Executive Summary / Key Takeaways

• Alliant Energy (NASDAQ:LNT) is strategically leveraging its regulated utility operations in Iowa and Wisconsin to capitalize on significant economic development opportunities, particularly from large energy users like data centers, which are projected to drive substantial load growth.
• The company's updated $11.5 billion capital expenditure plan through 2028, representing an approximately 11% CAGR, is heavily focused on generation and grid modernization to support this growth, incorporating a balanced mix of renewables, energy storage, and dispatchable natural gas resources.
• Favorable and adaptable regulatory frameworks in both states, including Iowa's Individual Customer Rate (ICR) construct and Wisconsin's biennial rate reviews and certificate processes, are key enablers for cost recovery and earning a return on these investments, positioning the company for win-win outcomes for customers, communities, and shareholders.
• Solid Q1 2025 financial results, with net income increasing significantly year-over-year driven by capital investments and temperature impacts, demonstrate strong operational execution and position the company well to achieve its reaffirmed 2025 EPS guidance of $3.15 to $3.25 per share.
• Management is confident in achieving its long-term 5% to 7% EPS growth target, based off the 2024 ongoing earnings of $3.04, with the expanded capital plan and anticipated load growth expected to support performance towards the upper end of this range, particularly starting around 2027.

The Backbone of Midwest Growth: Alliant Energy's Strategic Evolution

Alliant Energy Corporation, rooted in a history spanning over 25 years through the merger of predecessor companies like Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL), has evolved from a regional utility provider into a company strategically positioned at the nexus of energy transition and economic expansion in the Midwest. Its core business remains the regulated delivery of electric and natural gas services across Iowa and Wisconsin through its wholly-owned subsidiaries, IPL and WPL. This foundational structure, coupled with a strategic pivot towards clean energy and proactive engagement with regulatory bodies, defines its current trajectory.

The competitive landscape for Alliant Energy is primarily shaped by other regulated utilities operating within or adjacent to its service territories, as well as larger national players with diverse portfolios. Key competitors include large-scale operators like Duke Energy (DUK), Southern Company (SO), Xcel Energy (XEL), and NextEra Energy (NEE). While these companies share the fundamental business model of generating, transmitting, and distributing energy, they differ in scale, geographic focus, resource mix, and regulatory environments.

Compared to national giants like DUK and SO, Alliant Energy operates on a smaller scale, with an estimated 2-3% aggregate market share in the U.S. utility sector, trailing DUK's 7-8% and SO's 6-7%. This difference in scale impacts market positioning and cash flow generation, where larger peers often have an advantage. For instance, in Q1 2025, DUK and SO reported significantly higher revenues and cash flows from operations compared to Alliant Energy's consolidated figures. However, Alliant Energy's strength lies in its deep regional focus and tailored approach within its specific service areas.

Against Midwest peers like XEL, which has a 4-5% national share and significant overlap, Alliant Energy competes directly on service reliability, rates, and the ability to support regional growth. While XEL often leads in overall growth rates and innovation spend relative to revenue, Alliant Energy emphasizes operational efficiency within its asset base and leverages its strong relationships with state regulators. NEE, a leader in renewables with a 10-12% national share, presents a challenge with its cost leadership and aggressive growth in clean energy, often achieving lower operating costs per unit through advanced technology.

Alliant Energy's competitive advantages, or moats, are significantly tied to its regulated status, granting it exclusive service territories, and its strategic approach to resource planning and regulatory engagement. The company's flexible, non-litigated Clean Energy Blueprint process allows it to adapt its resource plans more nimbly than some peers, a critical advantage in responding to rapid changes in load growth and market dynamics like MISO capacity accreditation. Furthermore, its proactive safe harboring activities for renewable projects position it favorably against potential tax policy changes, a risk shared across the industry but mitigated by LNT's early action.

However, Alliant Energy faces vulnerabilities, including a higher debt-to-equity ratio (around 1.50 TTM) compared to some peers like XEL (1.55) or NEE (1.64), and the ongoing need for significant capital investment to modernize its grid and transition its generation fleet. While its operational efficiency in certain areas, such as potentially higher energy yields from specific wind projects compared to some competitors' assets, can provide a margin edge, it must continually invest to keep pace with the technological advancements and cost efficiencies demonstrated by leaders like NEE. The company's strategy is to leverage its regulatory alignment and regional strengths to drive growth that supports affordability, thereby reinforcing its position despite competitive pressures from larger or more specialized players.

Powering Economic Expansion: Strategy Meets Opportunity

Alliant Energy's strategy is fundamentally centered on supporting the economic vitality of Iowa and Wisconsin while ensuring a reliable, affordable, and increasingly sustainable energy supply. This purpose-driven approach is currently manifesting in a significant push for economic development, particularly targeting large energy users. The company has achieved notable success, securing fully executed energy supply agreements (ESAs) for three major data center developments totaling 2.1 gigawatts (GW) of demand. This represents a substantial increase, over 30%, in the company's peak demand, with the initial phase at the Big Cedar Industrial Center in Cedar Rapids, Iowa (1.1 GW) anticipated online by year-end 2028, and additional load ramping up as early as 2026-2027 using existing resources.

This influx of large load growth is the primary driver behind the company's significantly updated capital expenditure plan. The 2025-2028 CapEx forecast now stands at approximately $11.5 billion, reflecting an increase of about $600 million from the November 2024 update and roughly $1.8 billion higher than the plan eighteen months prior. This translates to a forecasted investment CAGR of nearly 11% from 2024 through 2028. The investment is strategically allocated across generation and electric grid strengthening to enhance resiliency and reliability.

The generation investment component of the CapEx plan reflects an "all-of-the-above" approach, balancing the need for dispatchable capacity with the ongoing clean energy transition. Planned investments include approximately 1500 MW of new natural gas resources, approximately 1200 MW of new wind generation, approximately 800 MW of new energy storage, refurbishments at approximately 500 MW of existing wind farms, improvements at approximately 280 MW of existing natural gas-fired units, and the conversion of certain coal-fired units to natural gas. This diversified mix is designed to meet growing demand, adapt to evolving MISO resource adequacy requirements, and complement the company's existing regulated fleet, which included 1.8 GW of wind and 1.5 GW of solar by the end of 2024.

Technological differentiation plays a crucial role in this strategy. While specific quantifiable performance metrics for all planned technologies are not detailed, the company highlights investments in advanced gas projects aimed at improving capacity and efficiency. The focus on energy storage (batteries) is also key, providing flexibility and grid stability. The company has proactively managed risks associated with battery tariffs, noting minimal exposure as batteries are largely in possession or transit, subject only to an estimated 20% tariff, which management states still results in a lower cost compared to domestically produced alternatives. This suggests a focus on cost-effective procurement within the global supply chain, a potential operational advantage. The refurbishment of existing wind farms is intended to extend the life and tax credit eligibility of these assets, maximizing value for customers. The company also mentions evaluating extending the operation of existing fossil facilities and repowering opportunities, demonstrating a pragmatic approach to resource management.

The success of this capital plan and growth strategy is intrinsically linked to the regulatory environment in Iowa and Wisconsin. Alliant Energy has actively pursued constructive regulatory outcomes. The Iowa rate review settlement, approved in 2024, is a cornerstone, providing base rate stability for IPL customers through the end of the decade and establishing the Individual Customer Rate (ICR) construct. This ICR mechanism is vital for attracting large loads, allowing for customized rate agreements that, upon regulatory approval, are expected to ensure a "win-win-win" by benefiting existing customers (through fixed cost absorption), new customers (with tailored rates), and shareholders (by enabling investment recovery and return). In Wisconsin, WPL recently filed a retail electric and gas rate review for the 2026-2027 test period, seeking recovery for increasing rate base driven by investments in solar, energy storage, and natural gas improvements, alongside distribution system upgrades. The company also has multiple certificate of authority (COA) filings pending before the Public Service Commission of Wisconsin (PSCW) for specific projects, including a liquified natural gas facility, a RICE technology gas unit, a wind farm, and wind farm refurbishment. These regulatory processes are essential for translating capital investments into rate base and earnings.

Financing this ambitious capital plan involves a mix of sources. The updated 2025-2028 plan anticipates funding primarily from cash flows from operations (nearly 50%, including significant tax credit monetization), new debt (approximately 40%), and new common equity issuances (approximately 12%). The company plans to issue up to $1.3 billion in common stock through 2028 (including its Shareowner Direct Plan and a planned ATM program), with the bulk expected ratably from 2026-2028. Debt financing plans for the remainder of 2025 include up to $1 billion at IPL (partially for refinancing a $300 million maturity) and up to $1.3 billion at the parent/AEF level. The company is committed to maintaining its investment-grade credit ratings and is exploring alternative financing, including hybrid instruments, if needed, particularly in response to potential changes in tax credit transferability rules, although safe harboring activities have significantly de-risked this area through 2028.

Performance, Outlook, and Key Considerations

Alliant Energy's recent financial performance reflects the initial impacts of its capital investment program and external factors. For the three months ended March 31, 2025, the company reported net income attributable to common shareowners of $213 million, or $0.83 per diluted share, a significant increase from $158 million, or $0.62 per diluted share, in the same period of 2024. This improvement was primarily driven by higher revenue requirements stemming from capital investments at both IPL and WPL, favorable temperature impacts on retail electric and gas sales compared to the unusually warm Q1 2024, and the timing of income tax expense. These positive factors were partially offset by increased depreciation and financing expenses associated with the growing asset base and debt levels.

Revenue trends in Q1 2025 showed increases in both electric utility ($853 million vs. $791 million in Q1 2024) and gas utility ($240 million vs. $205 million) segments, largely due to higher revenue requirements, temperature impacts on sales volumes, and changes in fuel/gas costs, which are often pass-through. Retail electric sales volumes increased 3% year-over-year, driven by temperature changes and growth in WPL's commercial and industrial sectors. Retail gas sales volumes saw a more substantial 18% increase, primarily due to colder temperatures. Operating expenses rose, notably in electric production fuel and purchased power (partially due to higher purchased electricity prices for WPL) and depreciation and amortization, reflecting new assets placed in service. Interest expense also increased due to recent financings.

Looking ahead, management reaffirmed its 2025 EPS guidance range of $3.15 to $3.25 per share. This guidance is underpinned by the continued contribution from capital investments, anticipated load growth from economic development, ongoing cost management efforts (building on a 5% workforce reduction via voluntary separation in Q4 2024), and the benefits of constructive regulatory outcomes. The company maintains its long-term EPS growth target of 5% to 7%, based off the 2024 ongoing earnings of $3.04. Management expressed confidence that the expanded capital plan and accelerating load growth, particularly starting around 2027, position the company to perform towards the upper end of this long-term growth range. The 2025 annual common stock dividend target is set at $2.03 per share, representing a 6% increase and continuing a long track record of dividend growth.

Despite the positive outlook, several risks could impact the investment thesis. Regulatory risk remains paramount; failure to obtain timely and favorable approvals for rate reviews, ICRs, and COAs could delay investment recovery and impact earnings. Construction risks, including cost overruns and schedule delays due to supply chain issues, inflation, tariffs, or labor availability, could affect the capital plan execution. Changes in tax policy, particularly regarding renewable tax credits (like potential IRA repeal), pose a risk, although safe harboring activities have significantly mitigated this in the near-to-medium term. Weather variability continues to introduce earnings volatility, as demonstrated in recent quarters. Economic conditions could impact customer demand and the ability to pay bills. Competition from third-party generation and alternative energy suppliers could affect sales volumes. Changes in MISO's resource adequacy requirements could necessitate adjustments to resource plans and potentially increase costs. Environmental regulations, including those related to coal ash and emissions, could require significant future investments and compliance costs.

Management's mitigation strategies include proactive engagement with regulators and stakeholders, disciplined project management and procurement, safe harboring of renewable assets, cost control initiatives, diversification of the generation mix, and leveraging the ICR construct to align rates with new load characteristics. The company's access to capital markets on competitive terms and its commitment to maintaining strong credit ratings are also crucial for funding the capital plan.

Conclusion

Alliant Energy is executing a clear strategy focused on leveraging its regulated utility platform to capture significant growth opportunities driven by economic development in its service territories. The influx of large data center loads is a transformative catalyst, underpinning a substantial increase in the company's capital expenditure plan through 2028. This expanded investment program, centered on a balanced mix of renewable energy, energy storage, and dispatchable gas generation, is designed to meet future demand while enhancing grid reliability and advancing sustainability goals.

Supported by constructive and adaptable regulatory frameworks in Iowa and Wisconsin, including innovative mechanisms like the Individual Customer Rate, Alliant Energy is well-positioned to recover its investments and earn a fair return, creating a virtuous cycle where growth contributes to customer affordability. The company's solid financial performance in Q1 2025 demonstrates effective operational execution against this backdrop. While risks such as regulatory uncertainty, construction challenges, and potential tax policy changes persist, management's proactive mitigation strategies, coupled with the visibility provided by the secured load growth and expanded capital plan, reinforce confidence in the company's ability to achieve its reaffirmed 2025 earnings guidance and its long-term 5% to 7% EPS growth target. For investors, Alliant Energy presents a compelling narrative of a regulated utility actively shaping its future through strategic investment and economic partnership, aiming for consistent, predictable growth in the heart of the Midwest.