Alliant writes down Franklin County wind farm ahead of probable sale

Based on an evaluation of the strategic options for the Franklin County wind farm performed in the third quarter, Alliant Energy (NYSE: LNT) said in its Nov. 3 earnings report that it concluded, as of Sept. 30, it was probable the Franklin County wind farm will be transferred to its regulated Interstate Power & Light (IPL) subsidiary.

As a result, an impairment analysis was performed to evaluate the value of the assets and a reasonable estimate of the amount of costs associated with the Franklin County wind farm that would be allowed for recovery for IPL’s electric rate-making purposes.  Based on various analyses, including discounted cash flows projected from the Franklin County wind farm, recently executed power purchase agreements associated with wind generating facilities located near the Franklin County wind farm and the cost of new wind farms identified through IPL’s proposed wind expansion, the current value of the Franklin County wind farm assets was determined to be approximately $33 million, subject to working capital adjustments.

Alliant Energy concluded that the current value of the Franklin County wind farm assets of approximately $33 million represents a reasonable estimate of the amount IPL will be allowed for recovery for IPL’s electric rate-making purposes. As a result, the carrying amount of the Franklin County wind farm was reduced to its current value resulting in non-cash pre-tax asset valuation charges of $86 million in the third quarter of 2016.

IPL anticipates requesting approval from the Federal Energy Regulatory Commission in the fourth quarter of 2016 to transfer the Franklin County wind farm to IPL and expects to complete that transfer in the first quarter of 2017. The final amount to be recovered for IPL’s electric rate-making purposes will be determined by the Iowa Utilities Board as part of IPL’s 2016 test year Iowa retail electric rate case, anticipated to be filed in the second quarter of 2017, and therefore the final asset valuation charge is subject to change.

The transfer of the Franklin County wind farm to IPL is separate from IPL’s request recently approved by the Iowa Utilities Board to own and operate up to 500 MW of additional wind generation, Alliant noted.

Franklin County Wind LLC is a non-regulated subsidiary of Alliant. It owns and operates the 100-MW Franklin County Wind Farm, located in Franklin County, Iowa. It began commercial operation in 2012.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.