Alliant's Two Utilities Win Energy Department Backing For Up To $5.1 Billion In Federal Loans
Wisconsin Power and Light and Interstate Power and Light can borrow at a Treasury rate plus 37.5 basis points, but every advance has conditions.
Alliant Energy's two utilities signed Energy Department loan guarantee agreements Monday that let them borrow up to $1,626,488,000 (Wisconsin Power and Light) and $3,500,000,000 (Interstate Power and Light) through the Federal Financing Bank, an 8-K filed Wednesday shows. The two caps add up to about $5.1 billion, though no money can flow until several approvals clear.
Terms of the borrowing
Alliant Energy, a utility holding company providing regulated electric and natural gas service in Iowa and Wisconsin through IPL and WPL, is not a party to the loan documents and has no direct obligations under them. Each utility's borrowings are full-recourse, senior unsecured obligations, and each must reimburse the Energy Department for anything it pays out under its guarantee.
Advances can reimburse up to 80% of eligible project costs. The program's eligible projects include power generation, new and upgraded transmission, substations, energy storage and other grid-reliability work.
Each advance carries a rate the Federal Financing Bank sets at the time, equal to the U.S. Treasury rate plus 37.5 basis points (0.375 percentage points). Final maturity for all borrowings is May 15, 2056. WPL repays in four equal annual installments starting May 15, 2053, and IPL in five equal installments starting November 15, 2052.
Conditions before any money moves
Advances depend on completion of the Energy Department's environmental review of the projects, state regulatory approvals, payment of fees and confirmation of investment grade credit ratings. Each utility can request an advance once a quarter, up to four times a year, until September 15, 2033 at the latest. The department may terminate an agreement if the first advance has not happened within 18 months of its effective date.
The agreements also require prepayment in several cases. One is a cost-recovery test: if project costs approved in final orders of the Iowa Utilities Commission (for IPL) or the Public Service Commission of Wisconsin (for WPL) fall short of a 95% threshold, the utility must repay part of the debt. A change of control, which includes anyone reaching 35% of a borrower's voting power, triggers an obligation to offer full prepayment.
Borrowers may prepay voluntarily on 10 business days' notice, but cannot reborrow what they repay. An event of default lets the department demand immediate repayment and cut the maximum loan amount to zero.
The next gate is the Energy Department's environmental review and the Iowa and Wisconsin regulatory approvals, which must come before either utility can draw a first advance.
Sources
- 8-K Filing — ALLIANT ENERGY CORP (LNT) — SEC EDGAR
