(As filed September 7, 2004)
File No. 70-[_____]
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM U-1
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
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ALLIANT ENERGY CORPORATION
ALLIANT ENERGY RESOURCES, INC.
ALLIANT ENERGY NUCLEAR LLC AND ITS SUBSIDIARY
ALLIANT ENERGY SYNFUEL LLC AND ITS SUBSIDIARIES
ALLIANT ENERGY EPC, LLC
ALLIANT ENERGY TRANSCO LLC AND ITS SUBSIDIARY
DISTRIBUTION VISION 2010, LLC
WISCONSIN POWER AND LIGHT COMPANY
WPL TRANSCO, LLC
4902 N. Biltmore Lane
Madison, Wisconsin 53718
INTERSTATE POWER AND LIGHT COMPANY
ALLIANT ENERGY CORPORATE SERVICES, INC.
ALLIANT ENERGY TRANSPORTATION, INC. AND ITS SUBSIDIARIES
ALLIANT ENERGY INVESTMENTS, INC. AND ITS SUBSIDIARIES
ALLIANT ENERGY INTERNATIONAL, INC. AND ITS SUBSIDIARIES
ALLIANT ENERGY INTEGRATED SERVICES COMPANY AND ITS SUBSIDIARIES
Alliant Energy Tower
200 First Street S.E.
Cedar Rapids, Iowa 52401
WISCONSIN RIVER POWER COMPANY
231 First Avenue North
Wisconsin Rapids, Wisconsin 54495
AEG WORLDWIDE, INC. AND ITS SUBSIDIARIES
ALLIANT ENERGY NEENAH, LLC
1 MidAmerican Plaza, Ste. 518
Oak Brook, Illinois 60181
AER HOLDING COMPANY
3993 Howard Hughes Parkway, Ste. 250
Las Vegas, Nevada 89109
(Names of companies filing this statement and
addresses of principal executive offices)
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ALLIANT ENERGY CORPORATION
(Name of top registered holding company parent)
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F. J. Buri, Corporate Secretary
Alliant Energy Corporation
4902 N. Biltmore Lane
Madison, Wisconsin 53718
(Name and address of agent for service)
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The Commission is requested to send copies of
all notices, orders and communications in
connection with this Application or Declaration to:
Barbara J. Swan, Executive Vice William T. Baker, Jr., Esq.
President andGeneral Counsel Thelen Reid & Priest LLP
Alliant Energy Corporation 875 Third Avenue
4902 N. Biltmore Lane New York, New York 10022
Madison, Wisconsin 53718
TABLE OF CONTENTS
Item 1. Description of Proposed Transaction..............................1
1.1 Introduction.............................................1
1.2 Capitalization of Alliant Energy and Utility
Subsidiaries..........................................3
1.3 Orders Affected By This Application/Declaration..........4
(a) October 2001 Order (File No. 70-9891)..........4
(b) Money Pool Order (File No. 70-10052)...........5
(c) IP&L Long-term Debt Order
(File Nos. 70-9375 and 70-9837)...............6
(d) IP&L Preferred Stock Order
(File No. 70-10077)...........................6
1.4 Summary of Requested Approvals...........................7
1.5 Parameters Applicable to External Financing
Transactions.........................................10
(a) Effective Cost of Funds.......................10
(b) Maturity......................................10
(c) Issuance Expenses.............................10
(d) Common Equity Ratio...........................11
(e) Investment Grade Ratings......................11
(f) Authorization Period..........................11
(g) Use of Proceeds..............................11
1.6 Alliant Energy External Financing.......................12
(a) Common Stock, Stock Purchase Contracts
and Stock Purchase Units.....................13
(b) Preferred Securities..........................14
(c) Long-term Debt................................14
(d) Short-term Debt...............................14
1.7 Common Stock Issued under Stock-Based Plans.............15
1.8 IP&L External Financing.................................16
(a) Preferred Stock and Preferred Securities......17
(b) Long-term Debt................................18
(c) Short-term Debt...............................18
1.9 WRP External Financing..................................19
1.10 Guarantees and Other Forms of Credit Support............19
(a) Alliant Energy Guarantees.....................19
(b) Non-Utility Subsidiary Guarantees.............20
1.11 Hedging Transactions....................................20
(a) Interest Rate Hedges..........................20
(b) Anticipatory Hedges...........................21
1.12 Continuation of Non-Utility Money Pool..................21
1.13 Non-Utility Subsidiary Financings.......................25
1.14 Changes in Capitalization of Majority Owned
Subsidiaries.........................................25
1.15 Financing Subsidiaries..................................26
1.16 Intermediate Subsidiaries and Subsequent
Reorganizations......................................27
1.17 Additional Investments in Energy Assets.................29
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1.18 Sales of Services and Goods Among AER and Other
Non-Utility Subsidiaries of Alliant Energy...........29
1.19 Activities of Non-Utility Subsidiaries Outside
the United States....................................30
1.20 Payment of Dividends Out of Capital and Unearned
Surplus and Acquisition, Retirement or
Redemption of Securities.............................32
1.21 Certificates of Notification............................33
Item 2. Fees, Commissions and Expenses..................................34
Item 3. Applicable Statutory Provisions.................................35
3.1 General.................................................35
3.2 Compliance with Rules 53 and 54.........................35
Item 4. Regulatory Approvals............................................37
Item 5. Procedure.......................................................37
Item 6. Exhibits and Financial Statements...............................38
Item 7. Information as to Environmental Effects.........................42
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ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
-----------------------------------
1.1 Introduction. Alliant Energy Corporation ("Alliant Energy") is a
registered holding company under the Public Utility Holding Company Act of 1935,
as amended (the "Act"). Its direct wholly-owned public-utility subsidiaries are
Interstate Power and Light Company ("IP&L") and Wisconsin Power and Light
Company ("WP&L"). WP&L in turn owns all of the issued and outstanding common
stock of South Beloit Water, Gas and Electric Company ("SBWG&E")./1/ Together,
IP&L, WP&L and SBWG&E provide public-utility service to approximately 970,000
electric and 409,000 retail gas customers in parts of Wisconsin, Iowa,
Minnesota, and Illinois. WP&L also owns 50% of the issued and outstanding common
stock of Wisconsin River Power Company ("WRP"), which owns and operates
hydroelectric generating facilities in Wisconsin having an aggregate capacity of
33 MW the output of which is sold to WP&L and two other wholesale purchasers
under long-term contracts./2/ IP&L, WP&L, SBWG&E, and WRP are herein referred
to collectively as the "Utility Subsidiaries."
Alliant Energy also holds, indirectly through WPL Transco, LLC,
approximately 25% of the common stock of ATC Management, Inc. ("ATC Management")
and an approximately 25% membership interest in American Transmission Company,
LLC ("ATC"), which were formed in 2000 to acquire, own and manage the Wisconsin
transmission assets of Alliant Energy and certain other Wisconsin electric
utility companies./3/
Alliant Energy's direct non-utility subsidiaries are as follows (all
wholly-owned except as noted):
o Alliant Energy Corporate Services, Inc. ("Alliant Services"),
which is a subsidiary service company.
o Alliant Energy Resources, Inc. ("AER"), which serves as the
holding company for substantially all of Alliant Energy's
non-utility investments and subsidiaries (described below).
o Alliant Energy Nuclear LLC, an intermediate subsidiary that holds
Alliant Energy's 20% interest in Nuclear Management Company, LLC,
-------------------
1 On August 6, 2004, Alliant Energy announced its intention to sell SBWG&E, as
well as IP&L's utility operations in Illinois.
2 See Wisconsin River Power Company, et al., 27 S.E.C. 539 (1948) and Wisconsin
Power and Light Company, Holding Co. Act Release No. 27478 (Dec. 19, 2001). WP&L
is an exempt holding company over SBWG&E and WRP under Section 3(a)(2) of the
Act pursuant to Rule 2 (see File No. 69-90).
3 See Alliant Energy Corporation, et al., Holding Co. Act Release No. 27331
(Dec. 29, 2000) (authorizing WP&L and SBWG&E to transfer their respective
transmission assets to ATC). ATC Management and ATC have been authorized in a
separate proceeding to issue securities and to engage in certain other related
transactions. See American Transmission Company, LLC, et al., Holding Co. Act
Release No. 27871 (July 1, 2004). They are not joined as applicants in this
proceeding. The intermediate holding company for this investment, WPL Transco,
LLC, is a named applicant.
which provides administrative and operating serves to certain
jointly-owned nuclear power plants./4/
o Alliant Energy TransCo LLC, an intermediate subsidiary that holds
Alliant Energy's 16% member interest in TRANSLink Development
Company LLC, which was formed to undertake development work in
connection with formation of an independent system operator but
which is currently inactive.
o Distribution Vision 2010, LLC (20% owned), an "energy-related
company" within the meaning of Rule 58 formed to engage in
research and development activities related to new electricity
distribution technologies.
AER's direct non-utility subsidiaries are as follows (all wholly-owned):
o Alliant Energy Transportation, Inc., which, through four
subsidiaries (Transfer Services, Inc., IEI Barge Services, Inc.,
Williams Bulk Transfer Inc., and Cedar Rapids and Iowa City
Railway Company), owns and operates a shortline freight railway
and other facilities used to provide the following services: barge
terminal and hauling, freight transfer and storage, and fuel
transportation and handling.
o Alliant Energy International, Inc., a "foreign utility company"
("FUCO") under Section 33 that holds Alliant Energy's interests in
various foreign energy production and distribution systems that
are also FUCOs.
o Alliant Energy Investments, Inc., which, through its two
principal subsidiaries (Iowa Land and Building Company and
Heartland Energy Services, Inc.) holds undeveloped real estate
and a minority interest in an "energy-related company" under Rule
58 that sells turbine repair services. A third subsidiary
(Village Lakeshares LP) previously held an interest in a venture
that managed and sold resort properties but is now in the process
of being dissolved. Alliant Energy Investments, Inc. also holds
minority interests in an "exempt telecommunications company"
("ETC") under Section 34 of the Act and in various local economic
development organizations.
o Alliant Energy Integrated Services Company, which, through
numerous direct and indirect wholly and partly owned subsidiaries,
is engaged in providing environmental consulting and engineering
services, energy management services, and various customer energy
supply projects (principally gas supply and fuel management
services, and steam production and sale), and holds passive
interests in gas gathering and pipeline systems.
o AER Holding Company, which holds small minority investments in
certain "energy-related companies" under Rule 58.
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4 See Alliant Energy Corporation, et al., Holding Co. Act Release Nos. 27096
(Oct. 26, 1999) and 27175 (May 10, 2000) (authorizing Alliant Energy to acquire
an indirect 20% interest in Nuclear Management Company, LLC).
2
o AEG Worldwide, Inc., an intermediate subsidiary which, through
wholly-owned subsidiaries (including Alliant Energy Generation,
Inc.), is engaged in developing exempt domestic wholesale
generation facilities. (Alliant Energy intends to liquidate AEG
Worldwide, Inc. at some point in the future.)
o Alliant Energy Synfuel LLC, an "energy-related company" under Rule
58 that holds an interest in a synthetic fuel processing facility.
o Alliant Energy Neenah, LLC, an "exempt wholesale generator"
("EWG") under Section 32 of the Act.
o Alliant Energy EPC, LLC, an "energy-related company" under Rule 58
that engages in providing operating and other services to owners
of wind power projects.
o LNT Communications L.L.C., which is an ETC.
An organizational chart showing the relationship of Alliant Energy and
its Subsidiaries as of June 30, 2004 is filed herewith as Exhibit E.
Alliant Energy's non-utility subsidiaries listed on the front cover of
this Application/Declaration and their respective non-exempt direct and indirect
subsidiaries are herein referred to collectively as the "Non-Utility
Subsidiaries." The Utility Subsidiaries and Non-Utility Subsidiaries are
referred to herein collectively as the "Subsidiaries." The term Subsidiaries is
also intended to include any other subsidiaries hereafter acquired, directly or
indirectly, by Alliant Energy in a transaction that is exempt under the Act or
rules thereunder (in particular, Rule 58) or in a transaction that has been
approved by the Commission either in this proceeding (e.g., a "Financing
Subsidiary" or "Intermediate Subsidiary," as described below) or in a separate
proceeding. Alliant Energy and the Subsidiaries are sometimes referred to as the
"Applicants."
For the twelve months ended December 31, 2003, Alliant Energy reported
total operating revenues of $3,128,187,000, operating income of $411,734,000,
and net income of $183,543,000, and, for the six months ended June 30, 2004,
Alliant Energy reported total operating revenues of $1,553,144,000, operating
income of $116,404,000, and net income of $20,984,000. On a consolidated basis,
approximately 61.3% of Alliant Energy's 2003 operating revenues were derived
from domestic electric utility operations, 18.1% from domestic gas utility
operations, and the balance, approximately 20.6%, from unregulated sources,
including EWG and FUCO operations. At June 30, 2004, Alliant Energy had
$7,775,874,000 in total assets, including net property, plant and equipment of
$5,149,132,000.
1.2 Capitalization of Alliant Energy and Utility Subsidiaries. As of
June 30, 2004, Alliant Energy's consolidated capitalization was as follows:
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Common Equity $2,371,546,000 47.6%
---------------------------- ---------------- ---------------
Preferred Equity $ 243,803,000 4.9%
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Long-term Debt* $2,257,928,000 45.3%
---------------------------- ---------------- ---------------
Short-term Debt** $ 110,022,000 2.2%
---------------------------- ---------------- ---------------
Total $4,983,299,000 100.0%
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* Includes variable-rate demand bonds classified as current.
** Includes current portion of Long-term Debt.
As of June 30, 2004, the consolidated capitalization of IP&L and WP&L
was as follows:
IP&L WP&L
------------------- ------------------ ---------- ------------------ ---------
Common Equity $1,055,477,000 48.0% $1,019,283,000 66.3%
------------------- ------------------ ---------- ------------------ ---------
Preferred Equity $ 183,840,000 8.4% $ 59,963,000 3.9%
------------------- ------------------ ---------- ------------------ ---------
Long-term Debt* $ 937,602,000 42.7% $ 391,569,000 25.4%
------------------- ------------------ ---------- ------------------ ---------
Short-term Debt** $ 20,500,000 0.9% $ 67,500,000 4.4%
------------------- ------------------ ---------- ------------------ ---------
Total $2,197,419,000 100.0% $1,538,315,000 100.0%
------------------- ------------------ ---------- ------------------ ---------
* Includes variable-rate demand bonds classified as current.
** Includes current portion of Long-term Debt.
As of June 30, 2004, WRP's capitalization consisted entirely of common
stock equity. (See Item 6 - Financial Statements.)
1.3 Orders Affected By This Application/Declaration. The current
authorization of Alliant Energy and its Subsidiaries to engage in financing
transactions and other related transactions is set forth in the following
orders:
(a) October 2001 Order (File No. 70-9891). By order dated October
3, 2001 (the "October 2001 Order"),/5/ as modified by supplemental order dated
December 17, 2002,/6/ Alliant Energy is authorized to issue from time to time
through December 31, 2004, common stock (including options, warrants or stock
purchase rights exercisable for common stock), preferred stock, other forms of
preferred securities, and long-term debt securities in an aggregate amount at
any time outstanding not to exceed $1.5 billion and to provide guarantees and
other forms of credit support on behalf of the Subsidiaries in an aggregate
amount at any time outstanding not to exceed $3 billion. The Commission
authorized Alliant Energy to utilize the proceeds of such financings to increase
its "aggregate investment," as defined in Rule 53, in EWGs and FUCOs to 100% of
its "consolidated retained earnings," also as defined in Rule 53 (the "EWG/FUCO
Investment Limitation"), and reserved jurisdiction over Alliant Energy's request
for authorization to increase its "aggregate investment" in EWGs and FUCOs to
$1.75 billion pending completion of the record.
-------------------
5 Holding Co. Act Release No. 27448.
6 Holding Co. Act Release No. 27620 (increasing maximum spread over referenced
U.S. Treasury securities as applicable to long-term debt and preferred
securities of Alliant Energy).
4
In addition to the foregoing, the Commission authorized (i) Alliant
Energy to issue up to 8 million shares of common stock pursuant to its dividend
reinvestment plan and stock-based plans maintained for the benefit of its
Subsidiaries' officers and employees and non-management directors; (ii) Alliant
Energy and Non-Utility Subsidiaries to make loans to less than wholly-owned
Non-Utility Subsidiaries at interest rates and maturities designed to provide a
return to the lending company of not less than its effective cost of capital;
(iii) AER and other Non-Utility Subsidiaries to provide guarantees and forms of
credit support on behalf of other Non-Utility Subsidiaries in an amount not to
exceed $600 million at any time outstanding; (iv) Alliant Energy and any
Non-Utility Subsidiary to enter into interest rate hedging transactions; (v)
Alliant Energy and its Non-Utility Subsidiaries to change the terms of the
authorized stock capitalization of any other Non-Utility Subsidiary; (vi)
Alliant Energy and any Non-Utility Subsidiary to organize and acquire the equity
securities of one or more special purpose entities organized exclusively for the
purpose of facilitating the issuance of securities ("Financing Subsidiaries"),
and to engage in certain related transactions with any such Financing
Subsidiaries; (vii) Alliant Energy and any Non-Utility Subsidiary to organize
and acquire the equity securities of one or more entities organized exclusively
for the purpose of acquiring and holding the securities of other exempt and
authorized Non-Utility Subsidiaries ("Intermediate Subsidiaries"); (viii) AER
and Non-Utility Subsidiaries to expend up to $800 million at any time
outstanding to acquire certain categories of non-utility, energy-related, assets
("Energy Assets") that are incidental to energy marketing and oil and gas
production operations of the Non-Utility Subsidiaries, and/or the securities of
companies substantially all of whose physical properties consist of Energy
Assets; (ix) AER and Non-Utility Subsidiaries to provide goods and services to
each other at market rates, subject to certain limitations; (x) Non-Utility
Subsidiaries to engage in certain categories of non-utility, energy-related,
activities outside the United States, subject to a reservation of jurisdiction;
and (xi) AER and Non-Utility Subsidiaries to pay dividends and/or acquire,
retire or redeem their own securities out of capital and unearned surplus.
(b) Money Pool Order (File No. 70-10052). By order dated June 21,
2002,/7/ as modified by orders dated October 10, 2002/8/ and December 12,
2002/9/ (as so modified, (the "Money Pool Order"), Alliant Energy is authorized
to issue short-term notes and/or commercial paper from time to time through
December 31, 2004, in an aggregate principal amount at any time outstanding not
to exceed $1 billion, and to use the proceeds thereof, together with other
available funds, to fund short-term loans to IP&L and Alliant Services through
the Alliant Energy System Utility Money Pool ("Utility Money Pool") and to AER
and certain other Non-Utility Subsidiaries through the Alliant Energy System
Non-Utility Money Pool ("Non-Utility Money Pool"). The Commission reserved
jurisdiction over borrowings by IP&L under the Utility Money Pool, as it was
then proposed to be amended and restated, pending completion of the record. In
addition, the Commission authorized IP&L to issue and sell short-term debt in
the form of notes and/or commercial paper from time to time through December 31,
2004 in an aggregate principal amount at any time outstanding not to exceed $300
million or
-------------------
7 Holding Co. Act Release No. 27542.
8 Holding Co. Act Release No. 27575 (releasing jurisdiction over IP&L's issuance
of short-term debt securities).
9 Holding Co. Act Release No. 27615 (increasing spread over referenced London
Interbank Offered rate applicable to short-term debt securities of Alliant
Energy and IP&L).
5
such lesser amount as may be approved from time to time by the Minnesota Public
Utilities Commission ("MPUC")./10/
(c) IP&L Long-term Debt Order (File Nos. 70-9375 and 70-9837) By
order dated November 25, 1998,/11/ as modified by orders dated December 15,
2000,/12/ October 24, 2001,/13/ and June 25, 2004/14/ (as so modified, the "IP&L
Long-term Debt Order"), the Commission has authorized IP&L to (1) issue and sell
from time to time through December 31, 2004 long-term debt securities in the
form of any combination of (a) collateral trust bonds, (b) senior unsecured
debentures, and (c) unsecured subordinated debentures); and (2) enter into an
agreement or agreements for the issuance and sale of one or more series of
tax-exempt bonds for the financing or refinancing of air and water pollution
control facilities and sewage and solid waste disposal facilities. As security
for IP&L's obligations under any agreement relating to 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 collateral trust 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 IP&L Long-term Debt Order, the aggregate
principal amount of the collateral trust bonds, senior debentures, subordinated
debentures, and tax-exempt bonds issued during the authorization period may not
exceed $350 million, provided that such amount excludes the principal amount of
any collateral trust bonds issued by IP&L solely as collateral security for its
obligations under any tax-exempt bond financing and any other forms of
collateral related to any tax-exempt bond financing.
(d) IP&L Preferred Stock Order (File No. 70-10077). By order dated
December 12, 2002 (the "IP&L Preferred Stock Order"),/15/ the Commission
authorized IP&L to amend and restate its articles of incorporation to provide
for the issuance of 16 million shares of preferred stock and to issue such
shares in one or more series from time to time through December 31, 2005 in an
aggregate amount at any time outstanding not to exceed the lesser of (i) the
limit set by the MPUC from time to time or (ii) $200 million. The Commission
reserved jurisdiction over a request by IP&L to organize and acquire the stock
-------------------
10 IP&L is currently authorized by the MPUC through March 31, 2005, to issue and
sell short-term indebtedness in an aggregate principal amount at any time
outstanding not to exceed $300 million. See Exhibit D-2 hereto.
11 Holding Co. Act Release No. 26945. (IP&L was then named IES Utilities Inc.)
12 Holding Co. Act Release No. 27306.
13 Holding Co. Act Release No. 27456. 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 and 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.
14 Holding Co. Act Release No. 27863 (increasing long-term debt limit to $350
million and extending authorization period through December 31, 2004).
15 Holding Co. Act Release No. 27614.
6
or other equity interests in one or more special purpose entities for the sole
purpose of issuing, in one or more series, preferred securities, and to engage
in certain other transactions related thereto.
IP&L will relinquish its authority under the IP&L Preferred Stock Order
upon the effective date of the Commission's order in this proceeding.
1.4 Summary of Requested Approvals The Applicants herein request
approval for a program of external financing, credit support arrangements, and
other related proposals for the period commencing January 1, 2005 and extending
through December 31, 2007 ("Authorization Period"). Specifically, the Applicants
are requesting authorization for:
(i) Alliant Energy to issue and sell, from time to time during
the Authorization Period, any combination of the following
types of securities, provided that the aggregate amount of
all such new securities issued during the Authorization
Period shall not exceed $500 million outstanding at any time:
(A) Common Stock (including options and warrants exercisable
for Common Stock), forward stock purchase contracts ("Stock
Purchase Contracts") and stock units consisting of a Stock
Purchase Contract coupled with an intermediate-term debt
security of Alliant Energy ("Stock Purchase Units"), (B)
preferred securities (including without limitation monthly
income preferred trust securities) ("Preferred Securities"),
(C) long-term debt securities having maturities of one to
fifty years ("Long-term Debt"), and (D) and short-term debt
securities having maturities of less than one year
("Short-term Debt").
(ii) Alliant Energy to issue, from time to time during the
Authorization Period, up to 8.5 million shares of Common
Stock pursuant to its dividend reinvestment plan and
incentive compensation and stock-purchase plans maintained
for its and its Subsidiaries' officers and employees and
non-management directors, such shares to be in addition to
any shares of Common Stock issued under the authority
requested in (i) above.
(iii) IP&L to issue and sell, from time to time during the
Authorization Period, any combination of the following types
of securities, provided that the aggregate amount of all such
new securities issued during the Authorization Period shall
not exceed $700 million outstanding at any time or such
lesser amount as may be authorized from time to time by the
MPUC: (A) preferred stock ("Preferred Stock") or other types
of Preferred Securities, (B) Long-term Debt, and (C)
Short-term Debt.
(iv) WRP to issue and sell, from time to time during the
Authorization Period, Long-term Debt and Short-term Debt,
provided that the aggregate amount of all such new securities
7
issued during the Authorization Period shall not exceed $2.5
million outstanding at any time.
(v) Alliant Energy to issue guarantees and provide other forms of
credit support ("Alliant Energy Guarantees") with respect to
securities issued by or other obligations of its Subsidiaries
in an aggregate principal or nominal amount not to exceed
$3.0 billion at any time outstanding.
(vi) AER and other Non-Utility Subsidiaries to provide guarantees
and other forms of credit support ("Non-Utility Guarantees")
with respect to securities issued by and other obligations of
other Non-Utility Subsidiaries in an aggregate principal or
nominal amount not to exceed $600 million at any time
outstanding, in addition to any guarantees that are exempt
pursuant to Rule 45(b) and Rule 52.
(vii) Alliant Energy and, to the extent not exempt under Rule 52,
any Subsidiary to enter into hedging transactions ("Interest
Rate Hedges") with respect to existing indebtedness of such
company in order to manage and minimize interest costs, and
to enter into hedging transactions ("Anticipatory Hedges")
with respect to anticipatory debt issuances in order to
lock-in current interest rates and/or manage interest rate
risk exposure.
(viii)Alliant Energy, AER and certain other Non-Utility
Subsidiaries to participate in the Non-Utility Money Pool.
(ix) Alliant Energy and Non-Utility Subsidiaries to make loans to
any Non-Utility Subsidiary of Alliant Energy that is less
than wholly-owned at interest rates and maturities designed
to provide a return to the lending company of not less than
its effective cost of capital.
(x) Alliant Energy and the Subsidiaries to change the terms of
the authorized capitalization of any other majority-owned
Subsidiary, provided that, if such Subsidiary is less than
wholly-owned, all other equity owners consent to such change.
(xi) Alliant Energy, IP&L, WP&L and the Non-Utility Subsidiaries
to acquire the equity securities of one or more Financing
Subsidiaries and to guarantee the securities issued by such
Financing Subsidiaries, to the extent not exempt pursuant to
Rule 45(b) and Rule 52, and Financing Subsidiaries to
transfer the proceeds of any financing to its parent or as
directed by its parent.
(xii) Alliant Energy and AER to acquire, directly or indirectly,
the equity securities of one or more Intermediate
Subsidiaries organized exclusively for the purpose of
acquiring, financing, and holding the securities of one or
8
more existing or future Non-Utility Subsidiaries, including,
but not limited to, EWGs, FUCOs, "energy-related companies"
under Rule 58 ("Rule 58 Companies"), and "exempt
telecommunications companies" ("ETCs") under Section 34 of
the Act, provided that such companies may also engage in
preliminary development and administrative activities
relating to investments in such entities; AER, Intermediate
Subsidiaries and other Non-Utility Subsidiaries to make
expenditures of up to $200 million at any time outstanding
during the Authorization Period on preliminary development
activities; and Alliant Energy, AER and Intermediate
Subsidiaries to consolidate or otherwise reorganize all or
any part of their direct or indirect investments in
Non-Utility Subsidiaries.
(xiii)AER and other Non-Utility Subsidiaries to expend up to $100
million at any time outstanding during the Authorization
Period to construct or acquire Energy Assets that are
incidental and related to the energy marketing and oil and
gas production operations of its subsidiaries, and/or the
securities of one or more existing or new companies
substantially all of whose physical properties consist or
will consist of Energy Assets, provided that the acquisition
and ownership of such Energy Assets would not cause AER or
any other Non-Utility Subsidiary to be or become an "electric
utility company" or "gas utility company," as defined in
Sections 2(a)(3) and 2(a)(4), respectively.
(xiv) AER and other Non-Utility Subsidiaries to provide services
and sell goods to each other at fair market prices, subject
to certain proposed limitations.
(xv) Non-Utility Subsidiaries to engage in certain categories of
energy-related activities outside the United States, subject
to a request for reservation of jurisdiction.
(xvi) AER and other Non-Utility Subsidiaries to pay dividends out
of capital and unearned surplus and/or acquire, retire or
redeem securities issued to associate companies to the extent
allowed under applicable law and the terms of any credit or
security instruments to which they may be parties.
(xvii)Alliant Energy to utilize the proceeds of authorized
financing to make investments in EWGs and FUCOs in an amount
which, when added to existing investments, will not exceed
the previously authorized EWG/FUCO Investment Limitation.
1.5 Parameters Applicable to External Financing Transactions The
following general terms will be applicable where appropriate to the proposed
external financing activities of Alliant Energy, IP&L and WRP requested to be
9
authorized hereby (including, without limitation, securities issued for the
purpose of refinancing or refunding outstanding securities of the issuer):/16/
(a) Effective Cost of Funds The effective cost of money (i.e., the
aggregate of all payments, including interest and other periodic payments) in
respect of Stock Purchase Contracts and Stock Purchase Units issued by Alliant
Energy will not exceed at the time of issuance the greater of (a) 700 basis
points over the yield to maturity of comparable-term U.S. Treasury securities or
(b) a gross spread over U.S. Treasury securities that is consistent with similar
securities of comparable credit quality and maturities issued by other
companies. The effective cost of money on Long-term Debt issued by Alliant
Energy, IP&L and WRP will not exceed at the time of issuance the greater of (a)
500 basis points over the yield to maturity of comparable-term U.S. Treasury
securities if the interest rate on such Long-term Debt securities is a fixed
rate or 500 basis points over the London Interbank Offered Rate ("LIBOR") for
maturities of less than one year if the rate on such Long-term Debt securities
is a floating rate, or (b) a gross spread over U.S. Treasury securities or
LIBOR, as applicable, that is consistent with similar securities of comparable
credit quality and maturities issued by other companies. The effective cost of
money on Preferred Stock and Preferred Securities issued by Alliant Energy and
IP&L will not exceed at the time of issuance the greater of (a) 600 basis points
over the yield to maturity of comparable-term U.S. Treasury securities or (b) a
gross spread over U.S. Treasury securities that is consistent with similar
securities of comparable credit quality and maturities issued by other
companies. The effective cost of money on Short-term Debt issued by Alliant
Energy, IP&L and WRP will not exceed at the time of issuance the greater of (a)
500 basis points over LIBOR for maturities of less than one year or (b) a gross
spread over LIBOR that is consistent with similar securities of comparable
credit quality and maturities issued by other companies.
(b) Maturity. The maturity of Long-term Debt will be between one
year and 50 years after the issuance thereof. Preferred Securities, Stock
Purchase Contracts and Stock Purchase Units will be redeemed no later than 50
years after the issuance thereof, unless converted into Common Stock. Preferred
Stock of IP&L may be perpetual in duration.
(c) Issuance Expenses The underwriting fees, commissions or other
similar remuneration paid in connection with any non-competitive issuance, sale
or distribution of securities pursuant to the authorization requested in this
Application/Declaration will not exceed the greater of (a) 5% of the principal
or total amount of the securities being issued or (b) issuance expenses that are
generally paid at the time of the pricing for sales of similar securities having
the same or reasonably similar terms and conditions issued by similar companies
of reasonably comparable credit quality.
(d) Common Equity Ratio. At all times during the Authorization
Period, Alliant Energy and each Utility Subsidiary will maintain common equity
-------------------
16 The Commission has previously authorized financing transactions subject to
these same general parameters. See e.g., AGL Resources Inc., et al., Holding Co.
Act Release No 27828 (Apr. 1, 2004); Exelon Corporation, et al., Holding Co. Act
Release No. 27830 (Apr. 1, 2004); and Ameren Corporation, et al., Holding Co.
Act Release No. 27860 (June 18, 2004).
10
of at least 30% of its consolidated capitalization (common stock equity,
preferred stock equity, long-term debt and short-term debt); provided that
Alliant Energy will in any event be authorized to issue Common Stock (including
pursuant to stock-based plans maintained for shareholders, including new
investors, officers, employees and non-employee directors) to the extent
authorized herein.
(e) Investment Grade Ratings. The Applicants further represent
that, except for securities issued to fund intrasystem financings, no guarantees
or other securities, other than Common Stock, may be issued in reliance upon the
authorization granted by the Commission pursuant to this Application/
Declaration, unless (i) the security to be issued, if rated, is rated investment
grade; (ii) all outstanding securities of the issuer that are rated are rated
investment grade; and (iii) all outstanding securities of Alliant Energy that
are rated are rated investment grade. For purposes of this provision, a security
will be deemed to be rated "investment grade" if it is rated investment grade 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, as amended ("1934 Act"). The ratings test will
not apply to any issuance of Common Stock. The Applicants further request that
the Commission reserve jurisdiction over the issuance of any guarantee or other
securities in reliance upon the authorization granted by the Commission pursuant
to this Application/Declaration at any time that the conditions set forth in
clauses (i) through (iii) above are not satisfied.
(f) Authorization Period. No security will be issued pursuant to
the authorization sought herein after the last day of the Authorization Period
(December 31, 2007).
(g) Use of Proceeds. The proceeds from the financings authorized by
the Commission pursuant to this Application/Declaration will be used for general
corporate purposes, including (i) financing, in part, investments by and capital
expenditures of Alliant Energy and its Subsidiaries, (ii) funding of future
investments in EWGs, FUCOs, and Rule 58 Companies, (iii) the acquisition,
retirement or redemption by Alliant Energy or any Subsidiary of any of its own
securities pursuant to Rule 42 or as authorized by the Commission in this
proceeding, (iv) financing working capital requirements of Alliant Energy and
its Subsidiaries, including by making contributions to the Non-Utility Money
Pool, and/or (v) the acquisition of the securities or assets of other companies,
as authorized in this proceeding or as may be authorized by the Commission in a
separate proceeding. The Applicants represent that no financing proceeds will be
used to acquire the equity securities of any new subsidiary unless such
acquisition has been approved by the Commission in this proceeding or in a
separate proceeding or in accordance with an available exemption under the Act
or rules thereunder, including Sections 32 and 33 and Rule 58. Alliant Energy
states that the aggregate amount of the proceeds of securities issued by Alliant
Energy and the amount of Alliant Energy Guarantees approved by the Commission in
this proceeding used to fund investments in EWGs and FUCOs will not, when added
to Alliant Energy's "aggregate investment" in all such entities at any point in
time, exceed the EWG/FUCO Investment Limitation authorized under the October
2001 Order. Alliant Energy requests the Commission to continue its reservation
of jurisdiction over Alliant Energy's use of financing proceeds to fund
investments in EWGs and FUCOs in an amount which, when added to Alliant Energy's
"aggregate investment" in such entities from time to time, would equal $1.75
billion. Alliant Energy further represents that the proceeds of financing and
11
Alliant Energy Guarantees and Non-Utility Guarantees utilized to fund
investments in Rule 58 Companies will be subject to the limitations of that
rule.
1.6 Alliant Energy External Financing. Alliant Energy requests
authority to issue and sell from time to time during the Authorization Period,
(i) directly, Common Stock (including options and warrants exercisable for
Common Stock),/17/ Stock Purchase Contracts and/or Stock Purchase Units, and
Short-term Debt, and (ii) directly or indirectly through one or more Financing
Subsidiaries, Preferred Securities and Long-term Debt, provided that the
aggregate amount of all such new securities issued during the Authorization
Period shall not exceed $500 million at any time outstanding, and provided
further that any shares of Common Stock sold pursuant to Alliant Energy's Rights
Agreement (Exhibit A-2 hereto) will not count against this limit./18/
All securities issued by Alliant Energy in accordance with the
authorization requested herein, including, without limitation, securities issued
for the purpose of refunding or retiring outstanding securities, will comply
with the applicable parameters set forth in Item 1.5 above.
Alliant Energy contemplates that such securities would be issued and
sold directly to the public in one or more offerings registered under the
Securities Act of 1933, as amended (the "1933 Act") either (i) through
underwriters selected by negotiation or competitive bidding or (ii) through a
selling agent acting either as agent or as principal for resale to the public
either directly or through dealers, or to one or more purchasers in
privately-negotiated transactions or to one or more investment banking or
underwriting firms or other entities who would resell such securities without
registration under the 1933 Act in reliance upon one or more applicable
exemptions from registration thereunder. All such securities sales will be at
rates or prices and under conditions negotiated or based upon, or otherwise
determined by, competitive capital markets.
Alliant Energy has filed a Registration Statement on Form S-3 (Exhibit
C-1 hereto) under the 1933 Act utilizing the "shelf" registration process, under
which Alliant Energy may offer for sale, in one or more transactions, any
combination of Common Stock, Stock Purchase Contracts and Stock Purchase Units
in one or more transactions in an aggregate amount of up to $300 million. The
Registration Statement includes a prospectus supplement relating to the issue
and sale of up to 7,500,000 shares of Common Stock pursuant to a Sales Agreement
(Exhibit B-1 hereto) between Alliant Energy and Cantor Fitzgerald & Co., as
sales agent.
-------------------
17 Alliant Energy is authorized under its Restated Articles of Incorporation, as
amended ("Restated Articles") (Exhibit A-1 hereto) to issue 240,000,000 shares
of common stock, par value $0.01 per share, of which 113,177,544 shares were
issued and outstanding on June 30, 2004. Alliant Energy is not authorized under
the terms of its Restated Articles to issue preferred stock.
18 The Commission has previously authorized Alliant Energy to adopt and
implement a Rights Agreement pursuant to which each outstanding share of Common
Stock, including those shares to be sold pursuant to the authorization requested
in this proceeding, has attached a right (a "Right") to purchase one-half of one
share of Common Stock and, upon the occurrence of certain triggering events, to
purchase shares of Common Stock having a market value of two times the exercise
price. See Interstate Energy Corporation, Holding Co. Act Release No. 26965
(Jan. 15, 1999). The Rights trade with the Common Stock to which they are
attached, are currently not exercisable and expire on January 20, 2009.
12
Alliant Energy's senior unsecured long-term debt securities are
currently rated BBB by Standard & Poor's Inc. ("S&P") and are not rated by
Moody's Investors Service ("Moody's"). Alliant Energy's commercial paper is
rated A-2 by S&P and P-3 by Moody's.
(a) Common Stock, Stock Purchase Contracts and Stock Purchase Units
Alliant Energy may issue and sell Common Stock, Stock Purchase Contracts and
Stock Purchase Units pursuant to underwriting agreements of a type generally
standard in the industry. Public distributions may be pursuant to private
negotiation with underwriters, dealers or agents, as discussed below, or
effected through competitive bidding among underwriters. In addition, sales may
be made through private placements or other non-public offerings to one or more
persons. If underwriters are used in the sale of such securities, such
securities will be acquired by the underwriters for their own account and may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale. Such securities may be offered to the public either through
underwriting syndicates (which may be represented by a managing underwriter or
underwriters designated by Alliant Energy) or directly by one or more
underwriters acting alone, or may be sold directly by Alliant Energy or through
agents designated by Alliant Energy from time to time. If dealers are used in
the sale of such securities, Alliant Energy will sell such securities to the
dealers, as principals. Any dealer may then resell such securities to the public
at varying prices to be determined by such dealer at the time of resale. If
Common Stock is being sold in an underwritten offering, Alliant Energy may grant
the underwriters thereof an over-allotment or "green shoe" option permitting the
purchase from Alliant Energy of additional shares at the same price then being
offered.
Alliant Energy may also issue Common Stock or options, warrants or
other stock purchase rights exercisable for Common Stock in public or
privately-negotiated transactions in exchange for the equity securities or
assets of other companies, provided that the acquisition of any such equity
securities or assets has been authorized in a separate proceeding or is exempt
under the Act or the rules thereunder (specifically, Rule 58).
Stock Purchase Contracts would obligate holders to purchase from
Alliant Energy, and Alliant Energy to sell to the holders, a specified number of
shares of Common Stock at a future date or dates (typically between three and
five years after the date of issuance). The price per share of Common Stock may
be fixed at the time the Stock Purchase Contracts are issued or may be
determined by reference to a specific formula set forth in the Stock Purchase
Contracts. Stock Purchase Contracts may be issued separately or as a part of
Stock Purchase Units (a form of "equity-linked" security), which would consist
of a Stock Purchase Contract and either Long-term Debt, debt securities of a
Non-Utility Subsidiary or debt obligations of third parties, including U.S.
Treasury securities, securing the holders' obligations to purchase the Common
Stock under the Stock Purchase Contracts. Stock Purchase Contracts may require
Alliant Energy and/or AER to make periodic payments to the holders of some or
all of the Stock Purchase Units or vice versa, and such payments may be
unsecured or prefunded on some basis. The Stock Purchase Contracts may require
13
holders to secure their obligations under these Stock Purchase Contracts in a
specified manner./19/
(b) Preferred Securities. Preferred Securities may be issued in one
or more series with such rights, preferences, and priorities as may be
designated in the instrument creating each such series, as determined by Alliant
Energy's board of directors. Dividends or distributions on Preferred Securities
will be made periodically and to the extent funds are legally available for such
purpose, but may be made subject to terms which allow the issuer to defer
dividend payments or distributions for specified periods. Preferred Securities
may be convertible or exchangeable into shares of Common Stock or other
securities that Alliant Energy is authorized to issue.
(c) Long-term Debt. Long-term Debt may be issued in one or more
series in the form of unsecured notes or debentures with such rights,
preferences, and priorities as may be designated in the instrument creating each
such series, as determined by Alliant Energy's board of directors. Long-term
Debt of a particular series (a) may be convertible into any other securities
that Alliant Energy is authorized to issue, (b) may be subject to optional
and/or mandatory redemption, in whole or in part, at par or at various premiums
above the principal amount thereof, (c) may be entitled to mandatory or optional
sinking fund provisions, (d) may provide for reset of the coupon pursuant to a
remarketing arrangement, and (e) may be called from existing investors by a
third party. The maturity dates, interest rates, redemption and sinking fund
provisions and conversion features, if any, with respect to the Long-term Debt
of a particular series, as well as any associated placement, underwriting or
selling agent fees, commissions and discounts, if any, will be established by
negotiation or competitive bidding.
(d) Short-term Debt. Short-term Debt may include commercial paper,
unsecured bank notes and other forms of unsecured short-term indebtedness having
maturities of less than one year from the date of issuance.
Commercial paper may be sold in established domestic or European
commercial paper markets. Such commercial paper would typically be sold to
dealers at the discount rate per annum prevailing at the date of issuance for
commercial paper of comparable quality and maturities sold to commercial paper
dealers generally. It is expected that the dealers acquiring such commercial
paper will reoffer it at a discount to corporate, institutional and, with
respect to European commercial paper, individual investors. It is anticipated
that such commercial paper will be reoffered to investors such as commercial
banks, insurance companies, pension funds, investment trusts, foundations,
colleges and universities, finance companies and non-financial corporations.
Alliant Energy may also establish and maintain back-up credit lines
with banks or other institutional lenders to support its commercial paper
program and other credit arrangements and/or borrowing facilities generally
-------------------
19 The Commission has previously authorized registered holding companies to
issue and sell stock purchase contracts and stock purchase units (sometimes
referred to as equity-linked securities). In addition to the October 2001 Order,
see Ameren Corporation, Holding Co. Act Release No. 27860 (June 18, 2004),
American Electric Power Company, Inc., Holding Co. Act Release No. 27517 (Apr.
11, 2002), and NiSource Inc., Holding Co. Act Release No. 27789 (Dec. 30, 2003).
14
available to borrowers with comparable credit ratings as they may deem
appropriate in light of their needs and existing market conditions providing for
revolving credit or other loans. Only the amounts drawn and outstanding under
these agreements and facilities will be counted against the proposed limit on
new financing by Alliant Energy.
1.7 Common Stock Issued under Stock-Based Plans. In addition to sales
of Common Stock as described in Item 1.6 above, Alliant Energy requests
authorization to issue Common Stock and/or purchase shares of its Common Stock
(either currently or under forward contracts) in the open market for purposes of
reissuing such shares at a later date under plans that are maintained for
stockholders, officers and employees, and non-employee directors. Currently,
Alliant Energy maintains three plans under which it may directly issue or
purchase in the open market shares of Common Stock, which are described as
follows (and referred to collectively as the "Stock Plans"):
o Alliant Energy Corporation Equity Incentive Plan. The 2002 Equity
Incentive Plan ("Incentive Plan") is intended to promote the
success and enhance the value of the company by linking the
personal interests of plan participants to those of Alliant
Energy's shareowners, and by providing plan participants with an
incentive for outstanding performance. The Incentive Plan provides
for grants of stock options, restricted stock and performance
units/shares with respect to Common Stock. The Incentive Plan is
administered by the compensation and personnel committee of
Alliant Energy's Board of Directors, which selects from all
eligible employees those to whom awards should be granted under
the terms of the Incentive Plan. Alliant Energy has registered
4,000,000 shares of Common Stock for issuance or delivery under
the Incentive Plan. See Registration Statement on Form S-8,
incorporated by reference herein as Exhibit C-2.
o Alliant Energy Corporation 401(k) Savings Plan. The Alliant Energy
Corporation 401(k) Plan, as amended ("401(k) Plan") permits
eligible employees to make deferred cash contributions through
payroll deductions in any amount from 1% of compensation up to 50%
of compensation, subject to the annual limit on contributions
prescribed under the Internal Revenue Code. Alliant Energy system
companies currently provide matching contributions equal to 50% of
an employee's contribution, up to a maximum of 6% of an employee's
compensation. Employee contributions may be invested in one or
more investment funds, including the Alliant Energy Common Stock
Fund. Matching contributions are all invested in the Alliant
Energy Common Stock Fund. Alliant Energy has registered 1,600,000
shares of Common Stock for issuance or delivery under the 401(k)
Plan. See Registration Statement on Form S-8, incorporated by
reference herein as Exhibit C-3.
o Alliant Energy Corporation Shareowner Direct Plan. The Alliant
Energy Corporation Shareowner Direct Plan ("Direct Plan") provides
participants with a convenient way to purchase shares of Common
Stock and to reinvest all or a portion of the dividends received
on their shares of Common Stock. Persons not presently owning
shares of Common Stock may become Direct Plan participants,
assuming certain qualifications are met, by making an initial cash
investment of not more than $120,000. Participants may acquire
15
additional shares of Common Stock by making optional cash
investments in amounts of not less than $250 ($25 in the case of
employees) per investment nor more than $120,000 per calendar
year, inclusive of any initial investment. Optional cash
investments made through payroll deductions may not be more than
$120,000 per calendar year, inclusive of any initial investment
and any optional cash investments made by means other than payroll
deduction. The price of shares of Common Stock purchased from
Alliant Energy (i.e., newly-issued shares) is equal to the average
(computed to four decimal places) of the high and low sales prices
of shares of Common Stock as reported on the New York Stock
Exchange Composite Tape on the applicable investment date or, if
no trading occurs on the applicable investment date, a price
determined with reference to the next preceding date on which the
Common is traded on the New York Stock Exchange. The price of
shares of Common Stock purchased for participants on the open
market or in privately-negotiated transactions will be the
weighted average price of all such shares purchased for the
applicable investment date. Alliant Energy has registered
6,000,000 shares of Common Stock for issuance under the
Shareholder Direct Plan. See Registration Statement on Form S-3,
incorporated by reference herein as Exhibit C-4.
Alliant Energy proposes to issue shares of its Common Stock, as well as
stock options, "phantom" stock awards, restricted stock awards, and other Common
Stock-based awards in an aggregate amount of up to 8.5 million shares (as such
number may hereafter be adjusted to reflect any stock split) in order to satisfy
its obligations under the Stock Plans. Shares of Common Stock issued or
purchased for delivery under the Stock Plans may either be newly issued shares,
treasury shares or shares purchased in the open market. Alliant Energy will make
open-market purchases of Common Stock in accordance with the terms of, or in
connection with, the operation of the Stock Plans pursuant to Rule 42. Alliant
Energy also proposes, within the limitations set forth herein, to issue and/or
purchase shares of Common Stock pursuant to these existing Stock Plans, as they
may be amended or extended, and similar plans or plan funding arrangements
hereafter adopted without any additional Commission order. Stock transactions of
this variety would thus be treated the same as other stock transactions
permitted pursuant to this Application/Declaration.
1.8 IP&L External Financing. The issuance of securities by IP&L, which
is incorporated in Iowa, is not exempt under Rule 52(a) because the Iowa
Utilities Board ("IUB") does not exercise jurisdiction over the issuance of
securities by utilities. The MPUC has jurisdiction over the issuance of all
securities by IP&L, and the Illinois Commerce Commission ("ICC") has
jurisdiction over the issuance of all securities by IP&L other than indebtedness
with a final maturity of less than one year and renewable for a period of not
more than two years.
IP&L requests authorization to issue and sell from time to time during
the Authorization Period, (i) directly, Preferred Stock and Short-term Debt, and
(ii) directly or indirectly through one or more Financing Subsidiaries,
Preferred Securities and Long-term Debt, provided that the aggregate amount of
all such new securities issued during the Authorization Period shall not exceed
$700 million at any time outstanding or such lesser amount as may be authorized
16
from time to time by the MPUC./20/ All securities issued by IP&L in accordance
with the authorization requested herein, including, without limitation,
securities issued for the purpose of refunding or retiring outstanding
securities, will comply with the applicable parameters set forth in Item 1.5
above.
IP&L contemplates that such securities would be issued and sold
directly to the public in one or more offerings registered under the 1933 Act
either (i) through underwriters selected by negotiation or competitive bidding
or (ii) through a selling agent acting either as agent or as principal for
resale to the public either directly or through dealers, or to one or more
purchasers in privately-negotiated transactions or to one or more investment
banking or underwriting firms or other entities who would resell such securities
without registration under the 1933 Act in reliance upon one or more applicable
exemptions from registration thereunder. All such securities sales will be at
rates or prices and under conditions negotiated or based upon, or otherwise
determined by, competitive capital markets.
IP&L has filed a Registration Statement on Form S-3 (Exhibit C-5
hereto) under the 1933 Act utilizing the "shelf" registration process, under
which IP&L may offer for sale, in one or more transactions, any combination of
Preferred Stock and Long-term Debt in the form of senior unsecured dentures and
collateral trust bonds in an aggregate amount of up to $210 million.
The secured long-term debt securities, unsecured long-term debt
securities, and commercial paper of IP&L are currently rated A-, BBB and A-2,
respectively, by S&P and A3, Baa1 and P-2, respectively, by Moody's.
(a) Preferred Stock and Preferred Securities. Preferred Stock or
Preferred Securities may be issued in one or more series with such rights,
preferences, and priorities as may be designated in the instrument creating each
such series, as determined by IP&L's board of directors. Dividends or
distributions on Preferred Stock or Preferred Securities will be made
periodically and to the extent funds are legally available for such purpose, but
may be made subject to terms which allow the issuer to defer dividend payments
or distributions for specified periods.
(b) Long-term Debt. Long-term Debt of IP&L may be in the form of
(a) one or more series of collateral trust bonds ("Trust Bonds") issued under an
Indenture of Mortgage and Deed of Trust, dated as of September 1, 1993, between
IP&L and J.P. Morgan Trust Company, National Association, successor, as Trustee,
as supplemented from time to time (Exhibit B-3 hereto), (b) one or more series
of senior unsecured debentures ("Senior Debentures") issued under an Indenture,
dated as of August 20, 2003, between IP&L and J.P. Morgan Trust Company,
National Association, successor, as Trustee (Exhibit B-4 hereto), or (c)
agreements with issuing authorities for the issuance and sale of one or more
series of tax-exempt bonds ("Tax-Exempt Bonds") for the financing or refinancing
-------------------
20 IP&L is authorized under its Restated Articles of Incorporation (Exhibit A-3
hereto) to issue 24,000,000 shares of common stock, par value $2.50 per share,
of which 13,370,788 are issued and outstanding and held by Alliant Energy, and
16,000,000 shares of preferred stock, par value $01 per share, of which 7,600,00
are issued and outstanding.
17
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 any series of Tax-Exempt Bonds, IP&L requests authority to
(1) issue its 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. Consistent with the terms of the IP&L Long-term Debt
Order, it is proposed that the principal amount of any Tax-Exempt Collateral
Bonds issued by IP&L as collateral security for Tax-Exempt Bond obligations and
any other forms of collateral related to the Tax-Exempt Bonds be excluded from
the proposed overall financing limit on long-term financing by IP&L.
(c) Short-term Debt. Short-term Debt of IP&L may include commercial
paper notes and secured or unsecured bank notes or other forms of secured or
unsecured short-term indebtedness having maturities of less than one year from
the date of issuance.
Commercial paper may be sold in established domestic or European
commercial paper markets. Such commercial paper would typically be sold to
dealers at the discount rate per annum prevailing at the date of issuance for
commercial paper of comparable quality and maturities sold to commercial paper
dealers generally. It is expected that the dealers acquiring such commercial
paper will reoffer it at a discount to corporate, institutional and, with
respect to European commercial paper, individual investors. It is anticipated
that such commercial paper will be reoffered to investors such as commercial
banks, insurance companies, pension funds, investment trusts, foundations,
colleges and universities, finance companies and non-financial corporations.
IP&L may also establish and maintain back-up credit lines with banks or
other institutional lenders to support its commercial paper program and other
credit arrangements and/or borrowing facilities generally available to borrowers
with comparable credit ratings as it may deem appropriate in light of its needs
and existing market conditions providing for revolving credit or other loans.
Only the amounts drawn and outstanding under these agreements and facilities
will be counted against the proposed limit on new financing by IP&L.
The issuance of secured Short-term Debt by IP&L would be limited to
those circumstances in which IP&L can expect a lower effective cost of borrowing
(taking into account all transactional costs) compared to issuing unsecured
Short-term Debt or in which unsecured credit is unavailable, except at a higher
cost than secured Short-term Debt. IP&L anticipates that the collateral offered
as security for any secured Short-term Debt would generally be limited to
current assets, such as inventory and/or accounts receivable.
1.9 WRP External Financing. The issuance of securities by WRP, which is
incorporated in Wisconsin, is not exempt under Rule 52(a) because WRP is not
subject to regulation as a public utility company in Wisconsin. WRP requests
authorization herein to issue and sell from time to time during the
18
Authorization Period Long-term Debt and Short-term Debt, provided that the
aggregate principal amount of all such new securities issued during the
Authorization Period shall not exceed $2.5 million at any time outstanding. The
issuance of secured Short-term Debt by WRP would be limited to those
circumstances in which WRP can expect a lower effective cost of borrowing
(taking into account all transactional costs) compared to issuing unsecured
Short-term Debt or in which unsecured credit is unavailable, except at a higher
cost than secured Short-term Debt. WRP anticipates that the collateral offered
as security for and secured Short-term Debt would generally be limited to
current assets, such as inventory and/or accounts receivable
1.10 Guarantees and Other Forms of Credit Support
(a) Alliant Energy Guarantees. Alliant Energy requests
authorization to provide Alliant Energy Guarantees with respect to the
securities or other obligations of any Subsidiary, as may be appropriate to
enable such Subsidiary to carry on its business, in an aggregate principal
amount not to exceed $3.0 billion outstanding at any one time, provided that the
amount of any Alliant Energy Guarantees in respect of obligations of any
Subsidiaries shall also be subject to the limitations of Rule 53(a)(1) or Rule
58(a)(1), as applicable. Any Alliant Energy Guarantee that is outstanding on the
last day of the Authorization Period will expire or terminate in accordance with
its stated terms.
Alliant Energy Guarantees may be in the form of, among other things,
direct parent guarantees, reimbursement obligations in respect of letters of
credit, indemnities, and capital maintenance or "keep well" agreements. Alliant
Energy requests authority to charge each Subsidiary a fee for providing credit
support that is determined by multiplying the amount of the Alliant Energy
Guarantee provided by the cost of obtaining the liquidity necessary to perform
the guarantee (for example, bank line commitment fees or letter of credit fees,
plus other transactional expenses) for the period of time the guarantee remains
outstanding.
Alliant Energy Guarantees may, in some cases, be provided to support
obligations of Subsidiaries that are not readily susceptible of exact
quantification or that may be subject to varying quantification. In such cases,
Alliant Energy will determine the exposure under such guarantee for purposes of
measuring compliance with the proposed limitation on Alliant Energy Guarantees
by appropriate means, including estimation of exposure based on loss experience
or projected potential payment amounts. If appropriate, such estimates will be
made in accordance with U. S. Generally Accepted Accounting Principles ("U. S.
GAAP"). Such estimation will be reevaluated periodically.
(b) Non-Utility Subsidiary Guarantees. In addition, AER and other
Non-Utility Subsidiaries request authority to provide Non-Utility Subsidiary
Guarantees with respect to the securities or other obligations of any other
Non-Utility Subsidiary (including any EWG, FUCO, or Rule 58 Company) as may be
appropriate to enable such Non-Utility Subsidiary to carry on its business in an
aggregate principal amount not to exceed $600 million outstanding at any one
time, excluding any guarantees and other forms of credit support that are exempt
pursuant to Rule 45(b) and Rule 52(b), provided, however, that the amount of any
Non-Utility Subsidiary Guarantees in respect of obligations of any Rule 58
19
Companies shall also be subject to the limitations of Rule 58(a)(1). Subject to
such limitations, it is proposed that the types and terms of any Non-Utility
Guarantee may be the same as described immediately above in relation to Alliant
Energy Guarantees.
1.11 Hedging Transactions
(a) Interest Rate Hedges Alliant Energy, and to the extent not
exempt pursuant to Rule 52, the Subsidiaries, request authorization to enter
into interest rate hedging transactions with respect to existing indebtedness
("Interest Rate Hedges"), subject to certain limitations and restrictions.
Interest Rate Hedges would be used as a means of prudently managing the risk
associated with outstanding debt issued pursuant to the authorization requested
in this Application/Declaration or an applicable exemption by, in effect,
synthetically (i) converting variable-rate debt to fixed-rate debt, (ii)
converting fixed-rate debt to variable-rate debt, and (iii) limiting the impact
of changes in interest rates resulting from variable-rate debt. In no case will
the notional principal amount of any interest rate swap exceed the face value of
the underlying debt instrument and related interest rate exposure. Transactions
will be entered into for a fixed or determinable period. Thus, the Applicants
will not engage in speculative transactions. Interest Rate Hedges (other than
exchange-traded Interest Rate Hedges) would only be entered into with
counterparties ("Approved Counterparties") whose senior unsecured debt ratings,
or the senior unsecured debt ratings of the parent companies of the
counterparties, as published by S&P, are equal to or greater than BBB, or an
equivalent rating from Moody's or Fitch Inc.
Interest Rate Hedges will involve the use of financial instruments
commonly used in today's capital markets, such as exchange-traded interest rate
futures contracts and over-the-counter 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 Securities or U.S. government agency (e.g., Fannie Mae)
obligations, or LIBOR-based swap instruments. The transactions would be for
fixed periods and stated notional amounts. Fees, commissions and other amounts
payable to the counterparty or exchange (excluding, however, the swap or option
payments) in connection with an Interest Rate Hedge will not exceed those
generally obtainable in competitive markets for parties of comparable credit
quality.
(b) Anticipatory Hedges In addition, Alliant Energy and the
Subsidiaries request authorization to enter into interest rate hedging
transactions with respect to anticipated debt offerings (the "Anticipatory
Hedges"), subject to certain limitations and restrictions. Such Anticipatory
Hedges (other than exchange-traded Anticipatory Hedges) would only be entered
into with Approved Counterparties, and 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 Securities
and/or a forward-dated swap (each a "Forward Sale"), (ii) the purchase of put
options on U.S. Treasury Securities (a "Put Options Purchase"), (iii) a Put
Options Purchase in combination with the sale of call options on U.S. Treasury
Securities (a "Zero Cost Collar"), (iv) transactions involving the purchase or
sale, including short sales, of U.S. Treasury Securities, or (v) some
combination of a Forward Sale, Put Options Purchase, Zero Cost Collar and/or
20
other derivative or cash transactions, including, but not limited to structured
notes, caps and collars, appropriate for the Anticipatory Hedges.
Anticipatory Hedges may be executed on-exchange ("On-Exchange Trades")
with brokers through (i) the opening of futures and/or options positions traded
on the Chicago Board of Trade ("CBOT") or other financial exchange, (ii) the
opening of over-the-counter positions with one or more counterparties
("Off-Exchange Trades"), or (iii) a combination of On-Exchange Trades and
Off-Exchange Trades. Alliant Energy or a Non-Utility Subsidiary will determine
the optimal structure of each Anticipatory Hedge transaction at the time of
execution.
The Applicants will comply with Statement of Financial Accounting
Standards ("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"). The Applicants represent 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. The
Applicants will also comply with any future FASB financial disclosure
requirements associated with hedging transactions./21/
1.12 Continuation of Non-Utility Money Pool
Alliant Energy, AER, Alliant Services and certain other Non-Utility
Subsidiaries of Alliant Energy request authorization to continue to participate
in the Non-Utility Money Pool, which will continue to be administered by Alliant
Services./22/
Under the terms of the Amended and Restated Non-Utility Money Pool
Agreement (Exhibit B-2 hereto), funds would be available from the following
sources for short-term loans to the Non-Utility Money Pool participants (other
than Alliant Energy) from time to time: (1) surplus funds in the treasuries of
any of the Non-Utility Money Pool participants ("Internal Funds"), and (2)
proceeds received by any of the Non-Utility Money Pool participants from the
issuance of Short-term Debt ("External Funds"), in each case to the extent
permitted by applicable laws and regulatory orders. Funds would be made
available from such sources in such order as Alliant Services, as the
administrator of the Non-Utility Money Pool, may determine would result in a
lower cost of borrowing, consistent with the individual borrowing needs and
-------------------
21 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. In addition to the October 2001 Order, see Ameren Corporation,
Holding Co. Act Release No. 27860 (June 18, 2004), NiSource Inc., Holding Co.
Act Release No. 27789 (Dec. 30, 2003) and FirstEnergy Corp., Holding Co. Act
Release No. 27694 (June 30, 2003).
22 As indicated in Item 1.3 above, under the terms of the Money Pool Order,
Alliant Energy, Alliant Services and IP&L were authorized to participate in a
separate Utility Money Pool, subject to a reservation of jurisdiction over
IP&L's participation in the Utility Money Pool under the terms of an amended and
restated Utility Money Pool Agreement pending receipt of further state utility
commission approvals. IP&L, which now has its own external credit facilities,
has not been an active participant in the Utility Money Pool since October 2002
and does not intend to seek state commission approvals to participate anytime in
the foreseeable future. Accordingly, Alliant Energy is not requesting authority
at this time to maintain a separate Utility Money Pool. Alliant Services, which
was previously a Utility Money Pool participant, is being added as a participant
in the Non-Utility Money Pool.
21
financial standing of Non-Utility Money Pool participants that invest funds in
the Non-Utility Money Pool.
Each Non-Utility Money Pool participant that is authorized or permitted
to borrow from the Non-Utility Money Pool would borrow pro rata from each
Non-Utility Money Pool participant that advances funds to the Non-Utility Money
Pool in the proportion that the total amount advanced by such participant bears
to the total amount then advanced to the Non-Utility Money Pool by all
participants. On any day when more than one source of funds (i.e., both Internal
Funds and External Funds), with different rates of interest, are used to fund
loans through the Non-Utility Money Pool, each borrowing participant would
borrow pro rata from each such funding source in the same proportion that the
amount of funds provided by that funding source bears to the total amount of
funds advanced to the Non-Utility Money Pool.
The cost of compensating balances, if any, and fees paid to banks to
maintain credit lines by Alliant Energy that are used to fund loans to the
Non-Utility Money Pool would initially be paid by Alliant Energy. These costs
would be retroactively allocated every month among the Non-Utility Money Pool
borrowers in proportion to each such borrowers' estimated peak short-term
borrowing requirements.
The daily outstanding balance of all loans to the Non-Utility Money
Pool participants shall accrue interest as follows: (a) if only Internal Funds
comprise the daily outstanding balance of all loans outstanding during a
calendar month, the interest rate applicable to such daily balances shall be the
average for the month of the CD yield equivalent of the 30-day Federal Reserve
"AA" Industrial Commercial Paper Composite Rate (the daily rate, "Composite,"
and the monthly average of such Composite, the "Average Composite"), or, if no
such Composite was established for that particular day, then the applicable rate
would be the Composite for the next preceding day for which such Composite was
established, and (b) if only External Funds comprise the daily outstanding
balance of all loans outstanding during a calendar month, the interest rate
applicable to such daily outstanding balance shall be the lending participant's
cost for such External Funds or, if more than one participant had made available
External Funds at any time during the month, the applicable interest rate shall
be a composite rate, equal to the weighted average of the costs incurred by the
respective participants for such External Funds. In cases where the daily
outstanding balances of all loans outstanding at any time during the month
include both Internal Funds and External Funds, the interest rate applicable to
the daily outstanding balances for the month shall be the weighted average of
the (i) cost of all Internal Funds contributed by participants, and (ii) the
cost of all such External Funds. The interest rate paid on funds advanced to the
Non-Utility Money Pool by any participant will be equal to the cost of borrowing
from the Non-Utility Money Pool. That is, the applicable rate would be the
Composite rate in the case of Internal Funds, the lending company's cost of
borrowing in the case of External Funds, and a weighted average cost of funds if
funds advanced to the Non-Utility Money Pool at any one time consist of both
Internal Funds and External Funds.
Funds not required by the Non-Utility Money Pool participants to make
loans (with the exception of funds required to satisfy the Non-Utility Money
Pool's liquidity requirements) will be invested in one or more short-term
investments: (i) interest-bearing accounts with banks; (ii) obligations issued
or guaranteed by the U.S. government and/or its agencies and instrumentalities,
22
including obligations under repurchase agreements; (iv) commercial paper rated
not less than A-1 by S&P or P-1 by Moody's, or their equivalent by a nationally
recognized rating agency; (iii) obligations issued or guaranteed by any state or
political subdivision thereof, provided that such obligations are rated not less
than "A" by a nationally recognized rating agency; (iv) bankers' acceptances;
(v) money market funds; (vi) bank certificates of deposit; (vii) Eurodollar
funds; and (viii) such other investments as are permitted by Section 9(c) of the
Act and Rule 40 thereunder.
Any income earned on investments of surplus funds would be allocated at
the end of each calendar month among those Non-Utility Money Pool participants
that have invested funds in accordance with the proportion that each
participant's average contribution of funds in the Non-Utility Money Pool for
the month bears to the average total amount of funds invested in the Non-Utility
Money Pool for the month.
Each participant receiving a loan through the Non-Utility Money Pool
would be required to repay the principal amount of such loan, together with all
interest accrued thereon, on demand and in any event within 365 days of the date
of such loan. All loans made through the Non-Utility Money Pool may be prepaid
by the borrower without premium or penalty and without prior notice. All loans
to, and borrowings from, the Non-Utility Money Pool to finance the existing
businesses of the Non-Utility Money Pool participants will be exempt pursuant to
the terms of Rule 52 under the Act. No loans through the Non-Utility Money Pool
would be made to, and no borrowings through the Non-Utility Money Pool would be
made by, Alliant Energy.
Authorization is requested for the following direct and indirect
Non-Utility Subsidiaries of Alliant Energy to participate in the Non-Utility
Money Pool:
Direct Subsidiaries of Alliant Energy:
-------------------------------------
o Alliant Services
o AER
o Alliant Energy Nuclear LLC
Direct Subsidiaries of AER:
--------------------------
o Alliant Energy Integrated Services Company
o Alliant Energy Investments, Inc.
o Alliant Energy International, Inc.
o Alliant Energy Transportation, Inc.
o Alliant Energy Synfuel LLC
o Alliant Energy Generation, Inc./23/
o Alliant Energy Neenah, LLC
o Alliant Energy EPC, LLC
-------------------
23 Alliant Energy Generation, Inc. is currently an indirect subsidiary of AER
but will become a direct subsidiary upon the dissolution of its parent (AEG
Worldwide, Inc.).
23
Direct and Indirect Subsidiaries of Alliant Energy Integrated
Services Company:
-------------------------------------------------------------
o Alliant Energy Field Services, LLC
o Alliant Energy Integrated Services - Energy Management LLC*
o Alliant Energy Integrated Services - Energy Solutions LLC*
o Cogenex Corporation*
o Energy Performance Services, Inc.*
o Heartland Energy Group, Inc.
o Industrial Energy Applications, Inc.
o Industrial Energy Applications Delaware Inc.
o RMT, Inc.
(* Alliant Energy has announced its intention to sell these
companies)
Direct and Indirect Subsidiaries of Alliant Energy Investments,
Inc.
---------------------------------------------------------------
o Heartland Energy Services, Inc.
o Iowa Land and Building Company
o Prairie Ridge Business Park, L.C.
o Village Lakeshares LP*
(* In the process of being dissolved)
Direct Subsidiaries of Alliant Energy Transportation, Inc.
---------------------------------------------------------
o Transfer Services, Inc.
o Cedar Rapids and Iowa City Railway Company
o IEI Barge Services, Inc.
o Williams Bulk Transfer Inc.
Direct Subsidiary of Alliant Energy Generation, Inc.
---------------------------------------------------
o Sheboygan Power, LLC
Exhibit I filed herewith describes the business and legal basis for
Alliant Energy's ownership of each of the Non-Utility Money Pool participants
listed above. It is requested that the Commission reserve jurisdiction over the
participation of any other direct or indirect, current or future, Non-Utility
Subsidiary of Alliant Energy as a borrower under the Non-Utility Money Pool.
1.13 Non-Utility Subsidiary Financings. It is believed that, in almost
all cases, the issuance of securities by AER and other Non-Utility Subsidiaries
will be exempt from Commission authorization pursuant to Rule 52(b). Any such
securities issued by AER or any other Non-Utility Subsidiary, directly or
indirectly through any Financing Subsidiary, would therefore be in addition to
securities issued by Alliant Energy, as described in Item 1.6 above.
In order to be exempt under Rule 52(b), any loans by Alliant Energy to
a Non-Utility Subsidiary or by any Non-Utility Subsidiary, including a Financing
Subsidiary, to another Non-Utility Subsidiary must have interest rates and
maturities that are designed to parallel the lending company's effective cost of
capital. However, in the limited circumstances where the Non-Utility Subsidiary
24
making the borrowing is not wholly-owned by Alliant Energy, directly or
indirectly, authority is requested under the Act for Alliant Energy or AER or
any other Non-Utility Subsidiary, as the case may be, to make loans to any such
less than wholly-owned Non-Utility Subsidiaries at interest rates and maturities
designed to provide a return to the lending company of not less than its
effective cost of capital. If such loans are made to a Non-Utility Subsidiary,
such company will not sell any services to any associate Non-Utility Subsidiary
unless such company falls within one of the categories of companies to which
goods and services may be sold on a basis other than "at cost," as described
below in Item 1.18 below./24/
1.14 Changes in Capitalization of Majority Owned Subsidiaries. The
portion of an individual Subsidiary's aggregate financing to be effected through
the sale of stock or other equity securities to Alliant Energy or other
immediate parent company during the Authorization Period pursuant to Rule 52
and/or pursuant to an order issued pursuant to this filing cannot be ascertained
at this time. It may happen that the proposed sale of capital securities (i.e.,
common stock or preferred stock) may in some cases exceed the then authorized
capital stock of such Subsidiary. In addition, the Subsidiary may choose to use
capital stock with no par value.
As needed to accommodate such proposed transactions and to provide for
future issues, request is made for authority to change the terms of any 50% or
more owned Subsidiary's authorized capital stock capitalization or other equity
interests by an amount deemed appropriate by Alliant Energy or other
intermediate parent company; provided that the consents of all other
shareholders or other equity holders have been obtained for the proposed change.
This request for authorization is limited to Alliant Energy's 50% or more owned
Subsidiaries and will not affect the aggregate limits or other conditions
contained herein. A Subsidiary would be able to change the par value, or change
between par value and no-par stock, or change the form of such equity from
common stock to limited partnership or limited liability company interests or
similar instruments, or from such instruments to common stock, without
additional Commission approval. Any such action by a Utility Subsidiary would be
subject to and would only be taken upon the receipt of any necessary approvals
by the state commission in the state or states where the Utility Subsidiary is
incorporated and doing business./25/ Alliant Energy will be subject to all
applicable laws regarding the fiduciary duty of fairness of a majority
shareholder to minority shareholders in any such 50% or more owned Subsidiary
and will undertake to ensure that any change implemented under this paragraph
comports with such legal requirements.
1.15 Financing Subsidiaries Alliant Energy, IP&L, WP&L, and the
Non-Utility Subsidiaries request authority to acquire, directly or indirectly,
the equity securities of one or more Financing Subsidiaries, which would be
organized specifically for the purpose of facilitating the financing of the
authorized and exempt activities (including exempt and authorized acquisitions)
of Alliant Energy and the Subsidiaries through the issuance of long-term debt or
equity securities, including but not limited to monthly income preferred
securities, to third parties, and to transfer the proceeds of such financings to
-------------------
24 The Commission has previously authorized substantially similar proposals. See
e.g., Entergy Corporation, et al., Holding Co. Act Release No. 27039 (June 22,
1999); NiSource Inc., Holding Co. Act Release No. 27789 (Dec. 30, 2003).
25 The Commission has previously approved substantially similar proposals. See
e.g., FirstEnergy Corp., Holding Co. Act Release No. 27694 (June 30, 2003).
25
or as directed by the Financing Subsidiary's parent. Alliant Energy may, if
required, guarantee or enter into expense agreements in respect of the
obligations of any Financing Subsidiary that it organizes. IP&L, WP&L or any
Non-Utility Subsidiary may also provide guarantees and enter into expense
agreements, if required, on behalf of any of its Financing Subsidiaries pursuant
to Rules 45(b)(7) and 52, as applicable. The amount of any securities issued by
a Financing Subsidiary of Alliant Energy would be counted against the limitation
on the amounts of similar types of securities that Alliant Energy is authorized
to issue directly, as set forth in Item 1.6 above. To avoid double counting,
however, any such credit support provided by Alliant Energy would not also be
counted against the limitation on Alliant Energy Guarantees, as set forth in
Item 1.10 above./26/ Similarly, the amount of any securities issued by a
Financing Subsidiary of IP&L would be counted against the limitation on the
amounts of similar types of securities that IP&L is authorized to issue
directly, as set forth in Item 1.8 above.
Any Financing Subsidiary organized pursuant to the authority granted by
the Commission in this proceeding shall be organized only if, in management's
opinion, the creation and utilization of such Financing Subsidiary will likely
result in tax savings, increased access to capital markets and/or lower cost of
capital for the Applicant that organizes and acquires such Financing Subsidiary.
No Financing Subsidiary shall acquire or dispose of, directly or indirectly, any
interest in any "utility asset," as that term is defined under the Act.
Alliant Energy and, to the extent not exempt under Rule 52, IP&L, WP&L
and the Non-Utility Subsidiaries also request authorization to issue to any
Financing Subsidiary, at any time or from time to time in one or more series,
unsecured debentures, unsecured promissory notes or other unsecured debt
instruments or preferred securities (individually, a "Note" and, collectively,
the "Notes") governed by an indenture or indentures or other documents, and the
Financing Subsidiary will apply the proceeds of any external financing by such
Financing Subsidiary plus the amount of any equity contribution made to it from
time to time to purchase the Notes from its parent. The terms (e.g., interest
rate, maturity, amortization, prepayment terms, default provisions, etc.) of any
such Notes would generally be designed to parallel the terms of the securities
issued by the Financing Subsidiary to which the Notes relate./27/
In cases where it is necessary or desirable to ensure legal separation
for purposes of isolating a Financing Subsidiary from its parent for bankruptcy
purposes, the ratings agencies may require that any expense agreement whereby
the parent provides services related to the financing to the Financing
Subsidiary be at a price, not to exceed a market price, consistent with similar
services for parties with comparable credit quality and terms entered into by
other companies so that a successor service provider could assume the duties of
the parent in the event of the bankruptcy of the parent without interruption or
an increase of fees. Therefore, Alliant Energy, IP&L, WP&L and the Non-Utility
Subsidiaries request approval under Section 13(b) of the Act and Rules 87 and 90
to provide the services described in this paragraph to any Financing Subsidiary
-------------------
26 The Commission has previously authorized substantially similar proposals. See
The Southern Company, Holding Co. Act Release No. 27134 (Feb. 9, 2000) and
NiSource Inc., Holding Co. Act Release No. 27789 (Dec. 30, 2003).
27 "Mirror image" Notes issued by Alliant Energy or a Subsidiary to its
Financing Subsidiary will be exempt under Rule 52(a) if the conditions of Rule
52(a) are satisfied.
26
at a fee not to exceed a market price but only for so long as such expense
agreement established by the Financing Subsidiary is in place./28/
1.16 Intermediate Subsidiaries and Subsequent Reorganizations Alliant
Energy and AER propose to acquire, directly or indirectly, the securities of one
or more Intermediate Subsidiaries, which would be organized exclusively for the
purpose of acquiring, holding and/or financing the acquisition of the securities
of, or other interest in, one or more EWGs or FUCOs, Rule 58 Companies, ETCs or
other non-exempt Non-Utility Subsidiaries (as authorized in this proceeding or
in a separate proceeding), provided that Intermediate Subsidiaries may also
engage in development activities and administrative activities relating to such
subsidiaries. Alliant Energy further requests authority for Intermediate
Subsidiaries or other Non-Utility Subsidiaries to engage in development
activities ("Development Activities") and administrative activities
("Administrative Activities") relating to such subsidiaries. Alliant Energy
proposes to expend directly or through AER, Intermediate Subsidiaries or other
Non-Utility Subsidiaries up to $200 million in the aggregate outstanding at any
time during the Authorization Period on all such Development Activities./29/
Development Activities will be limited to due diligence and design
review; market studies; preliminary engineering; site inspection; preparation of
bid proposals, including, in connection therewith, posting of bid bonds;
application for required permits and/or regulatory approvals; acquisition of
site options and options on other necessary rights; negotiation and execution of
contractual commitments with owners of existing facilities, equipment vendors,
construction firms, power purchasers, thermal "hosts," fuel suppliers and other
project contractors; negotiation of financing commitments with lenders and other
third-party investors; and such other preliminary activities as may be required
in connection with the purchase, acquisition, financing or construction of
facilities or the acquisition of securities of or interests in new businesses.
Administrative Activities will include providing ongoing personnel, accounting,
engineering, legal, financial, operating, technical and other support services
necessary to manage Alliant Energy's investments in Non-Utility Subsidiaries.
Investments in Intermediate Subsidiaries may take the form of any
combination of the following: (1) purchases of capital shares, partnership
interests, member interests in limited liability companies, trust certificates
or other forms of equity interests; (2) capital contributions; (3) open account
advances with or without interest; (4) loans; and (5) guarantees issued,
provided or arranged in respect of the securities or other obligations of any
Intermediate Subsidiaries. Funds for any direct or indirect investment in any
Intermediate Subsidiary will be derived from (1) financings authorized in this
proceeding; (2) any appropriate future debt or equity securities issuance
-------------------
28 The Commission has approved similar authority in other cases. See e.g.,
Exelon Corporation, et al., Holding Co. Act Release No. 27830 (Apr. 1, 2004).
29 Amounts expended in the development of projects culminating in an investment
in any EWG, FUCO or Rule 58 Company will not count against the limitation on
expenditures for Development Activities, but will instead be counted against the
limit on "aggregate investment" in such entities under Rule 53(a) or Rule 58(a),
as applicable, and any amounts initially counted against the limitation on
expenditures for Development Activities will be restored to the authorized
expenditure limit. The Commission has previously authorized expenditures on
Development Activities subject to the same terms. See NiSource Inc., Holding Co.
Act Release No. 27789 (Dec. 30, 2003) and Ameren Corporation, Holding Co.
Release No. 27777 (Dec. 18, 2003).
27
authorization obtained by Alliant Energy from the Commission; and (3) other
available cash resources, including proceeds of securities sales by AER or other
Non-Utility Subsidiary pursuant to Rule 52. To the extent that Alliant Energy
provides funds or guarantees directly or indirectly to an Intermediate
Subsidiary which are used for the purpose of making an investment in any EWG or
FUCO or a Rule 58 Company, the amount of such funds or guarantees will be
included in Alliant Energy's "aggregate investment" in such entities, as
calculated in accordance with Rule 53 or Rule 58, as applicable.
In addition, to the extent that such transactions are not otherwise
exempt under the Act or Rules thereunder,/30/ Alliant Energy requests
authorization to consolidate or otherwise reorganize all or any part of its
direct and indirect ownership interests in Non-Utility Subsidiaries, and the
activities and functions related to such investments. To effect any such
consolidation or other reorganization, Alliant Energy or AER may wish to either
contribute the equity securities of one Non-Utility Subsidiary to another
Non-Utility Subsidiary (including a newly formed Intermediate Subsidiary) or
sell (or cause a Non-Utility Subsidiary to sell) the equity securities or all or
part of the assets of one Non-Utility Subsidiary to another one. Such
transactions may also take the form of a Non-Utility Subsidiary selling or
transferring the equity securities of a subsidiary or all or part of such
subsidiary's assets as a dividend to an Intermediate Subsidiary or to another
Non-Utility Subsidiary, and the acquisition, directly or indirectly, of the
equity securities or assets of such subsidiary, either by purchase or by receipt
of a dividend. The purchasing Non-Utility Subsidiary in any transaction
structured as an intrasystem sale of equity securities or assets may execute and
deliver its promissory note evidencing all or a portion of the consideration
given. Each transaction would be carried out in compliance with all applicable
U.S. or foreign laws and accounting requirements, and any transaction structured
as a sale would be carried out for a consideration equal to the book value of
the equity securities being sold./31/
1.17 Additional Investments in Energy Assets AER and other Non-Utility
Subsidiaries request authority to make new investments in Energy Assets in the
United States and Canada, specifically including natural gas production,
gathering, processing, storage and transportation properties, facilities and
equipment, liquid oil reserves and storage facilities, and associated
facilities, that are incidental to the energy marketing, brokering and trading
operations of AER's subsidiaries. AER requests authorization to invest up to
$100 million (the "Investment Limitation") at any time outstanding during the
Authorization Period in such Energy Assets or in the equity securities of
existing or new companies substantially all of whose physical properties consist
or will consist of such Energy Assets./32/ Such Energy Assets (or equity
securities of companies owning Energy Assets) may be acquired for cash or in
exchange for Common Stock or other securities of Alliant Energy, AER, or other
Non-Utility Subsidiary of AER, or any combination of the foregoing. If Common
Stock of Alliant Energy is used as consideration in connection with any such
-------------------
30 Sections 12(c), 32(g), 33(c)(1) and 34(d) and Rules 43(b), 45(b), 46(a) and
58, as applicable, may exempt many of the transactions described in this
paragraph.
31 The Commission has previously authorized substantially similar proposals. See
Columbia Energy Group, Inc., Holding Co. Act Release No. 27099 (Nov. 5, 1999),
Entergy Corporation, et al., Holding Co. Act Release No. 27039 (June 22, 1999),
and NiSource Inc., Holding Co. Act Release No. 27789 (Dec. 30. 2003).
32 Companies whose physical properties consist of Energy Assets may also be
currently engaged in energy (gas or electric or both) marketing activities. To
the extent necessary, Applicants request authorization to continue such
activities in the event they acquire such companies.
28
acquisition, the market value thereof on the date of issuance will be counted
against the proposed Investment Limitation. The stated amount or principal
amount of any other securities issued as consideration in any such transaction
will also be counted against the Investment Limitation. Under no circumstances
will AER or any other Non-Utility Subsidiary acquire, directly or indirectly,
any assets or properties the ownership or operation of which would cause such
companies to be considered an "electric utility company" or "gas utility
company" as defined under the Act./33/
1.18 Sales of Services and Goods Among AER and Other Non-Utility
Subsidiaries of Alliant Energy. AER and other Non-Utility Subsidiaries propose
to provide services and sell goods to each other at fair market prices
determined without regard to cost, and therefore request an exemption (to the
extent that Rule 90(d) does not apply) pursuant to Section 13(b) from the cost
standards of Rules 90 and 91 as applicable to such transactions, in any case in
which the Non-Utility Subsidiary purchasing such goods or services is:
(i) A FUCO or foreign EWG that derives no part of its income,
directly or indirectly, from the generation, transmission, or
distribution of electric energy for sale within the United
States;
(ii) An EWG that sells electricity at market-based rates which
have been approved by the Federal Energy Regulatory
Commission ("FERC"), provided that the purchaser is not one
of the Utility Subsidiaries;
(iii) A "qualifying facility" ("QF") within the meaning of the
Public Utility Regulatory Policies Act of 1978, as amended
("PURPA") that sells electricity exclusively (a) at rates
negotiated at arms'-length to one or more industrial or
commercial customers purchasing such electricity for their
own use and not for resale, and/or (ii) to an electric
utility company (other than one of the Utility Subsidiaries)
at the purchaser's "avoided cost" as determined in accordance
with the regulations under PURPA;
(iv) A domestic EWG or QF that sells electricity at rates based
upon its cost of service, as approved by FERC or any state
public utility commission having jurisdiction, provided that
the purchaser thereof is not one of the Utility Subsidiaries;
or
(v) A Rule 58 Company or any other Non-Utility Subsidiary that
(a) is partially-owned, provided that the ultimate purchaser
of such goods or services is not a Utility Subsidiary or
Alliant Services (or any other entity within the Alliant
Energy system whose activities and operations are primarily
related to the provision of goods and services to the Utility
Subsidiaries, (b) is engaged solely in the business of
-------------------
33 The Commission has previously authorized electric registered holding
companies to make investments in Energy Assets (or the securities of companies
owning such assets) in the United States and Canada. In addition to the October
2001 Order, see Cinergy Corp., et al., Holding Co. Act Release No. 27717 (Aug.
29, 2003).
29
developing, owning, operating and/or providing services or
goods to Non-Utility Subsidiaries described in clauses (i)
through (iv) immediately above, or (c) does not derive,
directly or indirectly, any material part of its income from
sources within the United States and is not a public-utility
company operating within the United States./34/
1.19 Activities of Non-Utility Subsidiaries Outside the United States
The Applicants, on behalf of any current or future Non-Utility Subsidiaries,
request authority to engage in certain energy-related, non-utility, activities
outside the United States. Such activities include:
(i) the brokering and marketing of electricity, natural gas and
other energy commodities ("Energy Marketing");
(ii) energy management services ("Energy Management Services"),
including the marketing, sale, installation, operation and
maintenance of various products and services related to
energy management and demand-side management, including
energy and efficiency audits; facility design and process
control and enhancements; construction, installation,
testing, sales and maintenance of (and training client
personnel to operate) energy conservation equipment; design,
implementation, monitoring and evaluation of energy
conservation programs; development and review of
architectural, structural and engineering drawings for
energy efficiencies, design and specification of energy
consuming equipment; general advice on programs; the design,
construction, installation, testing, sales and maintenance
of new and retrofit heating, ventilating, and air
conditioning ("HVAC"), electrical and power systems, alarm
and warning systems, motors, pumps, lighting, water,
water-purification and plumbing systems, and related
structures, in connection with energy-related needs; and the
provision of services and products designed to prevent,
control, or mitigate adverse effects of power disturbances
on a customer's electrical systems; and
(iii) engineering, consulting and other technical support
services ("Consulting Services") with respect to
energy-related businesses, as well as for individuals. Such
Consulting Services would include technology assessments,
power factor correction and harmonics mitigation analysis,
meter reading and repair, rate schedule design and analysis,
environmental services, engineering services, billing
services (including consolidation billing and bill
disaggregation tools), risk management services,
communications systems, information systems/data processing,
-------------------
34 The Commission has previously authorized substantially similar proposals.
In addition to the October 2001 Order, see NiSource Inc, Holding Co. Act Release
No. 27789 (Dec. 30, 2003) and Ameren Corporation, Holding Co. Act Release No.
27777 (Dec. 18, 2003).
30
system planning, strategic planning, finance, feasibility
studies, and other similar services.
The Applicants request that the Commission (i) authorize Non-Utility
Subsidiaries to engage in Energy Marketing activities in Canada and reserve
jurisdiction over Energy Marketing activities outside of Canada pending
completion of the record in this proceeding,/35/ (ii) authorize Non-Utility
Subsidiaries to provide Energy Management Services and Consulting Services
anywhere outside the United States,/36/ and (iii) reserve jurisdiction over
other energy-related, non-utility, activities of Non-Utility Subsidiaries
outside the United States, pending completion of the record.
1.20 Payment of Dividends Out of Capital and Unearned Surplus and
Acquisition, Retirement or Redemption of Securities. AER and other Non-Utility
Subsidiaries request authorization to pay dividends out of capital and unearned
surplus and/or acquire, retire, or redeem securities that AER or any Non-Utility
Subsidiary has issued to any associate company, to the extent permitted under
applicable corporate law and the terms of any applicable credit or security
agreements. Moreover, to the extent such authorization is required under Section
12(c), Non-Utility Subsidiaries that are organized as partnerships (or as other
forms of non-corporate entities) request authorization to make distributions
from unrestricted cash representing, in whole or in part, a return of
capital./37/
It is anticipated that there will be situations in which AER or one or
more other Non-Utility Subsidiaries will have unrestricted cash available for
distribution in excess of any such company's current and retained earnings. In
such situations, the declaration and payment of a dividend would have to be
charged, in whole or in part, to capital or unearned surplus. As an example, if
AER (directly or indirectly through an Intermediate Subsidiary) purchases all of
the stock of an EWG or FUCO, and following such acquisition, the EWG or FUCO
incurs non-recourse borrowings some or all of the proceeds of which are
distributed to the Intermediate Subsidiary as a reduction in the amount invested
in the EWG or FUCO (i.e., return of capital), the Intermediate Subsidiary
(assuming it has no earnings) could not, without the Commission's approval, in
turn distribute such cash to AER for possible distribution to Alliant Energy.
Similarly, using the same example, if an Intermediate Subsidiary,
following its acquisition of all of the stock of an EWG or FUCO, were to sell
part of that stock to a third party for cash, the Intermediate Subsidiary would
again have substantial unrestricted cash available for distribution, but
(assuming no profit on the sale of the stock) would not have current earnings
and therefore could not, without the Commission's approval, declare and pay a
dividend to its parent out of such cash proceeds.
--------------------
35 The Commission has previously authorized substantially similar proposals.
In addition to the October 2001 Order, see NiSource Inc, Holding Co. Act Release
No. 27789 (Dec. 30, 2003) and Ameren Corporation, Holding Co. Act Release No.
27777 (Dec. 18, 2003).
36 The Commission has previously authorized substantially similar proposals.
In addition to the October 2001 Order, see NiSource Inc, Holding Co. Act Release
No. 27789 (Dec. 30, 2003) and FirstEnergy Corp., Holding Co. Act Release No.
27694 (June 30, 2003).
37 See Enron Corp., et al., Holding Co. Act Release No. 27809 (Mar. 9, 2004).
31
Further, there may be periods during which unrestricted cash available
for distribution by AER or another Non-Utility Subsidiary exceeds current and
retained earnings due to the difference between accelerated depreciation allowed
for tax purposes and depreciation methods required to be used in determining
book income. This difference may generate significant amounts of distributable
cash even in the absence of book income.
Finally, even under circumstances in which a Non-Utility
Subsidiary has sufficient earnings, and therefore may declare and pay a dividend
to its immediate parent, such immediate parent may have negative retained
earnings, even after receipt of the dividend, due to losses from other
operations. In this instance, cash would be trapped at a subsidiary level where
there is no current need for it.
Likewise, AER or other Non-Utility Subsidiary may also wish to
utilize freely distributable cash to acquire, retire or redeem any securities of
which it is the issuer that are held by any associate company. Such
transactions, which are not exempt under Rule 42, are a means to reduce the
capitalization of a company and serve essentially the same purpose as a dividend
paid out of capital or unearned surplus./38/
1.21 Certificates of Notification The Applicants propose to file
certificates of notification pursuant to Rule 24 that report each of the
transactions carried out in accordance with the terms and conditions of and for
the purposes represented in this Application or Declaration. Such certificates
would be filed within 60 days after the end of each of the first three calendar
quarters, and 90 days after the end of the last calendar quarter, in which
transactions occur. The Rule 24 certificates will contain the following
information for the reporting period:
(a) Any sales of any Common Stock, Stock Purchase Contracts or
Stock Purchase Units by Alliant Energy, the purchase price
per share or unit and the market price per share or unit at
the date of the agreement of sale;
(b) The total number of shares of Common Stock issued by, or
issuable under options granted, during the quarter under
Alliant Energy's benefit plans or otherwise;
(c) If Common Stock has been transferred to a seller of
securities of a company being acquired, the number of shares
so issued, the value per share and whether the shares are
restricted to the acquiror;
(d) The amount and terms of any Preferred Stock, Preferred
Securities, and Long-term Debt issued by Alliant Energy or
IP&L, directly or indirectly through a Financing Subsidiary,
during the quarter, and the amount and terms of any
Long-term Debt issued by WRP during the quarter;
-----------------------
38 The Commission has previously authorized substantially similar proposals.
In addition to the October 2001 Order, see NiSource Inc, Holding Co. Act Release
No. 27789 (Dec. 30, 2003) and FirstEnergy Corp., Holding Co. Act Release No.
27694 (June 30, 2003).
32
(e) The maximum amount of Short-term Debt of Alliant Energy,
IP&L and WRP outstanding during the quarter and the
effective cost or range of effective costs for such
Short-term Debt during the quarter;
(f) The amount of any Alliant Energy Guarantee or Non-Utility
Subsidiary Guarantee issued during the quarter, and the
company on whose behalf such guarantee was issued;
(g) The notional amount and principal terms of any Interest Rate
Hedge or Anticipatory Hedge entered into during the quarter
and the identity of the parties to such instruments;
(h) The amount and terms of any intercompany loan made to a less
than wholly-owned Non-Utility Subsidiary at interest rates
and maturities designed to provide a return to the lending
company of not less than its effective cost of capital;
(i) The name, parent company, and amount invested in any
Intermediate Subsidiary during the quarter;
(j) With respect to each Financing Subsidiary that has been
formed during the quarter, a representation that the
financial statements of the parent of such Financing
Subsidiary shall account for the Financing Subsidiary in
accordance with generally accepted accounting principles and
further, with respect to each such entity, (i) the name of
the Financing Subsidiary, (ii) the amount invested by the
parent in such Financing Subsidiary; and (iii) the amount
and terms of any securities issued by any Financing
Subsidiary during the reporting period which shall also
separately show the outstanding balance of all securities
issued by such Financing Subsidiaries during the
Authorization Period;
(k) If any Financing Subsidiaries are "Variable Interest
Entities" ("VIEs"), as that term is used in FASB
Interpretation 46R, "Consolidation of Variable Interest
Entities," a description of any financing transactions
conducted during the reporting period that were used to fund
such VIEs, and, if any financing proceeds are used for VIEs,
a description of the accounting for such transaction under
FASB Interpretation 46R;
(l) The amount and a description of any Energy Assets acquired
during the quarter;
(m) A list of Form U-6B-2 statements filed with the Commission
during the quarter, including the name of the filing entity
and the date of the filing; and
33
(n) Consolidated balance sheets as of the end of the quarter,
and separate balance sheets as of the end of the quarter for
each company, including Alliant Energy, that has engaged in
financing transactions authorized in this proceeding during
the quarter./39/
ITEM 2. FEES, COMMISSIONS AND EXPENSES
The fees, commissions and expenses incurred or to be incurred in
connection with the preparation and filing of this Application/Declaration are
estimated not to exceed $35,000. Fees, commissions and expenses paid in
connection with any specific financing transaction will be within the limit set
forth in Item 1.5 above.
ITEM 3. APPLICABLE STATUTORY PROVISIONS
3.1 General Sections 6(a) and 7 of the Act are applicable to the
issuance and sale of all securities by Alliant Energy, IP&L and WRP. Sections
6(a) and 7 of the Act are also applicable to Interest Rate Hedges, except to the
extent that Interest Rate Hedges are exempt under Rule 52, and to Anticipatory
Hedges. Sections 6(a) and 7 and/or Section 12(b) of the Act are applicable to
the issuance of Alliant Energy Guarantees and Non-Utility Subsidiary Guarantees,
to the extent not exempt under Rules 45(b). Sections 9(a)(1) and 10 of the Act
are also applicable to Alliant Energy's or any Subsidiary's acquisition of the
equity securities of any Financing Subsidiary and to any Non-Utility
Subsidiary's acquisition of the equity securities of any Intermediate
Subsidiary. Sections 6, 7(a), 9(a)(1), 10, 12(b) and 12(f) are or may be
applicable to reorganizations of Non-Utility Subsidiaries. Sections 9(a)(1) and
10 of the Act are also applicable to the acquisition of Energy Assets or the
securities of companies substantially all of whose assets consist of Energy
Assets; the acquisition, retirement or redemption of securities held by any
associate company of the issuer; and the energy-related activities of
Non-Utility Subsidiaries outside the United States. Section 12(c) of the Act and
Rule 46 are applicable to the payment of dividends from capital and unearned
surplus by any Non-Utility Subsidiary. Section 13(b) of the Act and Rules 80-
92 are applicable to the sale of services and goods among Non-Utility
Subsidiaries and by any Applicant to its Financing Subsidiary.
3.2 Compliance with Rules 53 and 54 The transactions proposed herein
are also generally subject to Section 32 of the Act and Rules 53 and 54. Under
Rule 53(a), the Commission shall not make certain specified findings under
Sections 7 and 12 in connection with a proposal by a holding company to issue
securities for the purpose of acquiring the securities of, or other interest in,
an EWG, or to guarantee the securities of an EWG, if each of the conditions in
paragraphs (a)(1) through (a)(4) thereof are met, provided that none of the
conditions specified in paragraphs (b)(1) through (b)(3) of Rule 53 exists. Rule
54 provides that the Commission shall not consider the effect of the
capitalization or earnings of subsidiaries of a registered holding company that
are EWGs or FUCOs in determining whether to approve other transactions if Rule
53(a), (b) and (c) are satisfied. These standards are met.
----------------------
39 Any of the information described in items (a) through (n) that is available
in reports filed under the 1933 Act or the 1934 Act may be incorporated by
reference into the Rule 24 certificate.
34
Alliant Energy currently does not meet all of the conditions of Rule
53(a). As of June 30, 2004, Alliant Energy's "aggregate investment," as defined
in Rule 53(a)(1), in EWGs and FUCOs was approximately $493.3 million, or
approximately 59.6% of Alliant Energy's average "consolidated retained
earnings," also as defined in Rule 53(a)(1), for the four quarters ended June
30, 2004 ($828.1 million). Although this exceeds the 50% "safe harbor"
limitation contained in Rule 53(a), the Commission authorized Alliant Energy
under the terms of the October 2001 Order to increase its "aggregate investment"
in EWGs and FUCOs to an amount equal to 100% 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 2001 Order,
due in part to the sale of certain non-regulated businesses (including Alliant
Energy's FUCO investments in Australia in April 2003, the sale of its affordable
housing and SmartEnergy businesses in mid-2003, and the sale of approximately
94% of its oil and gas exploration and production business in November 2003) and
the application of the proceeds 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 million) were used to make capital contributions to IP&L and
WP&L ; and implementation of other cost control measures./40/
Finally, based on the projections filed herewith, the proposed external
financing transactions are not expected to have an adverse impact on Alliant
Energy's consolidated capitalization. (See Exhibit H-1.)
In the two fiscal years ending after the issuance of the October 2001
Order, Alliant Energy experienced a modest increase in its level of losses from
its portfolio of EWGs and FUCOs. As described in the Application/Declaration in
File No. 70-9891, Alliant Energy's share of losses associated with its portfolio
of EWGs and FUCOs in fiscal year 2000 (the last fiscal year prior to issuance of
the October 2001 Order) totaled approximately $17.7 million, after interest
expense, taxes and currency transaction losses. In fiscal years 2001 and 2002,
Alliant Energy's share of losses totaled approximately $25.3 million and $26.7
million, respectively. 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. In
--------------------
40 At June 30, 2004, Alliant Energy's consolidated capitalization consisted of
47.6% common equity, 4.9% preferred stock, 45.3% long-term debt (including
variable-rate demand bonds classified as current), and 2.2% 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 2001 Order).
35
fiscal year 2003, Alliant Energy's share of income was approximately $3.8
million (not including gain from sale of Australian FUCO investments).
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
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./41/
ITEM 4. REGULATORY APPROVALS
No state commission, and no federal commission, other than the
Commission, has jurisdiction over the proposed transactions insofar as they
relate to Alliant Energy or any Non-Utility Subsidiary.
The issuance and sale of long-term debt securities by IP&L are subject
to approval by the MPUC and the ICC. In addition, the issuance of Short-term
Debt by IP&L requires approval by the MPUC./42/ A copy of the order issued by
the MPUC is filed herewith as Exhibit D-2. The order or orders of the ICC will
be filed by post-effective amendment hereto as and when obtained. IP&L will not
issue any securities authorized in this proceeding unless, at the time of
issuance thereof, IP&L has obtained all necessary approvals of the MPUC and ICC.
The approval of the ICC and MPUC would also be required in order for
IP&L to acquire the equity securities of any Financing Subsidiary, and the
approval of the Public Service Commission of Wisconsin ("PSCW") would be
required in order for WP&L to acquire the equity securities of any Financing
Subsidiary. Such approval will be obtained at the time such companies seek
approval to issue any securities through any Financing Subsidiary. The
Applicants request that the Commission reserve jurisdiction over the acquisition
of the securities of any Financing Subsidiary by IP&L and WP&L pending the
receipt of the required state commission authorization and the filing of such
authorization as a supplement to the record in this proceeding and the issuance
of a supplemental order of the Commission approving any such state-
jurisdictional acquisition.
No other state commission, and no federal commission, other than this
Commission, has jurisdiction over the proposed transactions as they relate to
any of the Utility Subsidiaries.
-------------------------
41 With regard to Rule 53(b)(3), as previously indicated, Alliant Energy's
investments in EWGs and FUCOs contributed positively to income in 2003.
42 In accordance with Minnesota law, IP&L has obtained approval for its capital
structure for the fiscal year ending March 31, 2005 (see Exhibit D-2).
36
ITEM 5. PROCEDURE.
---------
The Commission is requested to publish a notice under Rule 23 with
respect to the filing of this Application/Declaration as soon as practicable.
The Applicants request that the Commission's order be issued as soon as the
rules allow, and that there should not be a 30-day waiting period between
issuance of the Commission's order and the date on which the order is to become
effective. The Applicants further request that the Commission's order in this
proceeding continue to reserve jurisdiction over Alliant Energy's request for an
"aggregate investment" limit of $1.75 billion pending completion of the record.
The Applicants hereby waive a recommended decision by a hearing officer or any
other responsible officer of the Commission and consents to the participation of
the Division of Investment Management in the preparation of the Commission's
decision and/or order, unless the Division of Investment Management opposes the
matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS
---------------------------------
A EXHIBITS.
--------
A-1 Restated Articles of Incorporation of Alliant Energy, as
amended (incorporated by reference to Exhibit 4.1 to
Alliant Energy's Registration Statement of Form S-8, as
filed July 26, 2004, in File No. 333-117654).
A-2 Rights Agreement, dated January 20, 1999, between Alliant
Energy and Wells Fargo Bank Minnesota, N.A., successor
(incorporated by reference to Exhibit 4.1 to Alliant
Energy's Registration Statement on Form 8-A, dated
January 20, 1999, in File No. 1-9894).
A-3 Restated Articles of Incorporation of IP&L (incorporated
by reference to Exhibit 3.5 to IP&L's Annual Report on
Form 10-K for the year ended December 31, 2003, File No.
0-4117-1).
B-1 Sales Agreement, dated April 9, 2004, between Alliant
Energy and Cantor Fitzgerald & Co. (incorporated by
reference to Exhibit 1.3 to Alliant Energy's Registration
Statement on Form S-3, which is incorporated by reference
herein as Exhibit C-1).
B-2 Form of Amended and Restated Non-Utility Money Pool
Agreement (including form of grid note) (incorporated by
37
reference to Exhibit B-2 to Application/Declaration on
Form U-1, filed February 11, 2002, in File No. 70-10052).
B-3 Indenture of Mortgage and Deed of Trust, dated as of
September 1, 1993, between IP&L and J.P. Morgan Trust
Company, National Association, successor, as Trustee
(incorporated by reference to Exhibit 4(c) to IP&L's
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993), and the indentures supplemental
thereto dated, respectively, October 1, 1993, November 1,
1993, March 1, 1995, September 1, 1996 and April 1, 1997
(Exhibit 4(d) in IP&L's Quarterly Report on Form 10-Q
dated November 12, 1993, Exhibit 4(e) in IP&L's Quarterly
Report on Form 10-Q dated November 12, 1993, Exhibit 4(b)
in IP&L's Quarterly Report on Form 10-Q dated May 12,
1995, Exhibit 4(c)(i) in IP&L's Current Report on Form
8-K dated September 19, 1996 and Exhibit 4(a) in IP&L's
Quarterly Report on Form 10-Q dated May 14, 1997,
respectively).
B-4 Indenture, dated as of August 20, 2003, between IP&L and
J.P. Morgan Trust Company, National Association,
successor, as Trustee (incorporated by reference to
Exhibit 4.11 to IP&L's Registration Statement on Form S-3
in File No. 333-108199).
C-1 Registration Statement of Alliant Energy on Form S-3
("shelf" registration), as filed April 9, 2004, in File
No. 333-114361 (incorporated herein by reference).
C-2 Registration Statement of Alliant Energy on Form S-8
(2002 Equity Incentive Plan), as filed May 15, 2002, in
File No. 333-88304 (incorporated herein by reference).
C-3 Registration Statement of Alliant Energy on Form S-8
(401(k) Savings Plan), as filed July 26, 2004, in File
No. 333-117654 (incorporated herein by reference).
C-4 Registration Statement of Alliant Energy on Form S-3
(Shareholder Direct Plan), as filed March 31, 2004, in
38
File No. 333-114062 (incorporated herein by reference).
C-5 Registration Statement of IP&L on Form S-3 ("shelf"
registration), as filed March 31, 2004, in File No.
333-114065 (incorporated herein by reference).
D-1 Application of IP&L to the MPUC (incorporated by
reference to Exhibit D-1 to Post-Effective Amendment No.
6 to Application/Declaration in File No. 70-9375).
D-2 MPUC Order (incorporated by reference to Exhibit D-2 to
Post-Effective Amendment No. 6 to Application/Declaration
in File No. 70-9375).
E Organizational Chart of Alliant Energy Corporation and
Subsidiaries as of June 30, 2004 (Form SE - Paper Format
Filing).
F Opinion of Counsel (to be filed by amendment).
G Proposed Form of Federal Register Notice.
H-1 Alliant Energy forecast of consolidated capitalization
ratios for years 2004 through 2007, including forecast
assumptions (sources and uses) (to be filed by amendment
confidentially pursuant to Rule 104).
H-2 IP&L forecast of consolidated capitalization ratios for
years 2004 through 2007, including forecast assumptions
(sources and uses) (to be filed by amendment
confidentially pursuant to Rule 104).
I List and Description of Subsidiaries Participating in
Non-Utility Money Pool.
B FINANCIAL STATEMENTS.
--------------------
1.1 Consolidated Balance Sheet and Consolidated Income
Statement of Alliant Energy Corporation as of and for the
year ended December 31, 2003 (incorporated by reference
to the Annual Report on Form 10-K of Alliant Energy
Corporation for the year ended December 31, 2003) (File
No. 1-9894).
39
1.2 Consolidated Balance Sheet and Consolidated Statement of
Income of Alliant Energy Corporation as of and for the
six months ended June 30, 2004 (incorporated by reference
to the Quarterly Report on Form 10-Q of Alliant Energy
Corporation for the quarter ended June 30, 2004) (File
No. 1-9894).
1.3 Consolidated Balance Sheet and Consolidated Statement of
Income of Interstate Power and Light Company as of and
for the year ended December 31, 2003 (incorporated by
reference to the Annual Report on Form 10-K of Interstate
Power and Light Company for the year ended December 31,
2003) (File No. 0-4117-1).
1.4 Consolidated Balance Sheet and Consolidated Statement of
Income of Interstate Power and Light Company as of and
for the six months ended June 30, 2004 (incorporated by
reference to the Quarterly Report on Form 10-Q of
Interstate Power and Light Company for the quarter ended
June 30, 2004) (File No. 0-4117-1).
1.5 Consolidated Balance Sheet and Consolidated Statement of
Income of Wisconsin Power and Light Company as of and for
the year ended December 31, 2003 (incorporated by
reference to the Annual Report on Form 10-K of Wisconsin
Power and Light Company for the year ended December 31,
2003) (File No. 0-337).
1.6 Consolidated Balance Sheet and Consolidated Statement of
Income of Wisconsin Power and Light Company as of and for
the six months ended June 30, 2004 (incorporated by
reference to the Quarterly Report on Form 10-Q of
Wisconsin Power and Light Company for the quarter ended
June 30, 2004) (File No. 0-337).
1.7 Balance Sheet and Income Statement of Wisconsin River
Power Company as of and for the year ended December 31,
2003.
1.8 Balance Sheet and Income Statement of Wisconsin River
Power Company as of and for the six months ended June 30,
2004.
40
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS
None of the matters that are the subject of this Application or
Declaration involve a "major federal action" nor do they "significantly affect
the quality of the human environment" as those terms are used in section
102(2)(C) of the National Environmental Policy Act. The transaction that is the
subject of this Application or Declaration will not result in changes in the
operation of the Applicants that will have an impact on the environment. The
Applicants are not aware of any federal agency that has prepared or is preparing
an environmental impact statement with respect to the transactions that are the
subject of this Application or Declaration.
41
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company
Act of 1935, as amended, the undersigned companies have duly caused this
Application or Declaration filed herein to be signed on their behalves by the
undersigned thereunto duly authorized.
ALLIANT ENERGY CORPORATION
ALLIANT ENERGY CORPORATE SERVICES, INC.
WISCONSIN POWER AND LIGHT COMPANY
INTERSTATE POWER AND LIGHT COMPANY
ALLIANT ENERGY RESOURCES, INC.
ALLIANT ENERGY INVESTMENTS, INC.
ALLIANT ENERGY INTERNATIONAL, INC.
ALLIANT ENERGY INTEGRATED SERVICES COMPANY
ALLIANT ENERGY TRANSPORTATION, INC.
ALLIANT ENERGY EPC, LLC
ALLIANT ENERGY NEENAH, LLC
AER HOLDING COMPANY
AEG WORLDWIDE, INC.
By: /s/F.J. Buri
-----------------------
Name: F.J. Buri
Title: Secretary
WISCONSIN RIVER POWER COMPANY
By: /s/Charles J. Ohl
-----------------------
Name: Charles J. Ohl
Title: Vice President
ALLIANT ENERGY SYNFUEL LLC
ALLIANT ENERGY TRANSCO LLC
By: /s/F.J. Buri
-----------------------
Name: F.J. Buri
Title: Manager
(signatures continued on next page)
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ALLIANT ENERGY NUCLEAR LLC, BY ALLIANT ENERGY
CORPORATION, ITS SOLE MEMBER
By: /s/William D. Harvey
-----------------------
Name: William D. Harvey
Title: President
WPL TRANSCO, LLC, BY WISCONSIN POWER AND LIGHT
COMPANY, ITS SOLE MEMBER
By: /s/Barbara J. Swan
-----------------------
Name: Barbara J. Swan
Title: President
DISTRIBUTION VISION 2010, LLC
By: /s/Nick Veverka
-----------------------
Name: Nick Veverka
Title: Management Committee Member
Date: September 7, 2004
43