Good morning, and welcome to the Alliant Energy's Conference Call for the Third Quarter 2020 Results. This call is being recorded for rebroadcast. [Operator Instructions]. I would now like to turn the call over to your host, Susan Gille, Investor Relations Manager at Alliant Energy.

Good morning. I would like to thank all of you on the call and the webcast for joining us today. We appreciate your participation. Joining me on this call are John Larsen, Chairman, President and Chief Executive Officer; and Robert Durian, Executive Vice President and CFO. Following prepared remarks by John and Robert, we will have time to take questions from the investment community. We issued a news release last night announcing Alliant Energy's third quarter financial results, updated our consolidated 2020 earnings guidance range and announced our '21 earnings guidance and common stock dividend target. This release as well as supplemental slides that will be referenced during today's call are available on the Investor page of our website at www.alliantenergy.com. Before we begin, I need to remind you the remarks we make on this call and our answers to your questions include forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters discussed in Alliant Energy's press release issued last night and in our filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements. In addition, this presentation contains references to non-GAAP financial measures. The reconciliation between non-GAAP and GAAP measures are provided in the earnings release and our 10-Q, which will be available on our website. At this point, I'll turn the call over to John.

Thanks, Sue. Good morning, everyone, and thank you for joining us today as we highlight our solid results for the third quarter of 2020. I want to start by saying how proud I am to be part of the Alliant Energy team. Our purpose to serve customers and build strong communities has guided us throughout the year and the events of this quarter. 2020 has highlighted the importance of resiliency as we face the challenges of the pandemic and the derecho windstorm in Iowa. But resiliency is not new for us. Our customer-focused strategy is designed with both resiliency and flexibility in mind. On August 10, just a few days after our second quarter call, our teams with a picture of resiliency as they responded to an unprecedented storm that impacted 341 of the nearly 700 communities we serve in Iowa. The windstorm, known as the derecho, hit with little warning, leaving more than half of our Iowa customers without power. This was the biggest storm in our company's 100-plus-year history. Our dedicated employees, many of whom were without power, were assisted by crews from across the country in Canada, working day in and day out for more than 2 weeks until every customer had power available to them. I also want to recognize the kindness and resiliency of our Iowa customers during this time. Our employees were overwhelmed with the kindness and patience expressed to them throughout the restoration process. Our resiliency extended to our social commitments to our customers. In partnership with our employees, we started Project ReConnect, a program to help homeowners make costly repairs to their residences after the storm. To date, Alliant Energy, along with our employees, have donated more than $300,000 to Project ReConnect. It's one more way that our values to do the…

Thanks, John. Good morning, everyone. Yesterday, we announced third quarter 2020 GAAP earnings of $0.98 per share compared to $0.94 per share in the third quarter last year. Our higher earnings year-over-year were driven by higher revenue requirements due to increasing rate base, the timing of income tax expense and the favorable $0.04 adjustment to the credit loss liability related to legacy guarantees in our nonutility business. These higher earnings were partially offset by higher depreciation and equity dilution. We provided additional details on the earnings variance drivers for the quarter on Pages 3 and 4 on the supplemental slides. In the first 9 months of this year, temperatures in our service territory have increased retail, electric and gas margins by approximately $0.01 per share. By comparison in 2019, the year-to-date temperature impacts for the first 3 quarters increased retail, electric and gas margins by approximately $0.05 per share. Turning to temperature normalized sales. We've been very encouraged by the improvement we've seen in our sales when comparing the second quarter to the third quarter this year. I would characterize our current sales levels will be roughly flat versus the same period in 2019, with the increase in residential sales, offsetting the decreases seen in commercial and industrial sales. It's important to note that our third quarter results also reflected the impacts of the August 10 derecho storm in Iowa, which caused a temporary reduction in sales as we look for a couple of weeks to restore power to our customers in Central Iowa. As John mentioned, last night, we issued our consolidated 2021 earnings guidance range of $2.50 to $2.64 per share. The key drivers of the 6% midpoint growth in temperature normalized EPS are related to investments in our core utility business, including WPL's Kossuth Wind Farm and…

[Operator Instructions]. The first question today comes from Julien Dumoulin-Smith of Bank of America.

Congratulations to all team here, excellent outcome here. Perhaps just to kick things off, I mean, obviously, good start on '21 here. How are you thinking about the trajectory over the longer term, especially given the pro forma CapEx? Maybe a twofold question. Where does that position you vis-à-vis your guidance on the 5% to 7%? And then secondly, how do you think about some of the other CapEx tailwinds, right? You've just got so much renewables going here, how do you think about additional T&D spend and how that fits in the budget over the cumulative 5-year period?

Great, Julien. Happy to still feel very, very comfortable with the 5% to 7%. And as you know, the midpoint is where we spend a lot of time making sure we have a plan to get solidly within that range and we'll continue to. As far as some of the tailwinds, as you probably noticed, there's a little maybe decrease in some of the T&D spend as we brought some additional renewables in, in the '22, '23. And as we've shared with you and others, we do have some plans for increasing our T&D spend overhead to underground. As Robert and I both mentioned, you'd see a little bit of that in the tail end in 2024. There's some great T&D spend yet. So as you know, we try to have that $1.2 to $1.4 billion per year is a really good spot for us to maintain the 5% to 7% minimal equity needs and keeping customer costs affordable. So we really like the CapEx plan and I would say there's some great T&D spend that we continue to look at, and we'll just let capital compete as we always do, Julien. Thanks for the question.

Absolutely. And just a quick follow-up here. In the context of '21, can you elaborate a little bit more on the execution of cost controls item? Just if you don't mind.

Sure. Robert's team has done a great job of focusing on some of our transformation and then nearing in a little longer term. So I'll maybe ask Robert to weigh in on that one. Robert?

Julien, great question. So customer affordability is going to be a key component of our strategic plan, obviously, here in 2020 and going forward. And we've made some great progress this year. Through the first three quarters, we reduced O&M by about $60 million or about 12% compared to last year. About half of that was from energy efficiency expenditure reductions. The other half is largely related to our ability to manage costs and to accelerate some of the transformation activities for future sustainable savings. And so we'll continue to work on those areas as we look into 2021 and look at all parts of the organization and implement really some changes to drive cost efficiencies throughout our business. I'm really excited about a lot of new technology opportunities for us to drive those expense reductions. And we're also operating with a lot of fewer employees by not backfilling certain vacated positions. So I think our efforts in 2019 really helped us position us well for 2020 and looking forward to the rest of this year position us really well for next year for 2021.

[Operator Instructions]. Our next question comes from Andrew Weisel of Scotiabank.

Congrats on the recent renewables update and on the nice increase to the 5-year CapEx outlook. Can you share the latest forecast for rate base gain here, perhaps with or without the solar tax equity funding that will weigh on that growth?

Yes, Andrew. So we'll be providing some additional details regarding that information later today as part of our November 2025 virtual call as the presentation we'll be sharing next week as part of the EEI Finance Conference. If you think off of a base of 2019, which is the last full year that we've completed, we're expecting approximately an 8% CAGR through 2024. And a lot of that is dependent upon all of the renewables as well as the T&D spend that John and I discussed earlier. So think of that as about an 8% CAGR over that time frame.

Great. That's helpful. So then in terms of the CapEx walk, 2020 is obviously down a bit, mostly in that other category. Can you elaborate there? Was some of that discretionary spending that you're being sensitive to customer built and recovery because of COVID? Or was there physical limitations? And would these be temporary or timing issues or more permanent changes?

Yes. Think of that, as John alluded to before, we've got a lot of flexibility in our capital expenditure plans. And so when we see there opportunities or requirements to spend dollars in certain areas, we'll flex the rest of the plan to make sure that we comply with our target of $1.2 billion to $1.4 billion. What we saw here in 2020 is with the derecho storm, we did have to increase our electric T&D expenditures in the Iowa jurisdiction really to restore and to build that system. And so we flexed down some of the other spend. And think of that as just a lot of smaller items, some generation spend for our retiring plants, some spend on our nonutility business to keep the growth aspects there as well as there's been some lower facility spend. So a lot of smaller pieces that added up to what you see in the chart there.

Okay. Got it. On equity mix, with the moving around of CapEx, any change to the prior plans you've laid out? I have a feeling this might be in the slide deck coming later today, but maybe you could give us a little preview of what the equity outlook looks like?

Yes. Andrew, beyond the drift, nothing's changed on equity with refreshed CapEx.

Terrific. Great. And then just one last housekeeping one. Are you able to quantify the EPS impact from the derecho storm?

Yes. At this point, we haven't quantified it. But there was some sales impact, as we alluded to earlier. Think of that as probably about a $0.02 decrease in the third quarter related to just the sales impact. The remaining portions of the restoration costs, we're expecting to get recovery of those costs. And so we've actually capitalized lows. And we're also seeking -- later today, we'll be filing a deferral request for any of the operating expenses as well as the offsetting tax benefits associated with the storm. So beyond the sales impact, it will about negative $0.02. We're not expecting anything else material.

[Operator Instructions]. There are no further questions at this time.

This concludes Alliant Energy's Third Quarter Earnings Call. A replay will be available through November 10, 2020, at 888-203-1112 for U.S. in Canada or 719-457-0820 for international. Callers should reference conference ID 4175543 and PIN 9578. In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the Investors section of the company's website later today. We thank you for your continued support of Alliant Energy, and feel free to contact me with any follow-up questions.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.