Thank you for holding, ladies and gentlemen, and welcome to Alliant Energy's second quarter 2019 earnings conference call. At this time, all lines are in a listen-only mode. Today's conference call is being recorded. I would now like to turn the call over to your host, Susan Gille, Investor Relations Manager at Alliant Energy. Please go ahead.
Good morning. I would like to thank all of you on the call and on the webcast for joining us today. We appreciate your participation. With me here today are John Larsen, Chairman, President, and Chief Executive Officer, and Robert Durian, Senior Vice President and CFO, as well as other members of the senior management team. 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 second quarter financial results and reaffirm the consolidated 2019 earnings guidance issued in November 2018. 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. This presentation contains references to non-GAAP financial measures. The reconciliation between non-GAAP and GAAP measures are provided in our quarterly report on the Form 10-Q, which is available on our website at www.alliantenergy.com. At this point, I'll turn the call over to John.
Thanks, Sue. Good morning, everyone, and thank you for joining us. I'm first going to give you the headlines of the quarter, and then provide updates on several of our key strategic priorities. Robert will then provide details on our financial results and highlights of our regulatory schedule. For the headlines, first, we delivered another solid quarter of financial and operating results. Second, we are reaffirming our earnings guidance and are trending toward delivering results in the upper half of the range. Third, we continue to execute according to plan on key strategic generation and distribution investments for our customers. We continue to make great progress as we transition to a more efficient, cleaner, and balanced energy portfolio. In March, we placed 470 MW of wind into service for our Iowa customers.
The Upland Prairie and English Farms wind additions were on schedule and below budget, continuing our long track record of solid project execution. These projects were also awarded Envision Platinum Certification from ISI. To earn this honor, a project must demonstrate it delivers environmental, social, and economic benefits to communities. The platinum level is the highest rating possible and affirms that our investments in a clean energy future not only help us to reduce carbon emissions but are the right thing to do for our customers and communities. We're making nice progress with the remaining 530 MW of new wind for our Iowa customers. This will complete IPL's total planned 1,000 MW of additional renewable energy by the end of 2020. We experienced some unfavorable weather this past spring, we've made adjustments and expect to deliver these projects on time and on budget.
Overall, our second quarter generation capacity factor was on par with our 5-year averages. While our coal units saw a slight decrease, our gas and newer wind units provided a balance with increased capacity factors. Wind energy and efficient natural gas generation bring many customer benefits, including reduced fuel costs, lower air emissions, and local payments that support the rural communities we have the privilege to serve. As we continue to transition our energy mix, we are building the new West Riverside Energy Center located near Beloit, Wisconsin. This 730-megawatt, highly efficient natural gas resource is over 90% complete and is expected to be completed on time and on budget. We're expanding our use of solar generation with the construction of a solar garden near our Marshalltown Generating Station. We're well into the process for a similar solar installation at the West Riverside Energy Center.
Solar was the focus of some new tariffs recently approved by the Public Service Commission of Wisconsin. Three new tariffs were approved that will help enable us to provide more renewable options for our customers. While not large in size, they provide opportunities to bring tailored renewable solutions to our customers. Now I'll focus on what drives Alliant Energy's success, our workforce. Many of you have heard or read about a series of devastating storms that hit our Wisconsin service territory on July 19th and 20th. The storms produced 14 tornadoes, damaging straight-line winds, and significant rainfall. At the peak of the storm, more than 30,000 of our customers were without power, and statewide totals were exceeding 250,000. After the storms cleared, I'm proud to share that we had 75% of our impacted customers back online within 36 hours, with those able to take power restored soon after.
Our commitment to safety, the dedication of our teams, and the strong partnerships we have with our communities and emergency response professionals are just a few of the many reasons I'm proud to lead our company as CEO. With these storms, July brought with it higher temperatures, resulting in increased demand. Our estimated temperature impact on electric sales for July is $0.02 per share. I'm pleased to report that our generating fleet operated as expected during the higher temperatures, mitigating the impact of higher fuel costs for our customers. Finally, I'm excited to mention that next week, we'll launch our 2019 Corporate Sustainability Report. This report reaffirms our commitment to provide economical energy in a sustainable manner, and provides a broad view of our company's performance in the areas that are of most interest to our many stakeholders.
Our everyday actions enhance the environmental, social, and economic conditions of the communities we serve. We've had the privilege of serving our customers for more than 100 years. We look forward to continuing that tradition for decades to come. I encourage you to review the online report and see how we're creating a better tomorrow for our customers, communities, and investors. To summarize, our team is committed to delivering on our financial and operating goals. We have a great track record, and will continue to deliver results as we focus on the following. Continuing our solid track record of project execution, completing projects on time, on budget, and in a very sustainable and safe manner. Advancing affordable and clean energy through smart investments in wind, solar, high-efficiency natural gas, and the distribution network.
Consistently delivering on 5%-7% earnings growth guidance and a 60%-70% common dividend payout target. We will continue to manage the company to strike a balance between capital investments, operational and financial discipline, and cost impact to customers. I thank you for your interest in Alliant Energy, and I'll now turn the call over to Robert.
Thanks, John. Good morning, everyone. Yesterday, we announced second quarter 2019 earnings of $0.40 per share, compared to $0.43 per share in the second quarter of 2018. Our utilities had lower earnings year-over-year, driven by lower electric and gas sales due to milder temperatures in the second quarter of 2019 and timing of income tax expense. The lower earnings were partially offset by higher revenue requirements due to increasing rate base. We have provided additional details on the earnings variance drivers for the quarter on slide two. Our consolidated 2019 earnings guidance continues to be a range between $2.17 and $2.31 per share. The key drivers of the projected 6% growth in EPS are related to investments in our core utility business, including the West Riverside Energy Center in Wisconsin and our wind expansion program in Iowa.
Increasing our wind generation portfolio and operating our highly efficient natural gas generating units at higher capacity rates are resulting in lower fuel costs for our customers. Our second quarter production fuel and purchase power expenses dropped 20% when compared to the same period in 2018. This is just one example of how we are working to control costs for our customers. Our temperature-normalized electric sales through the first half of 2019 have been slightly lower than expected, primarily in our Iowa Utilities industrial class. About half of the lower industrial sales in our Iowa jurisdiction are due to operations issues at some of the larger customers. Temperature-normalized retail electric sales at our Wisconsin utility have increased over 2018, including higher industrial sales from two large customers returning to normal operations after prolonged outages.
As a reminder, industrial sales earn lower margins when compared to other retail classes, thus these changes in electric sales did not have a material impact to our earnings. To assist with modeling our results throughout 2019, please note that the 6% projected increase in earnings for 2019 will not be recognized consistently for all four quarters this year. First, the interim rate increase in Iowa went into effect April 1st, thus skewing the earnings growth more to the last three quarters. Second, our Iowa utility has higher electric rates in the summer from mid-June through mid-September, resulting in a higher proportion of earnings in the third quarter. Lastly, the timing of income tax expense recognition will result in lower earnings in the first half of the year and higher earnings in the second half of the year when compared to the quarterly results in 2018.
Slide three has been provided to assist you in modeling the effective tax rates for our two utilities and our consolidated group for the full year 2019. We estimate a consolidated effective tax rate of 11% for 2019. As we continue adding wind generation to our portfolio, the resulting additional PTCs are expected to result in lower effective tax rates for several years into the future. Please see slide four for details of our 2019 financing plan, which remains unchanged. In June, we completed the issuance of $350 million of debt at our Wisconsin utility and used the proceeds to refinance $250 million of debt that matured in July and to reduce commercial paper outstanding. Through July, we have completed about one-third of the $400 million of new common equity issuances planned for 2019, largely through exercising a portion of the forward contracts entered into at the end of 2018.
We plan to issue up to $300 million of long-term debt at our Iowa utility later this year to fund our wind expansion program in Iowa. These 2019 financing plans support our objective of maintaining capital structures at our two utilities consistent with our most recent regulatory decisions. We expect to refresh our future capital expenditure plans and disclose our 2020 financing plans, including quantifying the 2020 new common equity needs during our third quarter earnings call in November. We have included our 2019 regulatory initiatives of note on slide five. There have been two key developments to share with you since our last quarterly earnings call. Our Wisconsin utility filed its retail electric fuel-only rate review in June to set the fuel cost monitoring level for 2020. The rate reviews in Iowa continue to advance through their procedural schedules.
As a reminder, we filed electric and gas rate reviews in Iowa in March and implemented electric interim rates at the beginning of the second quarter. The electric interim rate increase includes recovery of the investments in our English Farms and Upland Prairie Wind projects, enhancements to our distribution network, and upgrades to customer service technologies. A portion of the increase due to these investments has been offset with the benefits of PTCs and reduced fuel costs from the new wind projects being passed on to our customers beginning in April. This rate review filing also included the first forward-looking test year for our Iowa utility for 2020. The rate review proceeding is progressing according to plan. Yesterday, many of the 15 intervenors in IPL's electric rate review proceeding filed direct testimony. We are still reviewing the details of the testimony.
The Iowa Business Energy Coalition's testimony and methodology appears generally consistent with how future test years are constructed and applied in other jurisdictions. Although we have different viewpoints with some of their inputs and the end result. The Office of Consumer Advocate, in contrast, has proposed a complicated and unique phased approach, effectively applying future and historic elements within one test year, which we believe is inconsistent with the Iowa legislation. Intervenors have raised issues with the proposed renewable energy rider, ROE and capital structure, PTC carryforwards, and other topics. Divergent viewpoints are a normal part of the rate reviews, and we are generally unsurprised by the intervenors' positions. We are proud of the investments that we have made on behalf of our customers and believe in the merits of the case that we put before the Iowa Utilities Board.
We look forward to working with the intervenors as the process continues. On slide six, we've provided the procedural schedules for the Iowa retail electric and gas dockets to help you monitor the progress of these rate reviews throughout the remainder of 2019. Under Iowa statutes, rate reviews must generally be decided within 10 months. Therefore, we anticipate final orders in both the electric and gas rate reviews by year-end. We appreciate your continued interest in our company. At this time, I'll turn the call back over to the operator to facilitate the question and answer session.
Thank you, Mr. Durian. At this time, the company will open up the call to questions from members of the investment community. Alliant Energy's management will take as many questions as they can within the 1-hour timeframe for this morning's call. If you would like to ask a question, please signal by pressing star one your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a moment to allow everyone an opportunity to signal for questions. We can take our first question from Julien Dumoulin-Smith from Bank of America. Please go ahead, your line is open.
Good morning. This is Dariusz Lozny on for Julien. I just wanted to briefly touch on the Iowa intervenor testimony that you mentioned a minute ago. Are there any specific read-throughs that you can share as far as ROE, equity needs, or the renewable rider at this time?
This is Robert. Maybe just to summarize a couple of the positions. For the ROEs, really there's two primary intervenors that have provided what's called the full revenue requirements testimony. One is the OCA, and the other is IBEC, is the term we use for them. Both of them are roughly around 9%. I think one was 8.9% and the other one was 9.2%. From a capital structure, I believe the OCA proposed a 47% equity ratio, and then IBEC was a 50% equity ratio. On the renewable rider, neither one of them had supported our position, so we'll be working with them in the next few weeks or whatever to see if we can gain alignment there.
Okay, great. Thank you. Just one follow-up. Any commentary as far as pursuing multi-year rate cases in the future?
Yeah, generally speaking, I don't think anybody in these intervenors' testimonies supported that. Again, we'll be working with them over the course of the next few weeks into the next year probably to try and figure out if they'll support us on a longer timeframe than the one year that we're currently pursuing.
Okay, great. Thank you very much.
Thank you. If you find your question has been answered, you may remove yourself from the queue by pressing star 2. We can now take our next question from Andrew Weisel from Scotiabank Howard Weil. Please go ahead.
Hey, good morning, everybody. First question.
Good morning, Andrew.
You mentioned you're trending toward the high end of guidance. Does that reflect the $0.02 benefit from the hot July weather and/or expenses from the storms that John mentioned, or does that assume normal weather since June 30th?
Yeah, Andrew, this is John. It does include both of those items.
Yes. just maybe
Andrew, for the year, we picked up $0.05 in the first quarter from weather. We lost $0.02 in the second quarter from weather, and then we're expecting to pick up another $0.02 up in July. Year to date, through July, we're about $0.05 ahead of plan as a result of weather impacts on temperatures. As far as the storm itself that John referred to, we don't expect any significant impacts on earnings as a result of that. That really puts us, like I said, around $0.05 ahead of plan right now.
Very good. Next question. I know you updated and rolled forward the CapEx forecast in November. I think you mentioned that in the remarks as well. I am hoping we can get some kind of a sneak peek here. In the past, you've been pretty consistently increasing CapEx guidance for the near-term years. Should we expect that again, or might there be other limiting factors, be it affordability or the balance sheet or whatever?
Yeah. Like I said, Andrew, we'll be prepared to talk about that in more detail when we issue that information in early November and then go into a fair amount of discussion with a lot of the analysts during our EEI finance conference in early November.
Fair enough. I'll have to be a bit more patient, I guess. Lastly, if I can squeeze a third one in. A lot of your neighbors in Wisconsin are taking the approach of combining efforts to own larger solar farm sites. Benefits like economies of scale, et cetera. I know you have joint ownership of a natural gas plant, though I do remember the history behind that as well. Is this joint effort approach something that you might consider in the future? I know your near-term plans are pretty locked and loaded for renewables, but over time, should we think that you'll continue to build your own assets, or might you combine with other utilities in your states?
Yeah. Thanks for the question, Andrew Weisel. This is John. Certainly all of those options will be on the table. We had a solid track record of some of our individual owning and operating, but partnerships with others is certainly a possibility as well.
All right. Thank you very much.
Thank you. We can now take our next question from Michael Sullivan from Wolfe Research. Please go ahead.
Hey, good morning.
Morning.
Good morning.
Just circling back to one of the questions I was asked on the rate case. Just given the recommendations that were given on equity ratio and just the spread relative to what you're asking, I guess what kind of gives you guys the level of comfort that'll be needed to give equity plans with the Q3 update?
Yeah, Michael, right now, what we're planning on doing, I would say over the probably matter of maybe 8 weeks or so, we'll be working closely with the interveners to try and identify opportunities for us to align on settlement parameters. Right now, the procedural schedule provides for some additional rebuttal testimony between the different interveners, and then we have a date in later September where any agreements that we reach before we get to the hearing process, we file as part of a settlement notice. We'll be working closely with the interveners over, like I said, a matter of the next few weeks to try and figure on how we can gain more alignments on those types of issues, as well as all the other issues that have been filed as part of the testimony.
We've had a really long history of engaging in these collaborative processes with interested parties. While we believe in the merits of our case, we're looking forward to trying to figure out some collaboration to reach alignment on some of these issues before we get to the hearing.
Okay. Yeah, just kind of given what you said on the history and what you've seen from yesterday's filings would kind of be relatively in line with what you would have expected and not something like too far out of whack that would take settlement possibilities off the table?
Yeah, I think that's a fair assessment. Nothing that we saw in yesterday's testimony was unexpected at this point. It's a normal part of the process. Like I said, we'll be working with them closely over the next few weeks to try and gain alignment before we get to the hearing.
Okay, thanks. My last one, just also kind of tied to the rate case, but also just thinking longer term about your generation needs and the like. Once you get through this upcoming wind program, particularly in Iowa, is there an opportunity for more beyond that? When do you start thinking about that? How tied is it to the renewables rider that you're asking for in the case?
Yeah. Michael, this is John. We certainly see some opportunity for additional grid investments on the heels of the great renewable portfolio that we're putting forward right now. I would see that being a little more in the center of our next investment cycle for IPL.
Okay. Thank you.
Ms. Gille, there are no further questions at this time.
With no more questions, this concludes our call. A replay will be available through August ninth, 2019 at eight eight eight two oh three one one one two for U.S. and Canada, or seven one nine four five seven zero eight two zero for international. Callers should reference conference ID four one seven five five four three and pin nine five seven eight. In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the investor section of the website later today. We all thank you for your continued support of Alliant Energy, and feel free to contact me with any follow-up questions.
This concludes today's call. Thank you for your participation. You may now disconnect.