(As filed June 21, 2002)
File No. 70-10052
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM U-1/A
Amendment No. 2
to
APPLICATION OR DECLARATION
UNDER THE
PUBLIC UTILITY HOLDING COMPANY ACT OF 1935
ALLIANT ENERGY CORPORATION
ALLIANT ENERGY CORPORATE SERVICES, INC.
ALLIANT ENERGY RESOURCES, INC.
ENERGYS, INC.
ALLIANT ENERGY GENERATION, INC.
HEARTLAND PROPERTIES, INC.
CAPITAL SQUARE FINANCIAL CORPORATION
HEARTLAND ENERGY GROUP, INC.
HEARTLAND ENERGY SERVICES, INC.
4902 N. Biltmore Lane
Madison, Wisconsin 53718
INTERSTATE POWER AND LIGHT COMPANY
ALLIANT ENERGY TRANSPORTATION, INC.
ALLIANT ENERGY INVESTMENTS, INC.
IOWA LAND AND BUILDING COMPANY
ALLIANT ENERGY INTERNATIONAL, INC.
ALLIANT ENERGY INTEGRATED SERVICES COMPANY
ALLIANT ENERGY INTEGRATED SERVICES-ENERGY MANAGEMENT LLC
ALLIANT ENERGY INTEGRATED SERVICES-ENERGY SOLUTIONS LLC
IOWA LAND AND BUILDING COMPANY
PRAIRIE RIDGE BUSINESS PARK, L.C.
TRANSFER SERVICES, INC.
WILLIAMS BULK TRANSFER INC.
Alliant Tower
200 First Street S.E.
Cedar Rapids, Iowa 52401
ALLIANT ENERGY FIELD SERVICES, LLC
5033 A Tangle Lane
Houston, Texas 77056
CEDAR RAPIDS AND IOWA CITY RAILWAY COMPANY
2330 12th Street, SW
Cedar Rapids, Iowa 52404
COGENEX CORPORATION
Boott Mills South, 100 Foot of John St.
Lowell, Massachusetts 01852
ENERGY PERFORMANCE SERVICES, INC.
INDUSTRIAL ENERGY APPLICATIONS, INC.
201 Third Avenue SE, Suite 300
Cedar Rapids, Iowa 52406
IEI BARGE SERVICES, INC.
18525 Hwy 20 West
East Dubuque, Illinois 61025
INDUSTRIAL ENERGY APPLICATIONS DELAWARE INC.
5925 Dry Creek Lane, NE
Cedar Rapids, Iowa 52402
RMT, INC.
744 Heartland Trail
Madison, Wisconsin 53717
SCHEDIN & ASSOCIATES, INC.
920 Plymouth Building
12 South Sixth Street
Minneapolis, Minnesota 55401
SVBK CONSULTING GROUP, INC.
37 N. Orange Ave., Suite 710
Orlando, Florida 32801
WHITING PETROLEUM CORPORATION
Mile High Center, Suite 2300
1700 Broadway
Denver, Colorado 80290
(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)
----------------------------------------------------
F. J. Buri, Corporate Secretary
Alliant Energy Corporation
4902 N. Biltmore Lane
Madison, Wisconsin 53718
(Name and address of agent for service)
----------------------------------------------------
The Commission is requested to send copies of all notices, orders and
communications in connection with this Application or Declaration to:
Barbara J. Swan, General Counsel William T. Baker, Jr., Esq.
Alliant Energy Corporation Thelen Reid & Priest LLP
4902 N. Biltmore Lane 40 West 57th Street
Madison, Wisconsin 53718 New York, New York 10019
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The Application or Declaration filed in this proceeding on February 11,
2002, which was amended and restated in its entirety by Amendment No. 1, dated
March 22, 2002, is hereby further amended and restated in its entirety to read
as follows:
ITEM 1. DESCRIPTION OF PROPOSED TRANSACTION.
------------------------------------
A. Background. Alliant Energy Corporation ("Alliant Energy") is a
registered holding company under the Public Utility Holding Company Act of 1935
(the "Act"). Its direct wholly-owned public utility subsidiaries are: Interstate
Power and Light Company (formerly IES Utilities Inc.)(1) ("IP&L") and Wisconsin
Power and Light Company ("WP&L").(2) These companies provide electric and gas
utility service to customers in parts of Wisconsin, Iowa, Minnesota and
Illinois.
All of the other applicants named herein (that is, the applicants other
than Alliant Energy and IP&L) are non-utility subsidiaries that, with one
exception (which is noted below), are directly or indirectly wholly-owned by
Alliant Energy. They are more particularly described as follows:
Alliant Energy Corporate Services, Inc. ("Alliant Services"), a
subsidiary service company, and Alliant Energy Resources, Inc. ("AER"), which
serves as the non-utility holding company for substantially all of Alliant
Energy's non-utility investments and subsidiaries, are direct subsidiaries of
Alliant Energy.
The applicants include seven direct subsidiaries of AER, as follows:
1. Alliant Energy Integrated Services Company ("Integrated Services"),
which directly and through subsidiaries of its own, provides environmental
consulting and engineering services, produces and sells steam, and provides
energy-management services, including energy performance testing. Twelve of
Integrated Services' subsidiaries are named applicants herein: Industrial Energy
Applications, Inc., Heartland Energy Group, Inc., RMT, Inc., Alliant Energy
Integrated Services - Energy Solutions LLC, Alliant Energy Integrated Services -
Energy Management LLC, Cogenex Corporation, Energy Performance Services, Inc.,
Energys, Inc., Alliant Energy Field Services, LLC, Industrial Energy
Applications Delaware, Inc., Schedin & Associates, Inc., and SVBK Consulting
Group, Inc.
-------------------
(1) By order dated October 24, 2001 (Holding Co. Act Release No. 27456), the
Commission approved the merger of Interstate Power Company ("IPC"), which,
at that time, was also a direct wholly-owned subsidiary of Alliant Energy,
and IES Utilities Inc. ("IES"), with IES as the surviving company. The
merger of IPC into IES was effective as of January 1, 2002, and, in
connection therewith, IES changed its name to Interstate Power and Light
Company.
(2) WP&L owns all of the issued and outstanding common stock of South Beloit
Water, Gas & Electric Company.
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2. Alliant Energy Investments, Inc. ("Alliant Energy Investments"), a
non-utility holding company that engages through subsidiaries in, among other
businesses, the development, ownership and management of investments in
affordable multi-unit housing properties, holding real estate for future
development of utility-related assets, and other passive investments in land.
Four of Alliant Energy Investments' subsidiaries are named applicants herein:
Heartland Properties, Inc., Heartland Energy Services, Inc., Iowa Land and
Building Company, and Prairie Ridge Business Park, L.C. (Note: Prairie Ridge
Business Park, L.C. is a 70% owned subsidiary. The remaining interest is held by
an unaffiliated third party.)
3. Alliant Energy Transportation, Inc. ("Alliant Energy
Transportation"), a non-utility holding company that engages through
subsidiaries in rail transportation, river barge terminal and hauling
activities, and related warehousing activities. Four subsidiaries of Alliant
Energy Transportation are named applicants herein: Transfer Services, Inc.,
Cedar Rapids and Iowa City Railway Corporation, Williams Bulk Transfer Inc., and
IEI Barge Services, Inc.
4. Capital Square Financial Corporation, which provides various
financial services, including the origination and sale of mortgages for
tax-advantaged affordable housing.
5. Alliant Energy Generation, Inc., which is an intermediate
subsidiary formed to develop and invest in "exempt wholesale generators"
("EWGs"), as defined under Section 32 of the Act, and other unregulated domestic
generation projects.
6. Alliant Energy International, Inc., which develops and holds
investments in "foreign utility companies" ("FUCOs"), as defined under Section
33 of the Act.
7. Whiting Petroleum Corporation, which directly and through
investments in partnerships engages in oil and gas development and production.
AER and its direct and indirect non-utility subsidiaries named above
are herein referred to as the "Non-Utility Subsidiaries."
B. Current Short-term Debt/Money Pool Authorization. By order dated
December 18, 1998 in File No. 70-9317 (Holding Co. Act Release No. 26956), as
modified and extended by order dated December 15, 2000 (Holding Co. Act Release
No. 27304) (as so modified and extended, the "Current Money Pool Order"),
Alliant Energy is authorized to issue notes and/or commercial paper from time to
time through June 30, 2004, and to fund separate money pools for intrasystem
borrowings by certain of its utility subsidiaries and Alliant Services and by
the Non-Utility Subsidiaries. Specifically, Alliant Energy is authorized to
issue and sell notes and/or commercial paper in an aggregate principal amount at
any time outstanding not to exceed $1 billion and to utilize the proceeds of
such borrowings to make loans through the system utility money pool ("Utility
Money Pool") to IP&L, WP&L and Alliant Services in an aggregate amount not to
exceed $475 million in 2001 and $525 million through the remainder of the
authorization period, and for other corporate purposes, including, among others,
funding of temporary investments in EWGs and FUCOs. At March 31, 2002, Alliant
Energy had issued and outstanding $47.2 million of commercial paper notes.
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Alliant Energy is also authorized under the Current Money Pool Order to
provide guarantees or enter into expense agreements or otherwise provide credit
support in an amount not to exceed $600 million at any time outstanding in order
to support a separate commercial paper program established by AER, which is used
to fund the Alliant Energy system non-utility money pool ("Non-Utility Money
Pool").
Under the terms of the Current Money Pool Order, Alliant Energy is
authorized to issue commercial paper in denominations of not less than $100,000
to dealers at rates not to exceed the rate per annum prevailing at the time of
issuance for commercial paper of comparable qualities and maturities. Alliant
Energy may also issue commercial paper to institutions if the resulting cost of
money would be equal to or less than that available from dealer-placed
commercial paper or bank borrowings. Commercial paper notes may have maturities
of up to 270 days and must be rated at least A-1 by Standard & Poor's ("S&P") or
at least P-1 by Moody's Investor Services ("Moody's"). Borrowings by Alliant
Energy from banks may bear interest at a rate no higher than the effective cost
of money for unsecured prime commercial bank loans prevailing at the date of
borrowing.
Under the Current Money Pool Order, as modified by the Commission's
order approving the merger of IPC into IES,(3) IP&L is authorized to borrow up
to $250 million at any one time outstanding under the Utility Money Pool.
Borrowings by WP&L and Alliant Services under the Utility Money Pool are exempt
pursuant to Rule 52(a) in the case of WP&L and Rule 52(b) in the case of Alliant
Services. WP&L's participation in the Utility Money Pool as a borrower but not
as a lender has been approved by the Public Service Commission of Wisconsin
("PSCW").(4)
At March 31, 2002, the outstanding borrowings under the Utility Money
Pool by WP&L, IP&L and Alliant Services were $56.2 million, $29.2 million, and
$67.5 million, respectively. The effective cost of funds borrowed under the
Utility Money Pool is currently 2.25.
As indicated, AER has established a separate commercial paper program
and bank credit facilities totaling $600 million, which are used to fund loans
under the Non-Utility Money Pool to the participating Non-Utility Subsidiaries
(as listed in Item 1.F, below). Alliant Energy currently guarantees all
commercial paper notes issued by AER, as well as borrowings under the bank
credit facilities maintained by AER.(5) At March 31, 2002, AER had issued and
outstanding $468.7 million of commercial paper notes.
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(3) See n. 1, above.
(4) WP&L is currently authorized by the PSCW to make short-term borrowings under
the Utility Money Pool in an aggregate principal amount outstanding at any
one time not to exceed $240 million. Under Wisconsin law, WP&L is prohibited
from making any loan to any affiliate, including any loan of surplus funds
through a system money pool arrangement.
(5) The Commission noted in the Current Money Pool Order that Rule 52 exempts
AER's financing arrangements that comply with its terms.
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C. Specific Authorizations Requested. In this Application or
Declaration, the applicants seek to restate, modify and extend their
authorization under the Current Money Pool Order for the period through
December 31, 2004 ("Authorization Period"). Specifically, authorization is
requested for each of the following proposed transactions:
1. Alliant Energy requests authority to issue and sell from time to
time commercial paper to dealers and notes and other forms of
short-term indebtedness to banks and other institutional lenders
("Short-term Debt") in an aggregate principal amount at any time
outstanding not to exceed $1 billion (its current authorization) and to
utilize the proceeds thereof to fund loans to IP&L and Alliant Services
through the Utility Money Pool and to AER and the other participating
Non-Utility Subsidiaries through the Non-Utility Money Pool, and for
other corporate purposes, including funding of investments in EWGs and
FUCOs. WP&L intends to terminate its participation in the Utility Money
Pool and is therefore not an applicant in this proceeding.
2. IP&L requests authorization to issue and sell Short-term Debt in a
principal amount which, when added to the principal amount of any
borrowings by IP&L under the Utility Money Pool, will not at any time
exceed $300 million. To the extent required, the Utility Money Pool
participants request authorization to make loans and extend credit to
each other under the Utility Money Pool.(6)
3. Alliant Energy seeks to have the flexibility to either guarantee
borrowings by AER to fund the Non-Utility Money Pool, as is currently
the case, or to make direct loans to the Non-Utility Money Pool.
Accordingly, as an alternative to making direct loans to the
Non-Utility Money Pool, Alliant Energy requests authorization to
guarantee borrowings by AER in an aggregate amount not to exceed $700
million at any time outstanding to fund loans to Non-Utility
Subsidiaries through the Non-Utility Money Pool.(7)
4. Alliant Energy, on behalf of itself and its participating Utility
and Non-Utility Subsidiaries, proposes to maintain and continue the
operation of the Utility Money Pool and the Non-Utility Money Pool,
with certain changes described below.
Upon the effective date of the Commission's final order in this
proceeding, the applicants will relinquish their authority under the Current
Money Pool Order, as modified by the terms of the Commission's October 24, 2001
order approving the merger of IPC into IES.
-------------------
(6) Borrowings by and extensions of credit to Alliant Services under the Utility
Money Pool to finance the existing business of Alliant Services will be
exempt pursuant to Rules 52 and 45(b)(1).
(7) The guaranty authority requested herein is in addition to the guaranty
authority that Alliant Energy has obtained in File No. 70-9891 (Holding Co.
Act Release No. 27448, Oct. 3, 2001).
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D. Reasons for Proposed Changes in Short-term Borrowing Arrangements.
Under the Current Money Pool Order, short-term borrowings and/or commercial
paper sales by Alliant Energy represent the only source of external funds that
are available for short-term borrowings by IP&L, WP&L and Alliant Services; none
of these companies currently maintains any external short-term credit
facilities, and IP&L has no authority under the Current Money Pool Order to
incur short-term indebtedness, other than through the Utility Money Pool.(8)
Until recently, Alliant Energy's commercial paper was rated A-1 by S&P and P-1
by Moody's. Thus, Alliant Energy's effective cost of funds was equal to or lower
than the effective cost of funds that any of the Utility Money Pool participants
could have obtained on its own by issuing commercial paper and other forms of
short-term notes to lenders other than Alliant Energy. Alliant Energy and the
other Utility Money Pool participants were also able to realize administrative
cost reductions by consolidating all short-term borrowing arrangements at the
Alliant Energy level. Recently, however, Alliant Energy's commercial paper was
downgraded to A-2 by S&P and to P-2 by Moody's. Under the Current Money Pool
Order, Alliant Energy is not authorized to issue commercial paper unless it is
rated at least A-1 by S&P or at least P-1 by Moody's. Thus, without the relief
requested herein, Alliant Energy is effectively foreclosed from issuing
commercial paper in amounts exceeding that permitted by Section 6(b) of the Act,
even though commercial paper rated A-2/P-2 continues to represent Alliant
Energy's lowest cost short-term borrowing option.(9)
Furthermore, with the downgrading of its commercial paper rating,
Alliant Energy has determined that IP&L and WP&L may have the ability to issue
commercial paper or other forms of short-term debt at a lower effective cost
than Alliant Energy. Accordingly, as described below, IP&L is seeking authority
in this proceeding to issue Short-term Debt directly when such borrowings would
have a lower effective cost than borrowings under the Utility Money Pool. Also,
because of the downgrading in Alliant Energy's commercial paper, it is not
possible at the current time for WP&L to participate in the Utility Money Pool
as a borrower.(10) WP&L will therefore establish its own external short-term
funding arrangements and terminate its participation in the Utility Money
Pool.(11) Nevertheless, Alliant Energy wishes to maintain and fund two separate
money pools such that, in the event Alliant Energy's commercial paper rating is
-------------------
(8) Although external borrowings by WP&L and Alliant Services would be exempt
under Rule 52, both companies currently satisfy all of their requirements
for short-term indebtedness through borrowings under the Utility Money Pool.
(9) Since December 1, 2001, Alliant Energy has relied upon the exemption
afforded by Section 6(b) of the Act to issue commercial paper.
(10) As previously noted, Wisconsin law prohibits WP&L from extending credit to
any affiliate, through a money pool or otherwise. In addition, the PSCW's
approval for WP&L to participate in the Utility Money Pool as a borrower was
originally conditioned upon Alliant Energy having an A-1/P-1 rating for its
commercial paper and maintaining completely segregated external funding
arrangements for the Utility Money Pool and the Non-Utility Money Pool.
Since Alliant Energy's commercial paper is no longer rated A-1/P-1, there is
no choice but to have WP&L obtain its own external sources of short-term
debt.
(11) External short-term borrowings by WP&L will be exempt under Rule 52(a) to
the extent approved by the PSCW.
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restored to A-1/P-1, the current Utility Money Pool structure could be restored
(i.e., with WP&L as a participating Utility Money Pool borrower), subject to
receipt of any necessary regulatory approvals.
E. Description of Short-term Debt. Alliant Energy and IP&L propose to
issue and sell from time to time Short-term Debt in the form of commercial paper
notes, bank notes, and other forms of short-term indebtedness. All Short-term
Debt will have maturities of less than one year from the date of issuance.
Alliant Energy requests authority to issue up to $1.0 billion of Short-term Debt
at any time outstanding, and IP&L requests authorization to issue Short-term
Debt and/or incur borrowings under the Utility Money Pool in an aggregate
principal amount at any time outstanding not to exceed $300 million.
Alliant Energy proposes to use up to $350 million of the proceeds of
Short-term Debt at any one time outstanding to make loans to IP&L and Alliant
Services through the Utility Money Pool and up to $700 million at any one time
outstanding to make loans to the Non-Utility Subsidiaries through the
Non-Utility Money Pool. IP&L also proposes to utilize proceeds of Short-term
Debt to make advances to the Utility Money Pool, but only to the extent that
such borrowing capacity is not required by IP&L in order to satisfy its own
needs.
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 nonfinancial corporations.
Commercial paper issued by Alliant Energy and IP&L will be rated investment
grade by S&P or Moody's.
Alliant Energy and IP&L may also establish and maintain back-up credit
lines with banks or other institutional lenders to support their commercial
paper program(s) and other credit arrangements and/or borrowing facilities
generally 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 and having commitment periods not longer than
the Authorization Period. Only the amounts drawn and outstanding under these
agreements and facilities will be counted against the proposed limits on
Short-term Debt.
The effective cost of money on all Short-term Debt will not exceed at
the time of issuance 300 basis points over the London Interbank Offered Rate
("LIBOR") for maturities of one year or less.
Alliant Energy represents that it will maintain common equity as a
percentage of its consolidated capitalization (inclusive of Short-term Debt) at
30% or above during the Authorization Period, and will also maintain common
equity as a percentage of capitalization (inclusive of Short-term Debt) of WP&L
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and IP&L at 30% or above during the Authorization Period. As indicated, at
March 31, 2002, Alliant Energy had issued and outstanding $47.2 million of
Short-term Debt in the form of commercial paper notes. At March 31, 2002,
Alliant Energy's consolidated capitalization consisted of 39.2% common equity,
2.4% preferred stock, 54% long-term debt and 4% Short-term Debt. If the full
amount of short-term borrowings for which authority is sought in this proceeding
($1 billion) were outstanding on such date, Alliant Energy's common equity as a
percentage of consolidated capitalization (inclusive of Short-term Debt) would
be 33.1%.
F. Operation of Money Pools.
------------------------
1. Utility Money Pool. Alliant Energy, IP&L and Alliant Services
will continue to participate in the Utility Money Pool, which will be operated
and administered by Alliant Services in the same manner in which it now is, with
the exception that funds made available to the Utility Money Pool from external
sources may be derived from external borrowings by Alliant Energy or IP&L, or
both. Filed herewith as Exhibit B-1 is a copy of the proposed Amended and
Restated Utility Money Pool Agreement, which incorporates this alternative
funding option.
Under the proposed terms of the Amended and Restated Utility Money Pool
Agreement, funds would be available from the following sources for short-term
loans to the Utility Money Pool participants (other than Alliant Energy) from
time to time: (1) surplus funds in the treasuries of any of the Utility Money
Pool participants ("Internal Funds"), and (2) proceeds received by any of the
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 Utility Money Pool, may determine would
result in a lower cost of borrowing, consistent with the individual borrowing
needs and financial standing of Utility Money Pool participants that invest
funds in the Utility Money Pool.
Each Utility Money Pool participant that is authorized or permitted to
borrow from the Utility Money Pool would borrow pro rata from each Utility Money
Pool participant that advances funds to the Utility Money Pool in the proportion
that the total amount advanced by such participant bears to the total amount
then advanced to the 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 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 Utility Money
Pool.
The cost of compensating balances, if any, and fees paid to banks to
maintain credit lines and accounts by Alliant Energy or IP&L that are used to
fund loans to the Utility Money Pool would initially be paid by the party
maintaining such credit lines and accounts. These costs would be retroactively
allocated every month among the Utility Money Pool borrowers in proportion to
each such borrowers' estimated peak short-term borrowing requirements.
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The daily outstanding balance of all loans to the 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
Utility Money Pool by any participant will be equal to the cost of borrowing
from the 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 Utility Money Pool at any one time consist of both Internal
Funds and External Funds.
Funds not required by the Utility Money Pool participants to make loans
(with the exception of funds required to satisfy the 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, 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 Utility Money Pool participants that
have invested funds in accordance with the proportion that each participant's
average contribution of funds in the Utility Money Pool for the month bears to
the total amount of funds invested in the Utility Money Pool for the month.
Each participant receiving a loan through the 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 Utility Money Pool may be prepaid by
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the borrower without premium or penalty and without prior notice. No loans
through the Utility Money Pool would be made to, and no borrowings through the
Utility Money Pool would be made by, Alliant Energy.
2. Non-Utility Money Pool. The Non-Utility Money Pool will continue to
be operated on the same terms and conditions as the Utility Money Pool, except
that, as indicated above, instead of guaranteeing a separate commercial paper
facility maintained by AER to fund the Non-Utility Money Pool, Alliant Energy
intends for the foreseeable future to directly fund the Non-Utility Money with
up to $700 million of proceeds of commercial paper and other short-term
borrowings. This will enable AER to terminate its separate commercial paper
facility, thereby eliminating duplicate program costs. Notwithstanding the
foregoing, in the event that Alliant Energy subsequently determines to restore
AER's separate commercial paper facility, it seeks to have the flexibility to
guarantee borrowings by AER. Accordingly, Alliant Energy requests authority to
guarantee up to $700 million borrowings by AER in order to fund the Non-Utility
Money Pool in lieu of making direct advances to the Non-Utility Money Pool in
that amount. Filed herewith as Exhibit B-2 is a copy of the proposed Amended and
Restated Non-Utility Money Pool Agreement.
The interest rates for Internal Funds and External Funds loaned through
or invested in the Non-Utility Money Pool will be determined in the same manner
as described above. 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.
In addition to Alliant Energy and AER, the following direct and
indirect subsidiaries of AER are currently participants in the Non-Utility Money
Pool:
Alliant Energy Field Services, LLC
Alliant Energy Generation, Inc.
Alliant Energy Integrated Services Company
Alliant Energy Integrated Services - Energy Management LLC Alliant
Energy Integrated Services - Energy Solutions LLC Alliant Energy
International, Inc.
Alliant Energy Investments, Inc.
Alliant Energy Transportation Inc.
Capital Square Financial Corporation
Cedar Rapids and Iowa City Railway Company
Cogenex Corporation
Energy Performance Services, Inc.
Energys, Inc.
Heartland Energy Group, Inc.
Heartland Properties, Inc.
Heartland Energy Services, Inc.
IEI Barge Services, Inc.
Industrial Energy Applications, Inc.
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Industrial Energy Applications Delaware Inc.
Iowa Land and Building Company
Prairie Ridge Business Park, L.C.
RMT, Inc.
Schedin & Associates, Inc.
SVBK Consulting Group, Inc.
Transfer Services, Inc.
Whiting Petroleum Corporation
Williams Bulk Transfer Inc.
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.
G. Use of Proceeds. As indicated above, the proceeds of Short-term
Debt issued by Alliant Energy will be used primarily to fund loans to its
subsidiaries through the Utility and Non-Utility Money Pools, and for other
lawful corporate purposes, including temporary funding of investments in EWGs
and FUCOs and other exempt or authorized investments (e.g., "energy-related
companies" under Rule 58), subject to the limitations of Rule 53 or Rule 58, as
applicable, or the limitations imposed under any applicable order(s). The
proceeds of Short-term Debt issued by IP&L and of Money Pool borrowings by IP&L
and Alliant Services will be used for working capital, to fund capital projects,
and for other lawful corporate purposes, provided, however, that no part of the
proceeds of Short-term Debt issued by IP&L or Money Pool borrowings by IP&L or
Alliant Services will be used to make investments in any EWG or FUCO. The
proceeds of borrowings under the Non-Utility Money Pool by AER and the other
participating Non-Utility Subsidiaries will be used for working capital, to fund
capital projects, and for other lawful corporate purposes, including but not
limited to temporarily funding of investments in EWGs and FUCOs and other exempt
or authorized investments (e.g., "energy-related companies" under Rule 58),
subject to the limitations of Rule 53 or Rule 58, as applicable, or the
limitations imposed under any applicable order(s).
H. Reports. Alliant Services will continue to administer the Utility
and Non-Utility Money Pools and provide cash management and banking services to
the participants on an "at cost" basis. Alliant Services will prepare and file
reports pursuant to Rule 24 with respect to the external short-term financing
activity of Alliant Energy and IP&L and borrowings under the Utility Money Pool
and certificates on Form U-6B-2 pursuant to Rule 52 with respect to external
short-term financing activity of AER and borrowings under the Non-Utility Money
Pool.(12) These reports will be filed within 45 days of the end of each calendar
quarter.
-------------------
(12) In order to combine information on all Utility Money Pool activity in one
report, it is proposed that information on borrowings by Alliant Services
under the Utility Money Pool, although exempt pursuant to Rule 52, be
combined with information on Utility Money Pool activity of the other
Utility Money Pool participants on the Rule 24 reports rather than reported
separately on Form U-6B-2.
13
ITEM 2. FEES, COMMISSIONS AND EXPENSES.
------------------------------
The fees, commissions and expenses incurred or to be incurred in
connection with the transactions proposed herein are estimated at not more than
$75,000. Rating agency fees (for the commercial paper) and compensating balances
and other fees paid to banks to maintain the credit lines supporting the
commercial paper are included in the proposed limit on the effective cost of
money on Short-term Debt.
ITEM 3. APPLICABLE STATUTORY PROVISIONS.
-------------------------------
A. General. Sections 6(a), 7, 9(a), 10, 12, 32 and 33 of the Act and
Rules 24, 42, 43, 45 and 52 thereunder are applicable to the proposed
transactions.
B. Rule 53/54 Analysis. The proposed transactions are also subject to
the requirements of Rules 53 and 54. Under Rule 53, in determining whether to
approve the issue or sale of any security (including any guarantee) by a
registered holding company for the purpose of financing the acquisition of any
EWG, the Commission may not make certain adverse findings under Sections 7 and
12 of the Act if the conditions set forth in paragraphs (a), (b) and (c) of
Rule 53 are satisfied. Rule 54 provides that in determining whether to approve
the issue or sale of a security by a registered holding company for purposes
other than the acquisition of an EWG or FUCO, or other transactions by such
registered holding company or its subsidiaries other than with respect to EWGs
or FUCOs, the Commission shall not consider the effect of the capitalization or
earnings of any subsidiary which is an EWG or a FUCO upon the registered holding
company if paragraphs (a), (b) and (c) of Rule 53 are satisfied.
Alliant Energy currently does not meet all of the conditions of
Rule 53(a). As of March 31, 2002, Alliant Energy's "aggregate investment," as
defined in Rule 53(a)(1), in EWGs and FUCOs was approximately $762.1 million, or
approximately 94.33% of Alliant Energy's average "consolidated retained
earnings," also as defined in Rule 53(a)(1), for the four quarters ended
March 31, 2002 ($807.9 million), which exceeds the 50% "safe harbor" limitation
contained in Rule 53(a). However, by order dated October 3, 2001 (Holding Co.
Act Release No. 27448), the Commission has authorized Alliant Energy to increase
its "aggregate investment" in EWGs and FUCOs to an amount equal to 100% of
Alliant Energy's average "consolidated retained earnings." Therefore, although
Alliant Energy's "aggregate investment" in EWGs and FUCOs currently exceeds the
50% "safe harbor" limitation, this investment level is permitted under the
October 3, 2001 order.
In any event, even taking 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, since the issuance of the October 3, 2001 order, there
has been no material adverse impact on Alliant Energy's consolidated
capitalization resulting from Alliant Energy's investments in EWGs and FUCOs. At
March 31, 2002, Alliant Energy's consolidated capitalization consisted of 39.6%
common equity, versus 37.3% at September 30, 2001 (the end of the quarter
immediately preceding the October 3, 2001 order). The transactions proposed
herein merely continue existing short-term funding arrangements at the same
14
authorized levels. Hence, the proposed transactions will not have any material
impact on capitalization. Finally, since the date of the October 3, 2001 order,
there has been no material change in Alliant Energy's level of earnings from
EWGs and FUCOs.
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.
ITEM 4. REGULATORY APPROVALS.
--------------------
The participation by IP&L in the Utility Money Pool under the Amended
and Restated Utility Money Pool Agreement is subject to the approval of Illinois
Commerce Commission ("ICC") and the Minnesota Public Utilities Commission
("MPUC"). In addition, the issuance of Short-term Debt by IP&L requires approval
by the MPUC. IP&L has filed applications with the ICC and MPUC for approval of
the proposed transactions. (Exhibits D-1, D-3 and D-5 hereto). The orders issued
by the ICC and MPUC will be filed as Exhibits D-2, D-4 and D-6 by Post-Effective
Amendment in this proceeding. Except as provided above, no state commission and
no federal commission, other than this Commission, has jurisdiction over the
proposed transactions.
ITEM 5. PROCEDURE.
---------
The Commission has published a notice under Rule 23 with respect to the
filing of this Application or Declaration, and no request for hearing was made.
The applicants request that the Commission's order approving the proposed
transactions be issued as soon as its rules permit, and that such order reserve
jurisdiction over the issuance of Short-term Debt by IP&L and IP&L's
participation in the Utility Money Pool under the Amended and Restated Utility
Money Pool Agreement pending receipt by IP&L of orders of the ICC and MPUC. The
applicants further request that there should not be a 30-day waiting period
between issuance of the Commission's order and the date on which the order are
to become effective, hereby waive a recommended decision by a hearing officer or
any other responsible officer of the Commission, and consent that the Division
of Investment Management may assist in the preparation of the Commission's
decision and/or orders, unless the Division opposes the matters proposed herein.
ITEM 6. EXHIBITS AND FINANCIAL STATEMENTS.
---------------------------------
A. EXHIBITS.
--------
A - None.
15
B-1 - Form of Amended and Restated Utility Money Pool Agreement
(including form of grid note). (Previously filed).
B-2 - Form of Amended and Restated Non-Utility Money Pool
Agreement (including form of grid note). (Previously
filed).
C - None.
D-1 - Application of IP&L to Illinois Commerce Commission for
approval of Amended and Restated Utility Money Pool
Agreement. (Filed herewith).
D-2 - Order of Illinois Commerce Commission approving Amended
and Restated Utility Money Pool Agreement. (To be filed by
amendment).
D-3 - Application of IP&L to Minnesota Public Utilities
Commission for approval of Amended and Restated Utility
Money Pool Agreement. (Filed herewith).
D-4 - Order of Minnesota Public Utilities Commission approving
Amended and Restated Utility Money Pool Agreement. (To be
filed by amendment).
D-5 - Application of IP&L to Minnesota Public Utilities
Commission for approval of capital structure. (Filed
herewith).
D-6 - Order of the Minnesota Public Utilities Commission
approving capital structure of IP&L. (To be filed by
amendment).
E - None.
F - Opinion of Counsel. (Filed herewith).
G - Form of Federal Register Notice. (Previously filed).
B. FINANCIAL STATEMENTS.
--------------------
FS-1 Consolidated Balance Sheet of Alliant Energy
Corporation as of December 31, 2001 (incorporated by
reference to the Annual Report on Form 10-K of
Alliant Energy Corporation for the year ended
December 31, 2001) (File No. 1-9894).
FS-2 Consolidated Statement of Income of Alliant Energy
Corporation for the year ended December 31, 2001
(incorporated by reference to the Annual Report on
Form 10-K of Alliant Energy Corporation for the year
ended December 31, 2001) (File No. 1-9894).
16
FS-3 Balance Sheet of IES Utilities Inc., as of December
31, 2001 (incorporated by reference to the Annual
Report on Form 10-K of IES Utilities, Inc. for the
year ended December 31, 2001) (File No. 0-4117-1).
FS-4 Statement of Income of IES Utilities Inc., for the
year ended December 31, 2001 (incorporated by
reference to the Annual Report on Form 10-K of IES
Utilities, Inc. for the year ended December 31, 2001)
(File No. 0-4117-1).
FS-5 Balance Sheet of IPC, as of December 31, 2001
(incorporated by reference to Amendment No. 1 to the
Current Report on Form 8-K/A of Alliant Energy
Corporation dated February 20, 2001) (File No.
1-9894).
FS-6 Statement of Income of IPC, for the year ended
December 31, 2001 (incorporated by reference to
Amendment No. 1 to the Current Report on Form 8-K/A
of Alliant Energy Corporation dated February 20,
2001) (File No. 1-9894).
FS-7 Unaudited Pro Forma Combined Balance Sheet of
Interstate Power and Light Company, as of December
31, 2001 (incorporated by reference to the Current
Report on Form 8-K of Interstate Power and Light
Company dated April 24, 2002) (File No. 0-4117-1).
FS-8 Consolidated Balance Sheet of Alliant Energy
Corporation as of March 31, 2002 (incorporated by
reference to the Quarterly Report on Form 10-Q of
Alliant Energy Corporation for the period ended March
31, 2002) (File No. 1-9894).
FS-9 Consolidated Statement of Income of Alliant Energy
Corporation for the three months ended March 31, 2002
(incorporated by reference to the Quarterly Report on
Form 10-Q of Alliant Energy Corporation for the
period ended March 31, 2002) (File No. 1-9894).
FS-10 Consolidated Balance Sheet of Interstate Power and
Light Company as of March 31, 2002 (incorporated by
reference to the Quarterly Report on Form 10-Q of
Interstate Power and Light Company for the period
ended March 31, 2002) (File No. 0-4117-1).
FS-11 Consolidated Statement of Income of Interstate Power
and Light Company for the three months ended March
31, 2002 (incorporated by reference to the Quarterly
Report on Form 10-Q of Interstate Power and Light
Company for the period ended March 31, 2002) (File
No. 0-4117-1).
17
ITEM 7. INFORMATION AS TO ENVIRONMENTAL EFFECTS.
---------------------------------------
The matters that are the subject of this Application or Declaration do
not 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 transactions proposed herein 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.
18
SIGNATURES
Pursuant to the requirements of the Public Utility Holding Company Act
of 1935, as amended, the undersigned companies have duly caused this statement
filed herein to be signed on their behalf by the undersigned thereunto duly
authorized.
ALLIANT ENERGY CORPORATION
INTERSTATE POWER AND LIGHT COMPANY
ALLIANT ENERGY CORPORATE SERVICES, INC.
ALLIANT ENERGY RESOURCES, INC.
WILLIAMS BULK TRANSFER INC.
By: /s/ F. J. Buri
-----------
Name: F. J. Buri
Title: Corporate Secretary
ALLIANT ENERGY GENERATION, INC.
ALLIANT ENERGY INTEGRATED SERVICES
COMPANY
ALLIANT ENERGY INTERNATIONAL, INC.
ALLIANT ENERGY INVESTMENTS, INC.
ALLIANT ENERGY TRANSPORTATION, INC.
COGENEX CORPORATION
ENERGY PERFORMANCE SERVICES, INC.
IOWA LAND AND BUILDING COMPANY
By: /s/ F. J. Buri
-----------
Name: F. J. Buri
Title: Secretary
CEDAR RAPIDS AND IOWA CITY RAILWAY
COMPANY
ENERGYS, INC.
HEARTLAND ENERGY GROUP, INC.
HEARTLAND ENERGY SERVICES, INC.
IEI BARGE SERVICES, INC.
INDUSTRIAL ENERGY APPLICATIONS, INC.
INDUSTRIAL ENERGY APPLICATIONS DELAWARE
INC.
TRANSFER SERVICES, INC.
By: /s/ Thomas L. Hanson
-----------------
Name: Thomas L. Hanson
Title: Treasurer and Secretary
(signatures continued on next page)
19
ALLIANT ENERGY FIELD SERVICES, LLC
By: /s/ Jim Overbey
-----------
Name: Jim Overbey
Title: Manager
ALLIANT ENERGY INTEGRATED SERVICES-
ENERGY MANAGEMENT LLC
ALLIANT ENERGY INTEGRATED SERVICES-
ENERGY SOLUTIONS LLC
By: /s/ Charles Castine
---------------
Name: Charles Castine
Title: Manager
WHITING PETROLEUM CORPORATION
By: /s/ F. J. Buri
-----------
Name: F. J. Buri
Title: Assistant Secretary
RMT, INC.
By: /s/ Thomas L. Hanson
-----------------
Name: Thomas L. Hanson
Title: Assistant Treasurer
HEARTLAND PROPERTIES, INC.
CAPITAL SQUARE FINANCIAL CORPORATION
By: /s/ Ruth A. Domack
---------------
Name: Ruth A. Domack
Title: President
(signatures continued on next page)
20
PRAIRIE RIDGE BUSINESS PARK, L.C.
BY: IOWA LAND AND BUILDING COMPANY,
A PARTNER
By: /s/ Thomas L. Aller
----------------
Name: Thomas L. Aller
Title: Vice President
SCHEDIN & ASSOCIATES, INC.
SVBK CONSULTING GROUP, INC.
By: /s/ John T. Steinhoff
------------------
Name: John T. Steinhoff
Title: President
Date: June 21, 2002
STATE OF ILLINOIS
ILLINOIS COMMERCE COMMISSION
IN RE:
INTERESTATE POWER and light COMPANY DOCKET NO.
APPLICATION FOR APPROVAL OF
TO AFFILIATED INTEREST CONTRACT
Interstate Power and Light Company (IPL or "Applicant"), an Iowa
Corporation submits this Application pursuant to the Illinois Public Utilities
Act (the "Act") for approval of an affiliated interest contract. Applicant is a
public utility subject to Section 7-101(3) of the Act. Applicant provides
electric and gas utility service to the public in Illinois. The particular
affiliated interest contract in question is attached to this Application as
Exhibit 1.1. In support of this Application, Applicant states:
1. On November 10, 1995, WPL Holdings, Inc. ("Holdings"), a holding
company incorporated under the laws of the State of Wisconsin, IES Industries
Inc., ("Industries") a holding company incorporated under the laws of the State
of Iowa; and Interstate Power Company (IPC), entered into an Agreement and Plan
of Merger. After the effective date of the Merger, the name of Holdings was
changed to Alliant Energy Corporation ("Alliant Energy")(1).
2. Under the terms of the Merger Agreement, IPC, IES Utilities Inc., a
wholly-owned subsidiary of Industries operating as an electric and gas public
utility in Iowa; and WPL, a wholly-owned subsidiary of Holdings operating as an
electric and gas public utility in Wisconsin became wholly-owned subsidiaries of
----------
(1) At the close of the merger Alliant Energy Corporation was using the name
of Interstate Energy Corporation.
1
Alliant Energy. Alliant Energy is a registered Public Utility Holding Company
under the Public Utility Holding Company Act of 1935.
3. On January 2, 2002 IPC merged into IES, which subsequently changed its
name to Interstate Power and Light Company. This merger was approved by the
Commission's May 23, 2001 Order in Docket No. 00-0261. IPL is an Iowa
Corporation operating as a public utility in Illinois pursuant to the Act and as
a public utility in Iowa and Minnesota. IPL supplies electric and, gas service
in the northwestern section of Illinois.
4. The Applicant's evidence demonstrated that under the terms of the
Alliant Energy Merger, Alliant Energy would be able to consolidate certain
corporate and administrative functions of Holdings, IES and IPC, thereby
eliminating duplicative positions, reducing other non-labor corporate and
administrative expenses and limiting or avoiding duplicative expenditures for
administrative and information systems. In order to achieve these savings a
service company - Alliant Energy Corporate Services, Inc. (AECS) was formed.
5. On May 9, 1999, in furtherance of reducing other non-labor corporate
and administrative, IPC in Docket No. 99-0228 filed for Commission authorization
to participate in a money pool ("Utility Money Pool"). In approving that filing
in its Order dated September 24, 1999, the Commission found that the purpose of
the Utility Money Pool was to function as an inter-company revolving credit
facility for the participating utility subsidiaries. AECS administers the
Utility Money Pool on an "at cost" basis. Funds will be made available from such
2
sources and in such order as AECS, as administrator of the Utility Money Pool,
may determine will result in a lower cost of borrowing consistent with the
individual borrowing needs and financial standing of the borrowing participant.
AECS provides each money pool participant with periodic activity and cash
accounting reports. No participant will be required to borrow through the
Utility Money Pool if it is determined that it could (and has authority to)
affect a borrowing at a lower cost directly from a bank or other financial
institution. The use of the Utility Money Pool is beneficial with respect to
cost control through borrowing at more favorable rates, either through the
Utility Money Pool or a competitive financial institution.
6. The Applicant seeks, with the Commission's approval, to restate, modify
and extend the Current Utility Money Pool. IPL is requesting authorization from
the Securities and Exchange Commission (SEC) to issue and sell Short-term Debt
in principal amounts which, when added to the principal amounts of any
borrowings by IPL under the Utility Money Pool, do not at any time exceed $300
million.
REASONS FOR PROPOSED CHANGES IN SHORT-TERM BORROWING ARRANGEMENTS
-----------------------------------------------------------------
Under the Utility Money Pool, short-term borrowings and/or commercial
paper sales by Alliant Energy represent the only source of external funds that
is available for borrowings by the Utility Subsidiaries and AECS, and none of
the Utility Subsidiaries currently maintains any external credit facilities.
Until recently, Alliant Energy's commercial paper was rated A-1 by S&P and P-1
by Moody's. Thus, Alliant Energy's effective cost of funds was equal to or lower
than the effective cost of funds that any of the Utility Subsidiaries could have
obtained on its own by issuing commercial paper and other forms of short-term
3
notes to lenders other than Alliant Energy. Alliant Energy and the Utility
Subsidiaries were also able to realize administrative cost reductions by
consolidating all short-term borrowing arrangements at the Alliant Energy level.
Recently, however, Alliant Energy's commercial paper was downgraded to A-2 by
S&P, and to P-2 by Moody's. Currently, Alliant Energy is not authorized by SEC
to issue commercial paper unless it is rated at least A-1 by S&P or at least P-1
by Moody's. Moreover, with the downgrade in its commercial paper rating, Alliant
Energy has determined that some or all of the Utility Subsidiaries may have the
ability to issue commercial paper or other forms of short-term debt at a lower
effective cost than Alliant Energy. Accordingly, IPL intends to issue Short-term
Debt directly when such borrowings would have a lower effective cost than
borrowings under the Utility Money Pool.
DESCRIPTION OF SHORT-TERM BORROWINGS
------------------------------------
1. IPL proposes to issue and sell from time to time Short-term Debt in the
form of commercial paper notes, bank notes, and other forms of short-term
indebtedness. All Short-term Debt will have maturities of less than one year
from the date of issuance. IPL is seeking authorization from the SEC to issue
Short-term Debt and/or incur borrowings under the Utility Money Pool in
aggregate principal amounts at any time outstanding not to exceed $300 million.
2. 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
4
paper will re-offer 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 re-offered to investors such as commercial
banks, insurance companies, pension funds, investment trusts, foundations,
colleges and universities, finance companies and non-financial corporations.
3. IPL 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 limits on Short-term Debt.
4. The effective cost of money on all Short-term Debt will not exceed at
the time of issuance 300 basis points over the London Interbank Offered Rate
("LIBOR") for maturities of one year or less.
OPERATION OF MONEY POOLS
------------------------
1. The Utility Money Pool will be operated and administered in
substantially the same manner in which it now is, with the exception that funds
made available to the Utility Money Pool from external sources may be derived
from external borrowings by Alliant Energy or by any of the other Utility Money
Pool participants. Filed herewith as Exhibit 1.1 is a copy of the proposed
Amended and Restated Utility Money Pool Agreement, which incorporates this
alternative funding option.
5
2. Under the proposed terms of the Amended and Restated Utility Money Pool
Agreement, funds would be available from the following sources for short-term
loans to the Utility Money Pool participants (other than Alliant Energy) from
time to time: (1) proceeds received by Alliant Energy and/or any of the other
Utility Money Pool participants from the issuance of Short-term Debt ("External
Funds"), to the extent permitted by applicable laws and regulatory orders, and
(2) surplus funds in the treasuries of any of the Utility Money Pool
participants ("Internal Funds"). Funds would be made available from such sources
in such order as AECS, as the administrator of the Utility Money Pool, may
determine would result in a lower cost of borrowing, consistent with the
individual borrowing needs and financial standing of Utility Money Pool
participants that invest funds in the Utility Money Pool.
3. Each Utility Money Pool participant that is authorized or permitted to
borrow from the Utility Money Pool would borrow pro rata from each Utility Money
Pool participant that invests funds in the Utility Money Pool in the proportion
that the total amount invested by such investing participant bears to the total
amount then invested in the 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
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 invested in the Utility
Money Pool.
4. The cost of compensating balances, if any, and fees paid to banks to
maintain credit lines and accounts by Alliant Energy or any other Utility Money
6
Pool participants that are used to fund loans to the Utility Money Pool would
initially be paid by the party maintaining such credit lines and accounts. These
costs would be retroactively allocated every month among the Utility Money Pool
borrowers in proportion to each such borrower's estimated peak short-term
borrowing requirements.
5. The daily outstanding balance of all loans to the 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.
7
6. Funds not required by the Utility Money Pool participants to make loans
(with the exception of funds required to satisfy the Utility Money Pool's
liquidity requirements) would ordinarily be invested in one or more short-term
investments, including: (i) interest-bearing accounts with banks; (ii)
obligations issued or guaranteed by the U.S. government and/or its agencies and
instrumentalities, 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.
7. Any income earned on investments of surplus funds would be allocated at
the end of each calendar month among those Utility Money Pool participants that
have invested funds in accordance with the proportion that each participant's
average contribution of funds in the Utility Money Pool for the month bears to
the total amount of funds invested in the Utility Money Pool for the month.
8. Each participant receiving a loan through the 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. The borrower without premium or penalty and without prior notice
may prepay all loans made through the Utility Money Pool. No loans through the
Utility Money Pool would be made to, and Alliant Energy would make no borrowings
through the Utility Money Pool.
8
CONCLUSION
For the reasons stated above, the Applicant respectfully requests the
Commission to issue an Order approving this Application. The Applicant believes
the restatement, modification and extension of the Current Utility Money Pool
further benefits its customers as a result of the Alliant Energy Merger as noted
by the Commission in its March 24, 1997 Order in Docket No. 96-1022.
Specifically, the Applicant requests the Commission to issue an order, pursuant
to Section 7-101 of the Act approving the contract with affiliated interests as
set forth in this Application. The specific agreement for which Interstate Power
and Light Company seeks Commission approval is the Amended and Restated Utility
Money Pool Agreement (Exhibit No. 1.1).
Respectfully submitted,
-------------------------------------
Kent M. Ragsdale
Managing Attorney
200 First Street S.E.
P.O. Box 351
Cedar Rapids, IA 52406
(319) 786-7765
(319) 786-4533 (fax)
kentragsdale@alliantenergy.com
Attorney for Interstate Power and Light Company
9
STATE OF MINNESOTA
PUBLIC UTILITIES COMMISSION
IN RE:
INTERESTATE POWER AND LIGHT COMPANY DOCKET NO.
APPLICATION FOR APPROVAL OF
AFFILIATED INTEREST CONTRACT
Interstate Power and Light Company ("IPL" or "Applicant"), an Iowa
Corporation submits this Application pursuant to the section 216B.48(3) of the
Minnesota Statutes for approval of an affiliated interest contract. Applicant
provides electric and gas utility service to the public in the State of
Minnesota. The particular affiliated interest contract in question is attached
to this Application as Exhibit A. In support of this Application, Applicant
states:
1. On November 10, 1995, WPL Holdings, Inc. ("Holdings"), a holding
company incorporated under the laws of the State of Wisconsin, IES Industries
Inc. ("Industries"), a holding company incorporated under the laws of the State
of Iowa and the parent of IES Utilities, Inc. ("IES"); and Interstate Power
Company ("IPC"), entered into an Agreement and Plan of Merger (the "Alliant
Merger"). After the effective date of the Alliant Merger, the name of Holdings
was changed to Alliant Energy Corporation ("Alliant Energy")(1).
----------
(1) At the close of the merger Alliant Energy Corporation was using the name
of Interstate Energy Corporation.
1
2. Under the terms of the Alliant Merger Agreement, IPC, IES, a
wholly-owned subsidiary of Industries operating as an electric and gas public
utility in Iowa; and WPL, a wholly-owned subsidiary of Holdings operating as an
electric and gas public utility in Wisconsin became wholly-owned subsidiaries of
Alliant Energy. Alliant Energy is a registered Public Utility Holding Company
under the Public Utility Holding Company Act of 1935.
3. Under the terms of the Alliant Energy Merger, Alliant Energy would be
able to consolidate certain corporate and administrative functions of Holdings,
IES and IPC, thereby eliminating duplicative positions, reducing other non-labor
corporate and administrative expenses and limiting or avoiding duplicative
expenditures for administrative and information systems. In order to achieve
these savings a service company - Alliant Energy Corporate Services, Inc. (AECS)
was formed.
4. In furtherance of reducing other non-labor corporate and
administrative, IPC filed for and received Commission authorization to
participate in a money pool ("Utility Money Pool").
5. The purpose of the Utility Money Pool is to function as an
inter-company revolving credit facility for the participating subsidiaries. AECS
administers the Utility Money Pool on an "at cost" basis. Funds are made
available from such sources and in such order as AECS, as administrator of the
Utility Money Pool, may determine will result in a lower cost of borrowing
2
consistent with the individual borrowing needs and financial standing of the
borrowing participant. AECS provides each money pool participant with periodic
activity and cash accounting reports. No participant will be required to borrow
through the Utility Money Pool if it is determined that it could (and has
authority to) affect a borrowing at a lower cost directly from a bank or other
financial institution. The use of the Utility Money Pool is beneficial with
respect to cost control through borrowing at more favorable rates, either
through the Utility Money Pool or a competitive financial institution.
6. On January 2, 2002 IPC merged into IES, which subsequently changed its
name to Interstate Power and Light Company (the "IPL Merger"). Upon the
effective date of the IPL Merger, IPL became subject to the jurisdiction of the
Commission. Prior to the IPL Merger, IES was a participant in the Utility Money
Pool.
7. The Applicant seeks, with the Commission's approval, to restate, modify
and extend the current Utility Money Pool Agreement.
REASONS FOR PROPOSED CHANGES IN SHORT-TERM BORROWING ARRANGEMENTS
-----------------------------------------------------------------
Under the Utility Money Pool, short-term borrowings and/or commercial
paper sales by Alliant Energy represent the only source of external funds that
is available for borrowings by the utility subsidiaries and AECS, and none of
the utility subsidiaries currently maintains any external credit facilities.
Until recently, Alliant Energy's commercial paper was rated A-1 by S&P and P-1
by Moody's. Thus, Alliant Energy's effective cost of funds was equal to or lower
3
than the effective cost of funds that any of the utility subsidiaries could have
obtained on its own by issuing commercial paper and other forms of short-term
notes to lenders other than Alliant Energy. Alliant Energy and the utility
subsidiaries were also able to realize administrative cost reductions by
consolidating all short-term borrowing arrangements at the Alliant Energy level.
Recently, however, Alliant Energy's commercial paper was downgraded to A-2 by
S&P and to P-2 by Moody's. With the downgrade in its commercial paper rating,
Alliant Energy has determined that some or all of the utility subsidiaries may
have the ability currently or in the future to issue commercial paper or other
forms of short-term debt at a lower effective cost than Alliant Energy.
Accordingly, IPL seek authority to issue Short-term Debt directly when such
borrowings would have a lower effective cost than borrowings under the Utility
Money Pool.
DESCRIPTION OF SHORT-TERM BORROWINGS
------------------------------------
1. In its capital structure filing with the Commission dated March 2002,
IPL proposed to issue and sell from time to time Short-term Debt in the form of
commercial paper notes, bank notes, and other forms of short-term indebtedness.
All Short-term Debt will have maturities of less than one year from the date of
issuance. IPL is also seeking authorization from the SEC to issue Short-term
Debt and/or incur borrowings under the Utility Money Pool in aggregate principal
amounts at any time outstanding not to exceed $180 million.
2. IPL also proposes to establish and maintain back-up credit lines with
banks or other institutional lenders to support its commercial paper program and
4
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.
OPERATION OF MONEY POOLS
------------------------
1. The Utility Money Pool will be operated and administered in
substantially the same manner in which it now is, with the exception that funds
made available to the Utility Money Pool from external sources may be derived
from external borrowings by Alliant Energy or by any of the other Utility Money
Pool participants. Filed herewith as Exhibit 1.1 is a copy of the proposed
Amended and Restated Utility Money Pool Agreement, which incorporates this
alternative funding option.
2. Under the proposed terms of the Amended and Restated Utility Money Pool
Agreement, funds would be available from the following sources for short-term
loans to the Utility Money Pool participants (other than Alliant Energy) from
time to time: (1) proceeds received by Alliant Energy and/or any of the other
Utility Money Pool participants from the issuance of Short-term Debt ("External
Funds"), to the extent permitted by applicable laws and regulatory orders, and
(2) surplus funds in the treasuries of any of the Utility Money Pool
participants ("Internal Funds"). Funds would be made available from such sources
in such order as AECS, as the administrator of the Utility Money Pool, may
determine would result in a lower cost of borrowing, consistent with the
individual borrowing needs and financial standing of Utility Money Pool
participants that invest funds in the Utility Money Pool.
5
3. Each Utility Money Pool participant that is authorized or permitted to
borrow from the Utility Money Pool would borrow pro rata from each Utility Money
Pool participant that invests funds in the Utility Money Pool in the proportion
that the total amount invested by such investing participant bears to the total
amount then invested in the 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
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 invested in the Utility
Money Pool.
4. The cost of compensating balances, if any, and fees paid to banks to
maintain credit lines and accounts by Alliant Energy or any other Utility Money
Pool participants that are used to fund loans to the Utility Money Pool would
initially be paid by the party maintaining such credit lines and accounts. These
costs would be retroactively allocated every month among the Utility Money Pool
borrowers in proportion to each such borrower's estimated peak short-term
borrowing requirements.
5. The daily outstanding balance of all loans to the 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
6
"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.
6. Funds not required by the Utility Money Pool participants to make loans
(with the exception of funds required to satisfy the Utility Money Pool's
liquidity requirements) would ordinarily be invested in one or more short-term
investments, including: (i) interest-bearing accounts with banks; (ii)
obligations issued or guaranteed by the U.S. government and/or its agencies and
instrumentalities, 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
7
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.
7. Any income earned on investments of surplus funds would be allocated at
the end of each calendar month among those Utility Money Pool participants that
have invested funds in accordance with the proportion that each participant's
average contribution of funds in the Utility Money Pool for the month bears to
the total amount of funds invested in the Utility Money Pool for the month.
8. Each participant receiving a loan through the 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. The borrower without premium or penalty and without prior notice
may prepay all loans made through the Utility Money Pool. No loans through the
Utility Money Pool would be made to, and Alliant Energy would make no borrowings
through the Utility Money Pool.
CONCLUSION
For the reasons stated above, the Applicant respectfully requests the
Commission to issue an Order approving this Application. The Applicant believes
the restatement, modification and extension of the current Utility Money Pool
Agreement to be in the best interests of its customers. Specifically, the
Applicant requests the Commission to issue an order, pursuant to Section
8
216(B).48, Minn. Stats., approving the contract with affiliated interests as set
forth in this Application. The specific agreement for which IPL seeks Commission
approval is the Amended and Restated Utility Money Pool Agreement (Exhibit 1.1).
Respectfully submitted,
-------------------------------------
Steven F. Price
Assistant Treasurer
Interstate Power and Light Company
P. O. Box 192
Madison, WI 53701-0192
Phone: 608-252-5728 Until 4/12/02
Phone: 608-458-5728 4/12/02 and after
9
BEFORE THE MINNESOTA PUBLIC UTILITIES COMMISSION
GREGORY SCOTT CHAIR
EDWARD A. GARVEY COMMISSIONER
MARSHALL JOHNSON COMMISSIONER
LEROY KOPPENDRAYER COMMISSIONER
PHYLLIS REHA COMMISSIONER
Petition of INTERSTATE POWER AND LIGHT COMPANY )
for approval of proposed Capital Structure for the Period Ending )
March 31, 2003 )
Docket No._____________________
INTRODUCTION
------------
TO THE MINNESOTA PUBLIC UTILITIES COMMISSION:
The Petitioner, INTERSTATE POWER AND LIGHT COMPANY (hereinafter sometimes
referred to as "IPL" or the "Company"), in accordance with Minnesota Statutes,
Section 216B.49 and Minnesota Rules, Parts 7825.1000 to 7825.1500, petitions the
Public Utility Commission of Minnesota ("Commission") for approval of its
proposed capital structure for calendar year 2002.
IPL requests that the Commission enter its order, to become immediately
effective, on or before April 15, 2002. IPL further requests that the order
approving the projected capital structure be effective until March 31, 2003.
IPL hereby waives a hearing on any and all matters covered by this Petition and
respectfully requests that, in accordance with the authority granted to the
Commission under Minnesota Statutes, Section 216B.26, the Order of the
Commission in this matter be declared in force and effective immediately upon
its being filed and served.
CONTEMPLATED CHANGES TO CAPITAL STRUCTURE:
------------------------------------------
The following table shows the actual and estimated capital structure for
Petitioner for 2001 and March 31, 2003.
1
<TABLE>
<CAPTION>
Interstate Power and Light Company
Capital structure
($millions)
(1) (2) (3) (4) (5) (6)
Actual 1/1/2001 Actual 9/30/2001 Actual 12/31/2001
------------------------ ------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C>
(1) Common Equity $ 796.8 47.8% $ 825.6 46.8% $ 821.9 45.4.0%
(2) Preferred Stock 53.8 3.2% 53.9 3.1% 53.9(a) 3.0%
(3) Long-Term Debt 640.4 38.4% 860 48.8% 898.1 49.6%
(4) Short-Term Debt 175.8 10.5% 24 1.4% 38.0 2.0%
-------- ------ -------- ------ -------- ------
(5) Total Capitalization $1,666.8 100.0% $1,763.5 100.0% $1,812.1 100.0%
Estimated 03/31/2003
With Maximum
Estimated 1/1/2002 Estimated 03/31/2003 Short-Term Notes
---------------------------- ---------------------------- --------------------------
(6) Common Equity $ 804.9 45.8% $ 909.8 45.3% $ 909.8 45.0%
(7) Preferred Stock 54 3.1% 150.0(a) 7.5% 150.0 7.4%
(8) Long-Term Debt 860 48.9% 782.9 39.0% 782.9 38.7%
(9) Short-Term Debt 2.2% 163.7 8.2% 8.9%
39.5 180.0(b)
-------- ------ -------- ------ -------- ------
(10) Total Capitalization $1758.4 100.0% $2,006.4 100.0% $2,022.7 100.0%
</TABLE>
(a) Reflects the retirement of approximately $59million of preferred stock
and the issuance of $150 million in new preferred stock.
(b) Reflects the issuance of additional unsecured short-term debt not to
exceed, at any one time, $ 180 Million. Pro-forma journal entries for
the issuance of securities are shown on Exhibit C, pages 1-2.
IPL presently contemplates the following changes in 2002 to its capital
structure:
a. Short-term Unsecured Debt
-------------------------
2
The Company plans to issue short-term unsecured debt not to exceed, at any
one time, $180 Million. Short-term debt as a percentage of total
capitalization for the period ending March 31, 2003 is estimated to range
from 2.0% to 8.2% through March 31, 2002, with an estimate of 8.2% at the
end of that period. If the maximum level of short-term debt were outstanding
at the end of March 31, 2003, the ratio of short-term debt to total
capitalization would be 8.9%.
b. Long-term Debt
--------------
The company does not plan to issue long-term debt during the period ending
March 31, 2003; however, the company plans to retire approximately
$76 million of higher coupon long-term debt using the proceeds from the
issuance of preferred equity securities described below. Long-term debt as a
percentage of total capitalization is expected to range from approximately
39% to 49.6% during the period ending March 31, 2003. If the maximum level
of short-term debt were outstanding at March 31, 2003, long-term debt as a
percentage of capitalization would be around 38.7%.
c. Preferred Equity
----------------
The company plans to retire up to $59 million of outstanding preferred
equity securities and to issue up to $150 million of new preferred equity
securities during the period ending March 31, 2003. The retirement is deemed
necessary because most of the preferred stock contains provisions that limit
the ability of IPL to issue unsecured debt. Preferred equity, as a
percentage of total capitalization, is expected to range from approximately
3.0% to 8.1% during the period ending March 31, 2003.
d. Common Equity
-------------
The company has no plans to issue common equity; however, the company's
parent plans to make an equity contribution to the company of up to
$170,000,000 during the period ending March 31, 2003. The change in common
equity for the period reflects the contributions from the company's parent,
earnings and dividends paid during the year. Common equity as a percent of
total capitalization is expected to range from approximately 43.0% to 46.9%.
If the maximum level of short-term debt were outstanding at year-end, common
equity as a percent of total capitalization would be approximately 45.0%.
3
PRIOR APPROVAL OF CAPITAL STRUCTURE
-----------------------------------
The Minnesota Public Utilities Commission, by Order in Docket
No. E,G-001/S-99-1629, entered December 16, 1999, approved the proposed capital
structure of Petitioner for calendar year 2001 and the first three months of
2002. The Order provided that the total capitalization for the order period not
exceed $527.9 million.
PROPOSED ORDER
--------------
IPL petitions the Minnesota Public Utilities Commission to issue an Order
approving the Company's proposed capital structure for the period ending
March 31, 2003. The individual components of the Company's proposed capital
structure for the period are as follows:
<TABLE>
<CAPTION>
03/31/03 03/31/03 Estimated
Period-End with Maximum Period
Target* ST Debt Range
---------- ------------ ---------
<S> <C> <C> <C>
Short-Term Debt 8.2% 8.9% 2.0% - 8.2%
Long-Term Debt 39.0 38.7 39.0% - 49.6%
Preferred Stock 7.5 7.4 3.0% - 8.1%
Common Equity 45.3 45.0 43.0% - 46.9%
-------- -------------
Total Capitalization 100.0% 100.0%
</TABLE>
* as a percent of total capitalization
The Company petitions the Commission to issue an Order approving a capital
structure for the Company, as shown above, with a 10 percent contingency range
above and below the 2002 year-end target amounts for common equity, preferred
stock, and long-term debt. The Company also requests that the Commission approve
a maximum total capitalization not to exceed $2,123.8 million. (The $2,123.8
million maximum total capitalization consists of the maximum expected year-end
capitalization of $2,022.7 million, including the maximum $ 180 Million
outstanding of short-term debt, plus a contingency equal to 5 percent of total
capitalization.)
In support of this Petition, IPL respectfully states and represents as follows:
A. NAME, ADDRESS, AND DESCRIPTION OF COMPANY
-----------------------------------------
4
INTERSTATE POWER AND LIGHT COMPANY is a corporation duly organized under the
laws of the State of Iowa on May 25, 1925, with its principal office located at
200 First Street, SE, Cedar Rapids, Iowa. It holds a Certificate of Authority
issued by the Secretary of State of Minnesota authorizing IPL to engage, among
other things, in the electric and gas public utility businesses in the State of
Minnesota. It is a "public utility" within the meaning of Section 1 of Section
49 of the Minnesota Public Utilities Act. Among other things, with authorization
by its Certificate of Incorporation, as amended, it serves electric energy to
the public in 21 counties in the State of Minnesota. It serves electric energy
and natural gas in the City of Albert Lea, Minnesota, and a number of smaller
Minnesota towns. It also serves electric energy and natural gas in various
counties in the States of Iowa and Illinois. As the result of a merger, since
April 21, 1998, IPL has been a subsidiary of Alliant Energy Corporation (AEC).
AEC, IPL's parent, is a Public Utility Holding Company regulated under the
Public Utility Holding Company Act of 1935, as amended.
B. NAME, ADDRESS, AND TELEPHONE NUMBER OF THE PERSON AUTHORIZED TO RECEIVE
-----------------------------------------------------------------------
NOTICES AND COMMUNICATIONS WITH RESPECT TO THE PETITION
-------------------------------------------------------
The names, addresses, and telephone numbers of the persons authorized to receive
notices and communication with respect to this Petition are:
Steven F. Price
Assistant Treasurer
Interstate Power and Light Company
222 West Washington Avenue
Madison, Wisconsin 53703
(608) 252-5728
Ritchie J. Sturgeon
Attorney
Alliant Energy Corporate Services, Inc.
222 West Washington Avenue
Madison, Wisconsin 53703
(608) 258-3951
C. DESCRIPTION OF THE SECURITIES TO BE ISSUED AND ANTICIPATED TERMS
----------------------------------------------------------------
5
A description of the Securities proposed to be issued by Petitioner during the
period ending March 31, 2003, is set forth in INTRODUCTION, supra, and is as
follows:
NOTES EVIDENCING BANK LOANS, COMMERCIAL PAPER AND INTER-COMPANY LOANS
---------------------------------------------------------------------
Short-term unsecured notes evidencing bank loans or commercial paper in an
aggregate principal amount not to exceed $ 180 Million. Such unsecured
short-term promissory notes evidencing bank loans and/or commercial paper may be
issued to Commercial Banks, Commercial Paper Dealers and Institutional Lenders.
None of the notes to be issued will have any voting rights.
In addition to, or in lieu of, issuing such short-term notes or commercial
paper, IPL may satisfy its short- term credit needs by borrowing from its
parent, AEC, or certain other utility affiliates through a utility money pool
arrangement among such companies. It is anticipated that AEC will be the primary
provider of funds to the utility money pool, and therefore the primary lender,
indirectly, to IPL of the funds borrowed by IPL from the pool. AEC will not
borrow money from the pool. Loans from the utility money pool are in the form of
short-term open account advances. Such short-term advances are charged interest
at market rates and due on demand, but in no event later than one year after the
debt is incurred. The utility money pool functions as an inter-company revolving
credit facility for IPL and its utility affiliates.
The aggregate short-term borrowings of IPL will not exceed $ 180 Million at any
one time.
PREFERRED EQUITY SECURITIES
---------------------------
Up to $150 million of redeemable cumulative preferred or trust preferred equity
securities, in one or more series, having a stated value expected to be $50 per
share with a dividend rate anticipated not to exceed 7.75%. A copy of the final
registration statement for the issuance of preferred equity securities will be
filed as an amendment to this application.
COMMON STOCK
------------
The Company's Dividend Reinvestment and Stock Purchase Plan (the "Plan") was
terminated on April 21, 1998. The Company has no plans to issue new equity
securities. See Exhibit G for a further description of the Company's Common
Stock.
6
D. ESTIMATED INTEREST COST, ISSUE DATE, AND MATURITY DATE
------------------------------------------------------
UNSECURED SHORT-TERM NOTES
--------------------------
The interest rate on short-term unsecured debt, including short-term loans from
the utility money pool, will be dependent upon the money market conditions at
the time the debt is incurred and will be at rates prevailing at such time for
borrowings of comparable quality. For purposes of this Petition, IPL's estimate
of the average short-term interest rate for the period ending March 31, 2003 is
3.00%.
Such borrowings on commercial paper shall mature not more than nine months from
the date of issuance, but in no event later than September 30, 2003. Such
borrowings on promissory notes to lending banks (bank loans) shall be on notes
to be issued on or before December 31, 2002 and to mature not later than
December 31, 2003. Loans from the utility money pool will be due on demand but
will mature not later than one year after the loan is made.
LONG-TERM DEBT
--------------
The Company has no plans at this time to issue long-term debt in 2002.
E. THE MANNER IN WHICH THE SECURITIES ARE TO BE ISSUED
---------------------------------------------------
UNSECURED SHORT-TERM DEBT
-------------------------
Short-term debt will be issued as unsecured short-term promissory notes to
lending banks (bank loans) and/or commercial paper sold directly to direct
purchasers and/or commercial paper sold to commercial paper dealers. The Company
may also borrow from AEC or certain utility affiliates through the utility money
pool. The need for timely processing of such transactions and the typically
short duration of each individual transaction make it impractical to invite
sealed written proposals (competitive bidding).
PREFERRED EQUITY SECURITIES
---------------------------
7
Preferred equity securities will be issued in a negotiated, underwritten public
offering by one or more brokers or investment banking organizations.
COMMON STOCK
------------
The Company has no plans to issue additional common equity during 2002.
LONG-TERM DEBT
--------------
The Company has no plans to issue long-term debt during 2002.
F. PURPOSES FOR WHICH SECURITIES ARE TO BE ISSUED
----------------------------------------------
UNSECURED SHORT-TERM DEBT - OVERVIEW OF HOW THE COMPANY USES IT
---------------------------------------------------------------
The Company's cash flows vary from year-to-year, season-to-season, and from
day-to-day. Cyclical requirements such as its construction program, the purchase
of fuel, payroll, income and property taxes may cause the Company's cash flow to
vary considerably during the year. The Company uses short-term debt to finance
construction and operations when there are not sufficient internally generated
funds.
The use of short-term debt allows the Company to refinance long-term obligations
when market conditions are favorable and in economic increments. The Company
monitors the projected level of short-term debt. When a sufficient level of
short-term debt has accumulated, and the budget does not project the reduction
of the short-term debt, the Company goes to the financial markets to replace the
short-term debt with long-term financing.
These notes may also be issued to renew or refund outstanding First Mortgage
Bonds, promissory notes of the same nature, or to replace maturing notes sold
through commercial paper dealers, as well as to provide additional funds for
construction and other purposes.
8
UNSECURED SHORT-TERM DEBT - SPECIFIC USES
-----------------------------------------
The net proceeds of the unsecured short-term promissory notes to be issued by
Petitioner during 2002, together with depreciation accruals, cash on hand, and
retained earnings will be used to:
(a) (a) pay the Petitioner's construction program for the period, estimated
at $280 million;
(b) other related purposes, or for the acquisition of property, or for
improvement of service.
PREFERRED EQUITY SECURITIES
---------------------------
The net proceeds from the sale of preferred equity securities will be used to:
(a) retire up to $59 million of outstanding preferred equity securities; and
(b) retire up to $76 million of high-coupon long-term debt.
G. STATEMENT WITH RESPECT TO "AFFILIATED INTERESTS"
------------------------------------------------
At the date hereof, IPL is not aware of any person who may be deemed an
"affiliated interest" within the meaning of Minnesota Statutes, Section 216B.48,
Subdivision 1, who has received or is entitled to receive a fee for services in
connection with the negotiations or consummation of the issuance of the
securities which are the subject of this Petition, or for services in securing
underwriters, sellers or purchasers of such securities. IPL is not aware of any
investment banking firm which presently is an "affiliated interest" of IPL.
9
H. PROFORMA CAPITAL STRUCTURE
--------------------------
The proforma capital structure of IPL as of September 30, 2001 is as follows:
Long-Term Debt: ($000)
--------------- ------
First Mortgage Bonds:
8-5/8% Series Due 2021 20,000
8% Series Due 2007 25,000
7-5/8% Series Due 2023 94,000
7-1/4% Series Due 2007 27,450
Collateral Trust Bonds:
7.25% Series, CTB, Due 2006 60,000
6.7/8% Series, CTB Due 2007 55,000
6% Series, CTB Due 2008 50,000
7% Series, CTB, Due 2023 50,000
5.5% Series, PCRRB Due 2023 10,200
5.5% Series, PCRRB Due 2023 7,000
5.5% Series, PCRRB Due 2023 2,200
Pollution Control Revenue Bonds:
5.75% Due 2003 1,000
5.75% Due 2003, Town of Salix, IA 1,680
6.25% Due 2009 1,000
6.30% Due 2010 5,600
6.35% Due 2012 5,650
City of Cedar Rapids, IA Variable Rate Due 2003 2,400
City of Chillicothe, IA Variable Rate Due 2010 5,300
City of Chillicothe, IA Variable Rate Series 1992A Due 2010 2,400
City of Chillicothe, IA Variable/Fixed (4.25%)Series 1998 due 2023 10,000
4.3% Variable/Fixed Rate Due 2005 2,650
4.3% Variable/Fixed Rate Due 2008 2,300
4.05% Variable/Fixed Rate Due 2010 3,250
4.2% Variable/Fixed Rate Due 2013 7,700
Debentures:
----------
7.875% Junior Deferrable Interest Debenture, Series A, Due 2025 50,000
6.625% Senior Debentures, Series A, Due 2009 135,000
6.75% Senior Debentures, Series B, Due 2011 200,000
Unamortized Discount (4,798)
-------
Long-Term Debt - Net $831,982
--------
Capital Lease:
--------------
Tower Lease 28,000
Preferred Stock:
----------------
Preferred Stock (Par Value $50), authorized
3,166,406 shares; Issued and outstanding:
120,000 shares - 4.30% 6,000
60,455 shares - 4.36% 3,023
55,926 shares - 4.68% 2,796
146,406 shares - 4.80% 7,320
100,000 shares - 6.10% 5,000
100,000 shares - 7.76% 5,000
10
545,000 shares - 6.40% 27,250
Discount & Unamort. Issue Exp. (2,441)
-------
Total Preferred Stock $53,948
-------
Common Stock:
-------------
(Par Value $2.50), authorized 24,000,000
shares; Issued and outstanding:
13,370,788 shares $33,426
Additional Paid-in Capital 421,907
Retained Earnings 370,222
--------
Total Common Stock $825,555
--------
Total Capitalization $1,739,485
==========
I. VERIFICATION
------------
STATE OF WISCONSIN )
) ss.
COUNTY OF DANE )
Steven F. Price, being first duly sworn on his oath, deposes and says that he is
Assistant Treasurer of Interstate Power and Light Company; that he has read the
foregoing Application; that he knows the contents thereof; and that the facts
therein stated are accurate and complete to the best of his knowledge,
information and belief.
---------------------------------------
Steven F. Price
Assistant Treasurer
Subscribed and sworn to before
me this; ___th day of February, 2002.
_____________________________________
Notary Public, State of Wisconsin
My Commission: ______________
11
J. EXHIBITS There are attached hereto and made a part hereof the
-------- following exhibits:
Exhibit A Resolutions by the Board of Directors authorizing the filing
of this petition
Exhibit B Opinion of Counsel
Exhibit C Pro-Forma Journal Entries
Exhibit D Balance Sheet
Exhibit E Income Statement
Exhibit F Statement of Cash Flows
Exhibit G Description of Shares Authorized by the Articles of
Incorporation
Exhibit H Description of Funded Debt of Interstate Power and Light
Company
Exhibit I Rate and Amount of Dividends Paid During the Past Five Years
Exhibit J Amount of Bonds Authorized and Issued that Exceed 1% of Total
Debt
Exhibit K A copy of each plan, offer or agreement for the
reorganization or readjustment of indebtedness or
capitalization or for the retirement or exchange of
securities.
Exhibit L Registration Statement to be Filed with Securities and
Exchange Commission
Exhibit M Monthly Cash Flow
Exhibit N Assumptions in Cash Flow Forecast
Exhibit O Reference to Applications to FERC
Exhibit P Summary of Sealed Written Public Proposals
Exhibit Q Amended Articles of Incorporation
EXHIBIT F
June 21, 2002
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
RE: ALLIANT ENERGY CORPORATION, ET AL. - FORM U-1 APPLICATION/DECLARATION
(FILE NO. 70-10052)
Dear Sirs:
I refer to the Form U-1 Application/Declaration, as amended (the
"Application") under the Public Utility Holding Company Act of 1935 (the "Act"),
filed with the Securities and Exchange Commission (the "Commission") by Alliant
Energy Corporation ("Alliant Energy"), a registered holding company, its
wholly-owned public utility subsidiary, Interstate Power and Light Company
("IP&L"), its wholly-owned non-utility subsidiary, Alliant Energy Resources,
Inc. ("AER"), and certain other direct and indirect subsidiaries of Alliant
Energy and AER (collectively, the "Applicants"). I have acted as counsel for
Alliant Energy and other Applicants in connection with the Application.
Capitalized terms used herein that are not defined herein shall have the
meanings ascribed to them in the Application.
As described in the Application, Alliant Energy is requesting the
Commission's authorization to issue and sell Short-term Debt from time to time
through December 31, 2004 and to utilize the proceeds thereof to fund loans to
IP&L and Alliant Energy Corporate Services, Inc. through the Utility Money Pool
and to AER and the other participating Non-Utility Subsidiaries through the
Non-Utility Money Pool, and to guarantee borrowings by AER to fund the
Non-Utility Money Pool. IP&L is requesting authorization to issue and sell
Short-term Debt and make borrowings through the Utility Money Pool. To the
extent required, the Utility Money Pool participants are requesting
authorization to make loans and extend credit to each other through the Utility
Money Pool. There proposals are referred to collectively as the "Proposed
Transactions."
In connection with the opinions given herein, I have examined original,
certified, or conformed copies of all such corporate records, agreements,
instruments, and documents and have made such other investigations as I have
deemed necessary or appropriate for the purpose of rendering this opinion. In my
examination, I have assumed the genuineness of all signatures, the authenticity
of all documents submitted to me as originals and the conformity to originals of
all documents submitted to me as conformed copies.
The opinions expressed below with respect to the Proposed Transactions are
subject to the following assumptions and conditions:
(a) The Proposed Transactions shall have been duly authorized and
approved, to the extent required by the governing documents and applicable state
laws, by the Boards of Directors of Alliant Energy and the other Applicants.
(b) The Commission shall have duly entered an appropriate order or orders
with respect to the Proposed Transactions as described in the Application
granting and permitting the Application to become effective under the Act and
the rules and regulations thereunder and the Proposed Transactions are
consummated in accordance with the Application and said order or orders.
(c) Alliant Energy and the other Applicants shall have obtained all
consents, waivers and releases, if any, required for the Proposed Transactions
under all applicable governing corporate documents, contracts, agreements, debt
instruments, indentures, franchises, licenses and permits.
(d) No act or event other than as described herein shall have occurred
subsequent to the date hereof which would change the opinions expressed above.
(e) The consummation of the Proposed Transactions shall be conducted under
my supervision and all legal matters incident thereto shall be satisfactory to
me, including the receipt in satisfactory form of opinions of other counsel
qualified to practice in jurisdictions in which I am not admitted to practice,
as I may deem appropriate.
Based on the foregoing, and subject to the assumptions and conditions set
forth herein, and having regard to legal considerations which I deem relevant, I
am of the opinion that, in the event the Proposed Transactions are consummated
in accordance with the Application:
1. Upon receipt by IP&L of orders of the Illinois Commerce Commission and
Minnesota Public Utilities Commission approving the Proposed Transactions as
they relate to IP&L, all state laws applicable to the Proposed Transactions will
have been complied with;
2. Alliant Energy and the other Applicants are each validly organized and
duly existing under the laws of the states in which they are incorporated;
3. The Short-term Debt to be issued by Alliant Energy and IP&L will be
valid and binding obligations such companies in accordance with their terms, and
any guarantees to be issued by Alliant Energy will be valid and binding
obligations of Alliant Energy in accordance with their terms; and
4. The consummation of the Proposed Transactions will not violate the
legal rights of the holders of any securities issued by Alliant Energy or any
associate company of Alliant Energy.
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I hereby consent to the use of this opinion in connection with the
Application. The opinions given herein are intended solely for the benefit of
the Commission and may not be relied upon by any other person.
Sincerely,
/s/ Barbara J. Swan
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Barbara J. Swan
Executive Vice President
and General Counsel
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