with the requested capitalization ranges, consisting of a range 10% above and below the average pre-infusion percentages for common equity, preferred equity and long-term debt.
TABLE 3 Requested Capital Structure Percentages PRE-EQUITY INFUSION PERIOD -------------------------- Period Requested Range Average (b) --------------- (3/04 - 6/04) Low High -------------- --- ---- Common Equity 44.2% 39.8% 48.6% Preferred Equity 8.1% 7.3% 8.9% Long-Term Debt (a) 43.8% 39.5% 48.2% (a) Including capital lease obligations. (b) As a percentage of total capitalization.
The following Table 4 shows the average post-equity infusion percentages for common equity, preferred equity and long-term debt, along with the requested capitalization ranges, consisting of a range 10% above and below the average pre-infusion percentages for common equity, preferred equity and long-term debt.
TABLE 4 Requested Capital Structure Percentages POST-EQUITY INFUSION PERIOD --------------------------- Period Requested Range Average (b) --------------- (7/04 - 3/05) Low High -------------- --- ---- Common Equity 46.3% 41.6% 50.9% Preferred Equity 7.6% 6.9% 8.4% Long-Term Debt (a) 43.0% 38.7% 47.3% (a) Including capital lease obligations. (b) As a percentage of total capitalization.
5 In support of this Petition, IPL respectfully states and represents as follows: A. NAME, ADDRESS, AND DESCRIPTION OF COMPANY ----------------------------------------- INTERSTATE POWER AND LIGHT COMPANY is a corporation duly organized under the laws of the State of Iowa on May 25, 1925, with its principal office located at 200 First Street, SE, Cedar Rapids, Iowa. It holds a Certificate of Authority issued by the Secretary of State of Minnesota authorizing IPL to engage in, among other things, the electric and gas public utility businesses in the State of Minnesota. It is a "public utility" within the meaning of Section 1 of Section 49 of the Minnesota Public Utilities Act. In accordance with its Certificate of Incorporation, as amended, it provides, among other things, electric energy to the public in 21 counties in the State of Minnesota. It serves electric energy and natural gas in the City of Albert Lea, Minnesota, and a number of smaller Minnesota towns. It also provides electric energy and natural gas in various counties in the States of Iowa and Illinois. As the result of a merger, since April 21, 1998, IPL has been a subsidiary of Alliant Energy Corporation (AEC). AEC, IPL's parent, is a Public Utility Holding Company regulated under the Public Utility Holding Company Act of 1935, as amended. B. NAME, ADDRESS, AND TELEPHONE NUMBER OF THE PERSON AUTHORIZED ------------------------------------------------------------ TO RECEIVE NOTICES AND COMMUNICATIONS WITH RESPECT TO THE PETITION ------------------------------------------------------------------ The names, addresses, and telephone numbers of the persons authorized to receive notices and communication with respect to this Petition are: Scot McClure Sr Regulatory Planning Consultant 4902 North Biltmore Lane Madison, WI 53707-1007 (608) 458-5141 e-mail: ScotMcClure@alliantenergy.com Jennifer Moore Regulatory Attorney 200 First Street SE Cedar Rapids, IA 52401-1409 (319) 786-4219 e-mail: jennifermoore@alliantenergy.com 6 C. DESCRIPTION OF THE SECURITIES TO BE ISSUED AND ANTICIPATED TERMS ---------------------------------------------------------------- A description of the Securities proposed to be issued by Petitioner during the period ending March 31, 2004, is set forth in INTRODUCTION, supra, and is as follows: NOTES EVIDENCING BANK LOANS, COMMERCIAL PAPER AND REIMBURSEMENT AGREEMENTS WITH - ------------------------------------------------------------------------------- RESPECT TO LETTERS-OF-CREDIT - ---------------------------- The Company plans to issue short-term unsecured notes evidencing loans from financial institutions or commercial paper or reimbursement agreements with respect to letters-of-credit in an aggregate principal amount not to exceed $300 million. Such unsecured short-term promissory notes evidencing bank loans and/or commercial paper may be issued to commercial banks, commercial paper dealers and institutional lenders. Reimbursement agreements with respect to letters-of-credit may be issued to commercial banks and other financial institutions. None of the notes or reimbursement agreements to be issued will have any voting rights. PREFERRED EQUITY SECURITIES - --------------------------- Petitioner does not plan to issue any preferred equity securities during the period covered by this petition. COMMON STOCK - ------------ The Company's Dividend Reinvestment and Stock Purchase Plan (the "Plan") was terminated on April 21, 1998. The Company has no plans to issue new equity securities. However, the Company does anticipate that it will received equity contributions from its parent, Alliant Energy Corporation, during 2004 of up to $100 million. (See Exhibit G for a further description of the Company's Common Stock.) LONG-TERM DEBT - -------------- The Company anticipates issuing up to $125 million of new long-term debt during the period ending March 31, 2005. Such long-term debt will be in the form of unsecured debentures or secured first mortgage bonds; will have a maturity or maturities of no more than 31 years, will bear interest at rates determined at the time of issuance in accordance with market rates for debt of similar type, maturity and credit quality; will be issued at a discount or premium anticipated to be no more than 3.0 %; and will have such call provisions as are currently acceptable in the market place at the time of issuance for debt of similar quality and maturity. 7 D. ESTIMATED INTEREST COST, ISSUE DATE, AND MATURITY DATE ------------------------------------------------------ UNSECURED SHORT-TERM NOTES - -------------------------- The interest rate on short-term unsecured debt will be dependent upon the money market conditions at the time the debt is incurred and will be at rates prevailing at such time for borrowings of comparable credit quality. For purposes of this Petition, IPL's estimate of the average short-term interest rate for the period ending March 31, 2005 is 2.0%. Any commercial paper issued will mature not more than nine months from the date of issuance, but in no event later than September 30, 2005. Any promissory notes issued to lending banks (bank loans) shall be issued on or before December 31, 2004 and will mature not later than December 31, 2005. LONG-TERM DEBT - -------------- The Company currently anticipates issuing up to $125 million of new long-term debt during the second quarter of 2004. Such long-term debt will be in the form of unsecured debentures or secured first mortgage bonds and will have a maturity of no more than 31 years, and will bear interest at rates determined at the time of issuance in accordance with market rates for debt of similar type, maturity and credit quality. For purposes of this Petition, IPL's estimate of the interest rate on $125 million of unsecured debentures with a 31-year maturity, if issued today, would be approximately 7.0%. E. THE MANNER IN WHICH THE SECURITIES ARE TO BE ISSUED --------------------------------------------------- UNSECURED SHORT-TERM DEBT - ------------------------- Short-term debt will be issued as unsecured short-term promissory notes to lending banks and other financial institutions (bank loans), and/or commercial paper sold directly to direct purchasers and/or commercial paper sold to commercial paper dealers, and/or reimbursement agreements with banks and other financial institutions with respect to the issuance of letters-of-credit. The need for timely processing of such transactions and the typical short duration of each individual transaction make it impractical to invite sealed written proposals (competitive bidding). 8 PREFERRED EQUITY SECURITIES - --------------------------- The Company has no plans to issue preferred equity securities during the period covered by this petition. COMMON STOCK - ------------ The Company has no plans to issue additional common equity during period ending March 31, 2005. LONG-TERM DEBT - -------------- The Company anticipates that long-term securities issued during the period covered by this petition will be registered unsecured debentures or registered collateral trust bonds and will be offered for sale in an underwritten or best-efforts transaction negotiated between the Company and one or more investment banking firms, underwriters, dealers or agents. F. PURPOSES FOR WHICH SECURITIES ARE TO BE ISSUED ---------------------------------------------- UNSECURED SHORT-TERM DEBT - OVERVIEW OF HOW THE COMPANY USES IT - --------------------------------------------------------------- The Company's cash flows vary from year-to-year, season-to-season, and from day-to-day. Cyclical requirements such as its construction program, the purchase of fuel, payroll, income and property taxes may cause the Company's cash flow to vary considerably during the year. The Company uses short-term debt to finance these needs when there are not sufficient internally generated funds available. The use of short-term debt allows the Company to issue long-term obligations when market conditions are favorable and in economic increments. The Company continuously monitors projected short-term debt levels, and when a sufficient level of short-term debt has accumulated and is not anticipated to decline, the Company refinances the short-term debt with long-term financing. These notes may also be issued to renew or refund outstanding First Mortgage Bonds, promissory notes of the same nature, or to replace maturing notes sold through commercial paper dealers, as well as to provide funds for construction and other general corporate purposes. The Company also periodically enters into long-term power supply, gas supply and other contracts that contain provisions that permit the supplier to require letters-of-credit from the Company to cover the Company's normal exposure with the supplier. The Company, if required to do so, will issue letters-of-credit to suppliers, and may be required by banks issuing such letters-of-credit to enter into reimbursement agreements with respect to such letters-of-credit. Consequently, the Company will reserve a minimum of $50 million of the maximum 9 short-term debt limit of $300 million for the purpose of providing funds to back up reimbursement obligations with respect to letters-of-credit. UNSECURED SHORT-TERM DEBT - SPECIFIC USES - ----------------------------------------- The net proceeds of the unsecured short-term promissory notes to be issued by Petitioner during 2004, together with cash flow from operations and cash on hand, will be used to: (a) Financing Petitioner's construction program for the period ending March 31, 2005, which is estimated at $416 million; (b) Other related purposes, or for the acquisition of property, or for improvement of service. LONG-TERM DEBT - -------------- The net proceeds of long-term debt to be issued during the period covered by this petition will be primarily used to refinance short-term debt that was incurred principally to finance construction expenditures, and will be used to refinance other short-term debt and for other general corporate purposes. PREFERRED EQUITY SECURITIES - --------------------------- The Company has no plans to issue preferred equity securities during the period covered by this petition. G. STATEMENT WITH RESPECT TO "AFFILIATED INTERESTS" ------------------------------------------------ At the date hereof, IPL is not aware of any person, who may be deemed an "affiliated interest" within the meaning of Minnesota Statutes, Section 216B.48, Subdivision 1, who has received or is entitled to receive a fee for services in connection with the negotiations or consummation of the issuance of the securities which are the subject of this Petition, or for services in securing underwriters, sellers or purchasers of such securities. IPL is not aware of any investment banking firm which presently is an "affiliated interest" of IPL. 10 H. CAPITAL STRUCTURE ----------------- The capital structure of IPL as of September 30, 2003 is as follows:
Long-Term Debt: ($000) - --------------- ------ First Mortgage Bonds: 8-5/8% Series Due 2021 $ 20,000 8% Series Due 2007 25,000 7-5/8% Series Due 2023 94,000 7-1/4% Series Due 2007 27,450 ---------- Total First Mortgage Bonds $ 166,450 Collateral Trust Bonds: 7.25% Series, CTB, Due 2006 $ 60,000 6.7/8% Series, CTB Due 2007 55,000 6% Series, CTB Due 2008 50,000 7% Series, CTB, Due 2023 50,000 5.5% Series, PCRRB Due 2023 10,200 5.5% Series, PCRRB Due 2023 7,000 5.5% Series, PCRRB Due 2023 2,200 ---------- Total Collateral Trust Bonds $ 234,400 Pollution Control Revenue Bonds: 5.75% Due 2004 $ 1,000 5.75% Due 2004, Town of Salix, IA 1,680 6.25% Due 2009 1,000 6.30% Due 2010 5,600 6.35% Due 2012 5,650 City of Cedar Rapids, IA Variable Rate Due 2004 2,400 City of Chillicothe, IA Variable Rate Due 2010 5,300 City of Chillicothe, IA Variable Rate Series 1992A Due 2010 2,400 City of Chillicothe, IA Variable/Fixed (4.25%)Series 1998 due 2023 10,000 4.3% Variable/Fixed Rate Due 2005 2,650 4.3% Variable/Fixed Rate Due 2008 2,300 4.05% Variable/Fixed Rate Due 2010 3,250 4.2% Variable/Fixed Rate Due 2013 7,700 ---------- Total Pollution Control Revenue Bonds $ 50,930 Debentures: - ----------- 7.875% Junior Deferrable Interest Debenture, Series A, Due 2025 $ 50,000 6.625% Senior Debentures, Series A, Due 2009 135,000 6.75% Senior Debentures, Series B, Due 2011 200,000 5.875% Senior Debentures Series C Due 2018 100,000 ---------- Total Debentures $ 485,000 Capital Lease: - -------------- Obligations Under Capital Leases $ 63,249 ---------- Total Long-Term Debt $1,000,029 - -------------------- Less: Current Maturities (99,850) Less: Unamortized Discount (7,447) ---------- Long-Term Debt - Net $ 892,732 ---------- 11 Short Term Debt: - ---------------- Notes Payable [includes current maturities] $ 103,850 Preferred Stock: $ 183,840 - ---------------- Common Stock: - ------------- (Par Value $2.50), authorized 24,000,000 shares; Issued and outstanding: 13,370,788 shares $ 33,427 Additional Paid-in Capital 596,222 Retained Earnings 373,883 Accumulated other comprehensive loss (18,887) ---------- Total Common Stock $ 984,645 ---------- Total Capitalization $2,165,067 ==========
[The remainder of this page intentionally left blank] 12 I. VERIFICATION ------------ STATE OF WISCONSIN ) ) ss. COUNTY OF DANE ) Steven F. Price, being first duly sworn on his oath, deposes and says that he is Assistant Treasurer of Interstate Power and Light Company; that he has read the foregoing Application; that he knows the contents thereof; and that the facts therein stated are accurate and complete to the best of his knowledge, information and belief. /s/ Steven F Price --------------------------------- Steven F. Price Assistant Treasurer Subscribed and sworn to before me this; 12th day of February, 2004. /s/ Jean M. Olson - --------------------------------- Notary Public, State of Wisconsin My Commission Expires: 8/6/06 -------- [Continued on following page] 13 J. EXHIBITS --------- There are attached hereto and made a part hereof the following exhibits: Exhibit A Resolutions by the Board of Directors authorizing the filing of this petition Exhibit B Opinion of Counsel Exhibit C Pro-Forma Journal Entries Exhibit D Balance Sheet Exhibit E Income Statement Exhibit F Statement of Cash Flows Exhibit G Description of Shares Authorized by the Articles of Incorporation Exhibit H Description of Funded Debt of Interstate Power and Light Company Exhibit I Rate and Amount of Dividends Paid During the Past Five Years Exhibit J Amount of Bonds Authorized and Issued that Exceed 1% of Total Debt Exhibit K A copy of each plan, offer or agreement for the reorganization or readjustment of indebtedness or capitalization or for the retirement or exchange of securities Exhibit L Registration Statement to be filed with Securities and Exchange Commission Exhibit M.1 Monthly Cash Flow Forecast Exhibit M.2 Capital Structure Forecast Exhibit N Assumptions in Cash Flow Forecast Exhibit O Reference to Applications to FERC Exhibit P Summary of Sealed Written Public Proposals Exhibit Q Amended Articles of Incorporation [END] 14 EX-99 4 e163376.txt EXH. D-3 - INFORMATIONAL STATEMENT EXHIBIT D-3 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION INTERSTATE POWER AND LIGHT COMPANY : : APPLICATION PURSUANT TO SECTION 6-102(D) OF : DOCKET NO. THE PUBLIC UTILITIES ACT FOR AN AUTHORITY : TO ISSUE LONG TERM DEBT SECURITIES IN AN : AGGREGATE NOT TO EXCEED $125,000,000 : FOR THE PURPOSES OF REFUNDING OR : REFINANCING EVIDENCES OF SHORT-TERM DEBT : INFORMATIONAL STATEMENT To the Illinois Commerce Commission: Interstate Power and Light Company (IPL) submits this Informational Statement to the Illinois Commerce Commission (Commission) pursuant to Section 6-102(d) of the Illinois Public Utilities Act (Act), 220 ILCS 5/6012(d). This Informational Statement relates proposed financing of up to $125,000,000 in long term debt securities scheduled to occur in on or after March 15, 2004, subject to market conditions. Inquires concerning this Informational Statement and the proposed financing should be directed to the following persons: Enrique Bacalao Jennifer S. Moore Assistant Treasurer Attorney Alliant Energy Corporation Alliant Energy Corporate Services 4902 North Biltmore Lane 200 First Street SE Madison, WI 53707-1007 Cedar Rapids, IA 52401-1409 (608) 458-3250 (319) 786-4219 (Fax) (608) 458-4824 (Fax) (319) 786-4533 The principal features of the proposed financing are as follows: 1. Type and Amount of Issue. ------------------------- IPL intends to issue up to $125 million of new long-term debt securities during the period ending June 30, 2004. Such long-term debt will be in the form of unsecured debentures or secured first mortgage bonds; will have a maturity or maturities of no more than 31 years; will bear interest at rates determined at the time of issuance in accordance with market rates for debt of similar type, maturity and credit quality; will be issued at a discount or premium anticipated to be no more than 3.0 %; and will have such call provisions as are currently acceptable in the market place at the time of issuance for debt of similar quality and maturity. As shown in the chart below, assuming the completion of this offering and an additional $100 million common equity investment by Alliant Energy, IPL's projected capitalization ratios at December 31, 2004 would be 47.5% common equity, 7.8% preferred stock, 42.3% long-term debt, and 2.4% short-term debt. FORECAST RANGE FOR CAPITAL STRUCTURE PERCENTAGES /(a)/ Pre-and Post-Equity Infusion ---------------------------- PRE-Equity Infusion POST-Equity Infusion ------------------- -------------------- Period Period ------ ------ Low High Low High --- ---- --- ---- Common Equity 44.2% 46.5% 44.8% 49.3% Preferred Equity 8.1% 8.4% 7.3% 8.1% Long-Term Debt/(b)/ 43.5% 45.4% 40.9% 43.4% - ---------- (a) As a percentage of total capitalization, including short-term debt. (b) Includes capital lease obligations 2 IPL intends to offer these debt instruments for sale as registered securities in compliance with all relevant securities laws and regulations through underwriters in the public market. 2. Use of Proceeds --------------- IPL intends to use the proceeds of the new long term debt securities to repay short-term debt that was incurred principally to finance IPL's construction program for the Emery Generating Station (EGS), f/k/a, the Power Iowa Energy Center/1/ located near Mason City, Iowa and to fund working capital requirements, as well as other corporate purposes. IPL will use more than 90% of the proceeds to repay short-term debt in the form of maturing commercial paper, currently totaling $129 million outstanding. Any balance of the proceeds of the long-term debt securities will be used to pay fees and charges related to the borrowing, including the cost of issuance of the long-term debt securities, or for general corporate purposes. All up-front fees, costs and charges will be amortized over the life of the related long-term debt securities in compliance with accounting guidance. 3. Non-Applicability of Section 6-102(b) ------------------------------------- Section 6-102(b) of the Act provides in pertinent part that it does not apply to "any issuance of stock or of bonds, notes or other evidences of indebtedness 90% or more of the proceeds of which are to be used by the public - ---------- 1 The Power Iowa Energy Center was renamed as the Emery Generating Station and is now under construction near Mason City Iowa. The Emery Generating Station is scheduled to go on line by June, 2004 and will provide IPL with a nominal 600 MW of capacity. See ICC Docket No. 02-0571, March 18, 2003, and IUB Docket No. GCU-02-2, September 13, 2002, and IUB Docket RPU-02-6, September 17, 2002. 3 utility for the purposes of refunding, redeeming or refinancing outstanding issues of stock, bonds, notes, or other evidences of indebtedness." 220 ILCS 5-6-102(b). As described in Section 2 of its Informational Statement, more than 90% of the proceeds from the issuance of long term debt securities will by used by IPL for the purpose of discharging short-term debt used to fund the construction of the EGS. Accordingly, the proposed issuance of long term debt securities is not subject to subsection (b) of Section 6-102 of the Act. 4. Fee Requirement --------------- A fee will be due to the Commission with respect to $125,000,000 of the requested authorization, because the proceeds in that amount will be used to refund existing short-term debt and for general corporate purposes with respect to which no fee was previously paid to the Commission. IPL will pay the required fee reflecting the percentage of IPL's utility property located in the state of Illinois no later than (30) days after service of the Commission's order authorizing Debentures. For the purposes of the fee calculation, as of December 31, 2003, IPL's property situated in the state of Illinois constituted 2.313% of its total property wherever situated. WHERFORE, based on the foregoing, the issuance of up to $125,000,000 of long term debt securities, as currently contemplated by Interstate Power and Light Company is not subject to Section 6-102(b) of the Act. Accordingly, Interstate Power and Light Company respectfully requests that the Illinois Commerce Commission enter a written order on or before February 17, 2004 in 4 conformance with Section 6-102(a) of the Act authorizing the issuance of up to $125,000,000 in long term debt securities. Interstate Power and Light Company also requests the issuance of an identification number for placement of its evidence of indebtedness pursuant to Section 6-101 of the Act. Dated this 30th Day of January, 2004 INTERSTATE POWER AND LIGHT COMPANY By: /s/ Enrique Bacalao ----------------------- Enrique Bacalao Assistant Treasurer Jennifer S. Moore Attorney for Interstate Power and Light Company 200 First Street SE Cedar Rapids, IA 52401-1409 (319) 786-4219 (Fax) (319) 786-4533 jennifermoore@alliantenergy.com - ------------------------------- 5 EX-99 5 e163230.txt EXH D-4 - ORDER EXHIBIT D-4 STATE OF ILLINOIS ILLINOIS COMMERCE COMMISSION INTERSTATE POWER AND LIGHT COMPANY : : APPLICATION PURSUANT TO SECTION 6-102(D) OF THE : PUBLIC UTILITIES ACT FOR AN AUTHORITY TO ISSUE : LONG-TERM DEBT SECURITIES IN AN AGGREGATE NOT TO : EXCEED $125,000,000 FOR THE PURPOSES OF REFUNDING : 04-0063 OR REFINANCING EVIDENCES OF SHORT-TERM DEBT. : ORDER ----- By the Commission: INTRODUCTION On February 2, 2004, Interstate Power and Light Company ("IPL" or the "Company") filed a verified Informational Statement with the Illinois Commerce Commission ("Commission") pursuant to Section 6-102(d) of the Illinois Public Utilities Act ("Act"), 220 ILCS 5/1-101 et seq. IPL therein requests authority to issue and sell, on or after March 15, 2004, up to $125,000,000 aggregate principal amount of long-term debt securities. The Company will use at least 90% of the proceeds to repay short-term debt in the form of maturing commercial paper. On February 10, 2004, the Commission Staff ("Staff") filed an Answer to the Company's Informational Statement. On that date, IPL filed a Response to Staff's Answer. STATUTORY AUTHORITY FOR PROPOSED FINANCING As explained more fully below, IPL states that its filing is governed by Section 6-102(d) of the Act, and that Section 6-102(b) is not applicable to the proposed financing. In Subsection 6-102(b) of Section 6-102 of the Act, the first sentence provides as follows: (b) The provisions of this subsection (b) shall apply only to (1) any issuances of stock in a cumulative amount, exclusive of any issuances referred to in item (3), that are 10% or more in a calendar year or 20% or more in a 24-month period of the total common stockholders' equity or of the total amount of preferred stock outstanding, as the case may be, of the public utility, and (2) to any issuances of bonds, notes or other evidences of indebtedness in a cumulative principal amount, exclusive of any issuances referred to in item (3), that are 10% or more in a calendar year or 20% or more in a 24-month period of the aggregate principal amount of bonds, notes and other evidences of indebtedness of the public utility outstanding, all as of the date of the issuance, but shall not apply to (3) any issuances of stock or of bonds, notes or other evidences of indebtedness 90% or more of the proceeds of which are to be used by the public utility for purposes of refunding, redeeming or refinancing outstanding issues of stock, bonds, notes or other evidences of indebtedness . . . . Subsection 6-102(d) of Section 6-102 of the Act provides in part as follows: (d) Any issuance of stock or of bonds, notes or other evidences of indebtedness, other than issuances of notes pursuant to subsection (c) of this Section, which is not subject to subsection (b) of this Section, shall be regulated by the Commission as follows: the public utility shall file with the Commission, at least 15 days before the date of the issuance, an informational statement setting forth the type and amount of the issue and the purpose or purposes to which the issue or the proceeds thereof are to be applied. Prior to the date of the issuance specified in the public utility's filing, the Commission, if it finds that the issuance is not subject to subsection (b) of this Section, shall issue a written order in conformance with subsection (a) of this Section authorizing the issuance . . . . NATURE AND PURPOSE OF PROPOSED FINANCING IPL is an Iowa corporation operating as a public utility in Illinois pursuant to the Act and as a public utility in Iowa and Minnesota. In Illinois, IPL supplies electric and gas service to customers in areas in the northwestern portion of the state. In this proceeding, the Company proposes to issue up to $125,000,000 of new long-term debt securities during the period beginning March 15, 2004 and ending June 30, 2004, in the form of unsecured debentures or secured first mortgage bonds with a maturity of no more than 31 years. IPL proposes to use at least 90% of the proceeds to repay short-term indebtedness in the form of maturing commercial paper. According to IPL, this short-term debt was incurred principally to finance the Company's construction program for the Emery Generating Station and to fund working capital requirements as well as other corporate purposes. As of February 4, 2004, the Company had outstanding commercial paper totaling $128,500,000. Projected capitalization ratios reflecting the proposed issuance of long-term debt are shown on page two of IPL's Informational Statement. 2 IPL indicates that any balance of the proceeds of the proposed long-term indebtedness will be used to pay fees and charges related to the borrowing, including the cost of issuance of the long-term debt securities, or for general corporate purposes. The proposed indebtedness will bear interest at a rate determined at the time of issuance in accordance with market rates for debt of similar type, maturity and credit quality. The proposed indebtedness will be issued at a discount or premium anticipated to be no more than 3.0% and will have such call provisions as are currently acceptable in the market place at the time of issuance for debt of similar quality and maturity. IPL represents that it will offer the proposed debt instruments for sale as registered securities in compliance with all relevant securities laws and regulations through underwriters in the public market. IPL submits that because more than 90% of the proceeds from the issuance of long-term debt securities will be used for the purpose of discharging short-term debt to fund the construction of the Emery Generating Station, the proposed issuance of long-term debt securities is not subject to subsection (b) of Section 6-102 of the Act. The Company acknowledges that a fee will be due to the Commission with respect to the requested authorization of $125,000,000, because no fee was previously paid in connection with the short-term debt to be refunded. IPL says it will pay the required fee reflecting the percentage of IPL's property located in the State of Illinois no later than 30 days after service of the Commission's order authorizing the proposed financing. For purposes of the fee calculation, IPL stated in the Informational Statement that its property situated in the State of Illinois, as of December 31, 2003, constituted 2.313% of its total property wherever situated. STAFF'S ANSWER AND IPL'S RESPONSE Staff reviewed the Company's Informational Statement and Article VI of the Act. In its Answer, Staff states that IPL's proposal is subject to Section 6-101 of the Act, which requires the Commission to provide proper identification numbers on the proposed indebtedness when issued. Staff notes that the Company requests one identification number. Staff states that IPL's proposal is not subject to Section 6-102(b) since at least 90% of the proceeds will be used for the purpose of refunding outstanding short-term indebtedness. Staff further observes that IPL's proposal is not subject to Subsection 6-102(c) of the Act. Staff agrees with IPL that IPLs proposal is subject to Section 6-102(d), which requires the Informational Statement filed by IPL and a Commission Order in conformance with Section 6-102(a). As indicated above, The Company will use at lest 90 percent of the proceeds from the sale of the securities to refund existing short-term debt. As of February 4, 2004, the Company had outstanding commercial paper totaling 3 $128,500,000. It is anticipated that the interest rate of commercial paper to be refunded will average approximately 1.22%. According to Staff, the Company anticipates one issuance of senior notes with a 30-year maturity, and expects the interest rate to approximate 6.35% by the end of March 2004. Staff observes that pursuant to Section 6-108 of the Act, the Company is required to pay a fee in an amount equal to 24 cents for every $100 of the principal amount of debt authorized by the Commission to be applied to the purpose of refunding short term indebtedness issued without the consent of the Commission, prorated by the percentage of the Company's property situated in the State of Illinois. Staff states that the Company's ILCC Form 21 annual report for the period ending December 31, 2002 indicates that 2.36% of the Company's total property is situated in Illinois. Staff notes that the resulting required fee of $7,089 is to be paid no later than 30 days after service of the Commission Order authorizing the issuance of the proposed indebtedness. In conclusion, Staff recommends that the Commission issue an Order, pursuant to Section 6-102(d) of the Act, authorizing the transactions described in IPL's Informational Statement and identifying the applicable provisions of the Act and Administrative Code. Staff further recommends that the Commission direct IPL to comply with the reporting requirements of 83 Ill. Adm. Code 240. In IPL's Response to Staff's Answer, the Company does not object to the property allocator used by Staff in calculating the fee. IPL says that in the Informational Statement, it attempted to provide the Commission with the most current percentage of property located in Illinois, which IPL estimated to be 2.313% based on a 2003 cost of service study. IPL states that since it will not have an audited update of its ILCC Form 21 for 2003 until March of 2004, the Company does not object to use of its ILCC Form 21 for 2002. COMMISSION'S ANALYSIS AND CONCLUSIONS Section 6-102 of the Act sets forth the Commission's authority to regulate the issuance of securities by a public utility. Specifically, Section 6-102(b) exempts the issuance of "stock or of bonds, notes or other evidences of indebtedness 90% or more of the proceeds of which are to be used by the public utility for purposes of refunding, redeeming or refinancing outstanding issues of stock, bonds, notes or other evidences of indebtedness" from the potentially more involved procedures available to the Commission to investigate issuances that fall within the purview of Section 6-102(b). According to the Company's Informational Statement, at least 90% of the proceeds of the proposed indebtedness will be used to either refund or refinance outstanding short-term debt. Accordingly, the Commission finds that the proposed issuance is exempt from Section 6-102(b) of the Act. 4 Under the procedures set forth in Section 6-102(d) of the Act, a public utility proposing any issuances of stock, bonds, notes or other evidences of indebtedness that are not subject to Section 6-102(b) must file with the Commission, at least 15 days before the date of issuance, an "informational statement setting forth the type and amount of the issue and the purpose or purposes to which the issue or the proceeds thereof are to be applied." A review of the Company's Informational Statement indicates that the Company properly filed such a statement initiating this proceeding, and that the Statement contains the information required by Section 6-102(d). Section 6-102(d) also provides that "[p]rior to the date of the issuance specified in the public utility's filing, the Commission, if it finds that the issuance is not subject to [Section 6-102(b)], shall issue a written order in conformance with [Section 6-102(a) of the Act] authorizing the issuance." Section 6-102(a) of the Act requires that a Commission order authorizing the issuance of indebtedness must state the "amount thereof and the purpose or purposes to which the issue or the proceeds thereof are to be applied" and that the "money . . . to be procured or paid for by such issue is reasonably required for the purpose or purposes specified in the order." The Commission finds that the Company's proposed issuance and sale of up to $125,000,000 in long-term debt securities is reasonably required for the purposes indicated by IPL. Specifically, 90% or more of the proceeds will be required for the purpose of refunding or refinancing short-term indebtedness, which was incurred primarily to finance IPL's construction of the Emery Generating Station. Any remainder will be used to pay fees and charges related to the borrowing, including the cost of issuance of the long-term debt securities, to fund working capital requirements, or for general corporate purposes. Section 6-108 of the Act provides that the Commission shall charge every public utility specified fees in connection with an issuance of securities. The Commission finds that IPL is required to pay a fee of $7,089 pursuant to Section 6-108, using the allocation methodology proposed by Staff, no later than 30 days after service of this Order. Finally, the Commission notes that the Company must comply with 83 Ill. Adm. Code 240 (Reports of Issuance and Sale or Disposal of Securities and the Application of Proceeds), which requires public utilities to meet specified reporting requirements in connection with the issuance and sale of securities. FINDINGS AND ORDERING PARAGRAPHS The Commission, having given due consideration to the record herein, is of the opinion and finds that: (1) Interstate Power and Light Company is a public utility within the meaning of the Public Utilities Act; 5 (2) the Commission has jurisdiction over IPL and the subject matter of this proceeding; (3) the recitals of fact set forth in the prefatory portion of this Order are supported by the record and are hereby adopted as findings of fact; (4) IPL 's proposed issuance and sale of up to $125,000,000 of long-term debt securities, at least 90% of the proceeds of which shall be applied to the refunding or refinancing of outstanding short term indebtedness, with the proceeds to be used only in the manner described in Finding (5) below, is hereby approved in accordance with Section 6-102(d) of the Act; (5) all proceeds to be obtained from IPL's issuance and sale of long-term debt securities are reasonably required for the purpose of refunding or financing outstanding short-term indebtedness, to pay fees and charges related to the borrowing including the cost of issuance of the long-term debt securities, to fund working capital requirements, and for other corporate purposes; the total amount used to pay fees and charges related to the borrowing including the cost of issuance of the long-term debt securities, to fund working capital requirements and for other corporate purposes may not exceed $12,500,000 or 10 percent of the total proceeds from the issuance, whichever is less; (6) the funds to be obtained from the issuance of the long-term debt securities are reasonably required for the purposes described herein; (7) the proposed transactions are not subject to the provisions of Section 6-102(b) of the Act; (8) in accordance with Section 6-101 of the Act, IPL shall, before issuance and sale of the long-term debt securities described herein, cause the following to be placed on the face of such securities as may be issued by IPL: Ill. C.C. No. 6321; (9) IPL required to pay a fee of $7,089 in accordance with Section 6-108 of the Act; this fee shall be paid no later than thirty days after service of this Order; (10) IPL shall comply with the reporting requirements of 83 Ill. Adm. Code 240. IT IS THEREFORE ORDERED by the Commission that Interstate Power and Light Company's proposed issuance and sale of up to $125,000,000 aggregate principal amount of long-term debt, during the period beginning March 15, 2004 and ending June 30, 2004, the proceeds of which shall be used for only those purposes described in Findings (4) and (5) above, is hereby approved in accordance with Section 6-102(d) of the Act. 6 IT IS FURTHER ORDERED that IPL shall comply with Findings (4) through (10) of this Order. IT IS FURTHER ORDERED that subject to the provisions of Section 10-113 of the Public Utilities Act and 83 Ill. Adm. Code 200.880, this Order is final; it is not subject to the Administrative Review Law. By order of the Commission this 3rd day of March, 2004. (SIGNED) EDWARD C. HURLEY Chairman EX-99 6 e163443.txt EXH G - PROP. FORM OF FED. REG. NOT. Exhibit G PROPOSED FORM OF FEDERAL REGISTER NOTICE SECURITIES AND EXCHANGE COMMISSION (Release No. 35-_____) Filings under the Public Utility Holding Company Act of 1935, as amended ("Act") March __, 2004 Notice is hereby given that the following filing(s) has/have been made with the Commission pursuant to provisions of the Act and rules promulgated thereunder. All interested persons are referred to the application(s) and/or declaration(s) for complete statements of the proposed transaction(s) summarized below. The application(s) and/or declaration(s) and any amendments thereto is/are available for public inspection through the Commission's Office of Public Reference. Interested persons wishing to comment or request a hearing on the application(s) and/or declaration(s) should submit their views in writing by April __, 2004 to the Secretary, Securities and Exchange Commission, 450 5th Street, N.W., Washington, D.C. 20549, and serve a copy on the relevant applicant(s) and/or declarant(s) at the address(es) as specified below. Proof of service (by affidavit or, in case of an attorney at law, by certificate) should be filed with the request. Any request for hearing shall identify specifically the issues of fact or law that are disputed. A person who so requests will be notified of any hearing, if ordered, and will receive a copy of any notice or order issued in the matter. After April __, 2004, the application(s) and/or declaration(s), as filed or as amended, may be granted and/or permitted to become effective. * * * * * * INTERSTATE POWER AND LIGHT COMPANY (70-9375) --------------------------------- Interstate Power and Light Company ("IP&L"), whose principal executive offices are at Alliant Energy Tower, 200 First Street S.E., Cedar Rapids, Iowa 52401, has filed a post-effective amendment to its application-declaration, as previously amended, in this proceeding designating Sections 6(a), 7, and 12(b) of the Act and Rules 23, 24, 45 and 54 thereunder as applicable to the proposed transactions. IP&L is a direct wholly-owned public utility subsidiary of Alliant Energy Corporation ("Alliant Energy"), a registered holding company. IP&L is engaged principally in the generation, purchase, transmission, distribution and sale of electric power and the purchase, distribution, transportation and sale of natural gas in portions of Iowa, Minnesota and Illinois. At December 31, 2003, IP&L provided electric service to approximately 529,000 customers and gas 1 service to approximately 236,000 customers (excluding transportation and other customers). By orders in this proceeding dated November 25, 1998 (Holding Co. Act Release No. 26945) and December 15, 2000 (Holding Co. Act Release No. 27306), as subsequently modified by order dated October 24, 2001 in File No. 70-9837 (Holding Co. Act Release No. 27456)/1 (such orders being hereafter referred to as the "Prior Orders"), the Commission has authorized IP&L to (1) issue and sell from time to time through June 30, 2004 (the "Authorization Period"), in one or more series, any combination of (a) collateral trust bonds ("Trust Bonds"), (b) senior unsecured debentures ("Senior Debentures"), and (c) unsecured subordinated debentures ("Subordinated Debentures"); and (2) enter into an agreement or agreements for the issuance and sale of one or more series of tax-exempt bonds ("Tax-Exempt Bonds") for the financing or refinancing of air and water pollution control facilities and sewage and solid waste disposal facilities ("Facilities"). As security for IP&L's obligations under any agreement relating to the Tax-Exempt Bonds, IP&L is authorized to (1) issue its non-negotiable promissory note or notes to evidence the loan to IP&L of the proceeds of the Tax-Exempt Bonds by the issuer thereof, (2) convey a subordinated security interest in any Facilities that are financed through the issuance of Tax-Exempt Bonds, (3) issue and pledge one or more new series of Trust Bonds ("Tax-Exempt Collateral Bonds"), (4) acquire and deliver letters of credit guaranteeing payment of the Tax-Exempt Bonds and enter into reimbursement agreements with respect to any such letters of credit, (5) acquire insurance policies guaranteeing payment of the Tax-Exempt Bonds, and (6) provide a direct guarantee of payment of the principal of and premium, if any, and interest on the Tax-Exempt Bonds. Under the Prior Orders, the aggregate principal amount of the Trust Bonds, Senior Debentures, Subordinated Debentures, and Tax-Exempt Bonds issued during the Authorization Period shall not exceed $300 million, provided that such amount excludes the principal amount of any Tax-Exempt Collateral Bonds issued as collateral security for Tax-Exempt Bond obligations and any other forms of collateral related to the Tax-Exempt Bonds. IP&L may not issue any long-term debt securities unless such securities are rated at the investment grade level as established by at least one nationally recognized statistical rating organization, as that term is used in paragraphs (c)(2)(vi)(E), (F) and (H) of Rule 15c3-1 under the Securities Exchange Act of 1934. Under the October 24, 2001 order, the Commission reserved jurisdiction over the issuance by IP&L of any such securities that are rated below investment grade. - ---------- 1 In the October 24, 2001 order, the Commission approved the merger of Interstate Power Company into IES Utilities Inc., which then changed its name to Interstate Power & Light Company. The Commission also approved an increase from $200 million to $300 million in the aggregate amount of long-term debt securities that IP&L may issue through June 30, 2004. 2 The Prior Orders provide that no series of Trust Bonds will be issued at interest rates in excess of the lower of 15% per annum or those interest rates generally obtainable at the time of pricing for first mortgage bonds having reasonably similar maturities, issued by companies of the same or reasonably comparable credit quality and having reasonably similar terms, conditions and features (the "Ceiling Rate"). Further, the Prior Orders provide that no series of Senior Debentures or Subordinated Debentures will be sold if their fixed interest rate or initial adjustable interest rate exceeds the Ceiling Rate. IP&L states that, through December 31, 2003, it had issued and sold a total of $200 million principal amount of long-term debt securities in accordance with the authorization under the Prior Orders. IP&L further states that it currently plans to issue an additional $100 million principal amount of Trust Bonds or Senior Debentures in the second quarter of 2004, the proceeds of which will be used to repay short-term debt that was incurred principally to finance IP&L's construction program and for other corporate purposes, and to redeem approximately $20 million principal amount of Tax-Exempt Bonds, also during the second quarter of 2004. IP&L is now requesting that the Commission issue a further supplemental order in this proceeding to (a) extend the Authorization Period under the Prior Orders from June 30, 2004 to December 31, 2004, (b) increase the maximum aggregate principal amount of the Trust Bonds, Senior Debentures, Subordinated Debentures, and Tax-Exempt Bonds that IP&L may issue during the Authorization Period from $300 million to $350 million, such that, taking into account previous issuances of such securities totaling $200 million, IP&L would have authority to issue up to an additional $150 million of long-term debt securities during the remainder of 2004, and (c) authorize IP&L to enter into and perform interest rate hedging transactions in order to manage interest rate risk associated with outstanding long-term indebtedness and anticipated long-term debt offerings. IP&L is not requesting any other change or modification to the terms, conditions or limitations under the Prior Orders. IP&L is requesting a six-month extension in the Authorization Period in order to make the expiration date under the Prior Orders coterminous with the expiration date under orders issued in File 70-10052 that grant IP&L authorization to issue and sell short-term indebtedness./2 IP&L states that the extension will also provide it greater financing flexibility in the event that its currently planned offering of Trust Bonds or Senior Debentures and redemption of Tax-Exempt Bonds are delayed beyond the second quarter of 2004. The proposed $50 million increase (from $300 million to $350 million) in the - ---------- 2 By orders dated June 21, 2002 (Holding Co. Act Release No. 27542), October 10, 2002 (Holding Co. Act Release No. 27575), and December 13, 2002 (Holding Co. Act Release No. 27615) in File No. 70-10052, IP&L is authorized to issue and sell short-term debt securities from time to time through December 31, 2004. 3 limit on new long-term debt securities that IP&L may issue will allow IP&L to complete in 2004 both its planned offering of Trust Bonds or Senior Debentures ($100 million) and redemption of approximately $20 million Tax-Exempt Bonds. IP&L requests authorization to enter into interest rate hedging transactions with respect to its outstanding long-term indebtedness ("Interest Rate Hedges") in order to reduce or manage interest rate cost. Interest Rate Hedges will involve the use of financial instruments commonly used in today's capital markets, such as futures, interest rate swaps, caps, collars, floors, and structured notes (i.e., a debt instrument in which the principal and/or interest payments are indirectly linked to the value of an underlying asset or index), or transactions involving the purchase or sale, including short sales, of U.S. Treasury or Agency (e.g., FNMA) obligations or LIBOR-based swap instruments. The transactions would be for fixed periods and stated notional amounts. In no case will the notional principal amount of any Interest Rate Hedge exceed that of the underlying debt instrument and related interest rate exposure. In addition, IP&L requests authorization to enter into interest rate hedging transactions with respect to anticipated debt offerings (the "Anticipatory Hedges"). Such Anticipatory Hedges would be utilized to fix and/or limit the interest rate risk associated with any new issuance through (i) a forward sale of exchange-traded U.S. Treasury futures contracts, U.S. Treasury obligations and/or a forward swap (each a "Forward Sale"), (ii) the purchase of put options on U.S. Treasury obligations (a "Put Options Purchase"), (iii) a Put Options Purchase in combination with the sale of call options on U.S. Treasury obligations (a "Collar"), (iv) transactions involving the purchase or sale, including short sales, of U.S. Treasury obligations, or (v) some combination of a Forward Sale, Put Options Purchase, Collar and/or other derivative or cash transactions, including, but not limited to structured notes, caps and collars, appropriate for the Anticipatory Hedges. Interest Rate Hedges and Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades") with brokers through the opening of futures and/or options positions traded on the Chicago Board of Trade ("CBOT") or other designated contract markets, the establishment of over-the-counter positions with one or more counterparties ("Off-Exchange Trades"), or a combination of On-Exchange Trades and Off-Exchange Trades. IP&L will determine the optimal structure of each Interest Rate Hedge or Anticipatory Hedge transaction at the time of execution. Interest Rate Hedges and Anticipatory Hedges in the over-the-counter market would only be entered into with counterparties ("Approved Counterparties") whose senior debt ratings, or the senior debt ratings of the parent companies of the counterparties, as published by Standard and Poor's Ratings Group, are equal to or greater than BBB, or an equivalent rating from Moody's Investors Service or Fitch, Inc. Fees, commissions and other amounts payable to a counterparty or exchange (excluding, however, the swap or option payments) in connection with any Interest Rate Hedge or Anticipatory Hedge will not exceed those generally obtainable in competitive markets for parties of comparable credit quality. It is stated that the fees, commissions and expenses, paid or incurred in connection with filing the post-effective amendment are estimated not to exceed $5,000. Fees, commissions and expenses paid or incurred by IP&L in connection with any offering of long-term debt securities authorized in this proceeding 4 will be within the limitations specified in the Prior Orders. It is further stated that the issuance and sale of long-term debt securities by IP&L is subject to approval by the Minnesota Public Utilities Commission and the Illinois Commerce Commission. No other state commission, and no federal commission, other than this Commission, has jurisdiction over the proposed transaction. 5 -----END PRIVACY-ENHANCED MESSAGE-----