Clean energy investments drive increased profits for Wisconsin utilities; Alliant to spend $6.8B by 2023

Clean energy investments drive increased profits for Wisconsin utilities; Alliant to spend $6.8B by 2023

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Wisconsin’s investor-owned utilities are reporting strong earnings as new investments in clean energy have begun to generate profits.

Alliant Energy announced a 7% increase in its 2020 dividends Wednesday as it reported earnings of $226 million in the third quarter of 2019.

That’s up almost 10 percent over the same period last year, which Alliant attributes to its growing capital investments, on which regulated utilities are guaranteed a profit.

The Madison-based company, which controls utilities in Wisconsin and Iowa, expects to spend $6.8 billion over the next four years, including about $1.7 billion on renewable generation.

About $2.9 billion of that investment will come from Alliant’s Wisconsin subsidiary.

Alliant last week announced plans to acquire up to a gigawatt of solar generation by 2024 and is in the process of building a gigawatt of wind capacity in Iowa, though the majority of the capital spending will be on gas and electric distribution systems.

“The customers and the communities we serve will continue to benefit from reliable, affordable, cleaner energy as a result of our strong pipeline of investments in renewable energy, and electric and gas distribution,” CEO John Larsen said in a written statement.

John Larsen (copy)

Larsen

Alliant also revised its expected earnings per share by 6 cents for 2019 primarily due to the influence of weather on gas and electricity sales.

Madison Gas and Electric reported earnings of $30.7 million, up 4 percent from the same period last year, thanks in part to the completion of the $112 million Saratoga Wind Farm, which added to the company’s generation assets.

MGE expects to add more generation assets in 2020 with the completion of the Badger Hollow and Two Creeks solar farms. The company plans to own about 22% of the 450-megawatt projects, representing an investment of $130 million.

While these investments drive profits for shareholders, they can also benefit ratepayers by eliminating fuel costs — a strategy known as “steel for fuel.”

“So far we’ve seen that the steel for fuel strategy is reducing fuel costs,” said Tom Content, executive director of the Citizens Utility Board, which represents residential and small business ratepayers. “When you’re shifting more and more of your mix toward sources that don’t have any fuel cost at all … that just helps mitigate risks for customers.”

Tom Content (copy)

Content

But Content cautions that continued savings will depend on finding ways to pay off some $3 billion worth of investments in coal-fired power plants.

Wisconsin regulators last week approved a plan for We Energies to refinance about $100 million worth of pollution controls at its Pleasant Prairie plant, which was shuttered in 2018.

WEC Energy Group, the parent company of We Energies and Wisconsin Public Service of Green Bay, reported third quarter earnings of $234.3 million, an increase of about 0.5% over the same period last year.

Executive chairman Gale Klappa said the utility delivered “solid results” in spite of cooler temperatures and July storms that caused extensive damage to its distribution network.

Minnesota-based Xcel Energy, which serves about 250,000 customers in western Wisconsin, last month reported earnings of $527 million, up 7% from the same period in 2018.

Xcel plans to spend $22 billion in the next five years as it replaces fossil fuel generators with natural gas and renewable energy sources.

“These investments will deliver economic and environmental benefits for our shareholders, customers and stakeholders while supporting our drive to achieve an 80 percent reduction in carbon emissions by 2030,” said CEO Ben Fowke.

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