Good morning, and welcome to Alliant Energy's ESG Investor Event. My name is Barbara Tormasi. And on behalf of the company, I would like to express our appreciation for your joining us this morning. Alliant Energy is a leading utility in the ESG space. Today, we look forward to sharing with you both the progress we've made and our future plans that are going to make us even stronger.
Let me cover today's agenda with you. First, our CEO, John Larson will set the stage discussing our leadership in clean energy. Robert Durian, our CFO will be up next and he will cover our value proposition for investors, including our strong future growth story. Then we will have a panel discussion with a group of senior leaders who will highlight key aspects of our work in the social and governance areas. This includes our focus on employees, customers and communities.
The panel includes Jim Gallegos, Diane Cook, Amy Davis and Terry Copa. Finally, we will have a Q and A session and we look forward to addressing questions you may have about Alliant Energy. I encourage you to enter your questions anytime during the meeting. We will queue up questions that we receive and we'll answer them during the Q and A session. And note, information we provide today will include forward looking statements, which are based on current views and assumptions.
Additional factors may cause actual results to differ. These factors can be found in our SEC filings, including our Form 10 ks. We also will discuss non GAAP results. Reconciliations for non GAAP figures are available. Details for both of these items are in today's presentation and are available on our Investor Relations website at allionenergy.com.
Now I'd like to ask David De Leon, the President of our Wisconsin utility, to start us off with a safety share.
As Barbara mentioned, I'm David de Leon. At Alliant Energy, we like to begin all of our meetings with a safety share, and I can't think of a better way to kick off our ESG Day presentation by doing the same. We are now deep into another hot summer here in the Midwest. So I would like to talk a little bit about emergency preparedness for severe weather. It's not uncommon this time of year for severe storm to show up with little or no warning, And it's always important to remember what to do if you have severe weather headed your way.
The first thing you should do is identify the best place in your home to be in the event of severe weather. Typically, this will be a bathroom or a basement and ideally, it will be the lowest point in your home and away from any windows. You should also be sure to have basic supplies in this area, such as a flashlight, a weather radio, a first aid kit, as well as communication devices, such as a landline phone or a cell phone, all well charged. It's also a good idea to keep nonperishable food and bottled water in this area. Although it does not happen often, some storms are severe enough to cause power outages that may last hours or in extreme cases days.
If you do use a generator, have gas available and please do not use your generator to back feed power into your home circuit by plugging into an outlet. You should have a licensed electrician install a connection point for you. Back feeding power into your home circuit is dangerous and often illegal. This can cause electricity to feed out of your home onto the electric distribution grid and could result in 1 of the utility line technicians being injured. Keeping these preparation tips in mind and having all family members understand the plan will put you in the best position possible to weather a severe storm safely and without an injury.
Thank you for being safe and I hope you enjoy the remainder of today's presentation.
Thank you for your interest in Alliant Energy. Headquartered in Madison, Wisconsin, Alliant Energy has served customers across Iowa and Wisconsin for more than 100 years, providing regulated electric and natural gas service to customers each and every day safely and reliably by employees who are dedicated to delivering on our purpose of serving customers and building stronger communities. Positioned for growth, we are continuing to modernize and expand our electric and gas distribution systems, while accelerating expansion of renewable energy. Our strategy is focused on building a cleaner energy future, keeping costs affordable and creating a simple personalized experience for customers across Wisconsin and Iowa. Alliant Energy has been recognized for our leadership role in sustainability with transparent reporting.
And we continue to be recognized for our efforts across the broader environmental, social and governance landscape, showcasing our broader commitment to corporate responsibility, as well as for our efforts to invest in our communities, driving economic development across Iowa and Wisconsin, strengthening the communities we proudly serve and call home. With a strong investment proposition and a track record of consistent shareholder returns, we invite you to learn
more about our story
and how Alliant Energy is powering what's next in energy. Alliant Energy, powering beyond.
Hello. I'm John Larson, CEO of Alliant Energy. Thank you for being with us today. I'm joined today by members of our leadership team and we're excited to share our ESG journey with you. It's been a natural evolution for us and a direct outcome of how we deliver on our purpose to serve customers and build stronger communities.
Align Energy is a leader in the transition to clean energy with a clear path for the future. We've created a clean energy blueprint to guide our actions and we'll share key destinations along that path during the course of the day. We know how important a clear vision and solid execution is when making investment decisions and Alliant Energy has both. Before I begin, I'll take a few moments to give you a quick background on Alliant Energy. We're a Midwest based utility with about 1,000,000 electric customers and over 400,000 natural gas customers.
We operate in the states of Wisconsin and Iowa. We have a long track record of delivering consistent earnings growth for our investors. Last year marked our 11th straight year of achieving our targeted earnings growth. And for 2021, we announced earnings per share guidance that represents a growth of 6.2% over last year. We have approximately $11,000,000,000 in total rate base, dollars 3,400,000,000 of operating revenues and Alliant Energy is powered by more than 3,000 dedicated employees.
So let's turn our attention back to our clean energy journey. I started my career at Alliant Energy more than 30 years ago and I've seen a great deal of transition. But our mission to deliver safe, affordable and reliable energy has remained constant. And as we take the next important steps in our clean energy journey, that mission is even more important. So why is the transition to a clean energy future important?
It starts and ends with our customers. I think about our customers here in the heart of America. I think about the communities and businesses we so proudly serve. I think about the farmers. They work hard to make a living and feed the world.
They rely on our energy and a sustainable environment for the health of their crops. I think of the impact we have on local economies and I think of my family and the responsibility that I have to be part of a sustainable and promising tomorrow. Over the past few years, I've had the opportunity to meet with many investors from all around the world. It's been one of the most rewarding parts of my job. And while I've heard different investment goals and objectives, one common theme has been the interest in our path to an efficient and low carbon future.
I mentioned earlier, this is not new for us. We've been reducing our carbon footprint for well over a decade, transitioning from smaller and less efficient coal units to more wind and natural gas. We're currently the 3rd largest owner and operator of regulated wind in the United States. So how did we achieve this? I'll point to 4 important drivers.
1st, we have exceptional wind resources in our service territory. 2nd, we do business in constructive regulatory environments. 3rd, we've developed strong landowner relations and partnerships. And finally, we have a strong track record of delivering projects on time and on budget. As I mentioned earlier, this is all driven by our desire to deliver value to our customers.
The cost to build and operate renewable resources has continued to decline, making them a smart choice to serve our customers well into the future. And with the support of our communities, partners and regulators, last year we achieved a major milestone by completing the construction of over $2,000,000,000 worth of wind generation. It's now online and providing clean energy for our customers. I'd also point out that we've recently added 2 new highly efficient natural gas generating facilities, 1 in Wisconsin and 1 in Iowa. They complement our renewable portfolio and help us maintain our balance of safe, affordable, reliable and resilient energy.
These quick response and dispatchable resources are a key part of our balanced energy portfolio and they help ensure we can meet the needs of our customers in all conditions. They were designed through state of the art engineering with an eye for environmental stewardship, using 99% less water and emitting 55% less carbon compared to the generation resources they replaced. As we continue to transition to cleaner energy sources, these facilities play an important role as a bridge to the net zero future. Our investment in wind and the associated retirement of older fossil fuel generation has changed the mix of our assets. Today, over 20% of our utility rate base is dedicated to renewable generation.
That's progress, but we aren't done. So let's look to the future. Through significant collaboration with our stakeholders, we've developed what I referred to earlier as our clean energy blueprint. It guides the next steps of our clean energy transition. We evaluated resource options, analyzing many scenarios, all of which were designed to provide our customers with clean, safe, reliable energy for many years to come.
We'll continue to improve our plans and while wind was a major part of our more recent phase of the transition, solar energy and storage will play a major factor in the years to come. So with the wind at our backs, we're now turning our faces to the sun. We've recently announced our plan to install nearly 1.5 gigawatts of solar generation, furthering our national leadership in renewable energy. And our rate base will continue to evolve. By 2024, we'll be out of coal in Wisconsin and well advanced down that path in Iowa and nearly 25% of our total rate base coming from clean energy.
Now no clean energy story would be complete without sharing a few numbers. First off, in 2020, we achieved 42% reduction in CO2 emissions compared to 2,005 levels. And we have a clear path towards our goal of a 50% reduction by 2,030. We've reduced water usage by 66% in 2020 and we're on a path to 75% reduction by 2,030. And I'm excited to share that we've already met or exceeded our ambitious NOx, SOx and Mercury emission goals.
Looking forward, our aspiration is to achieve net zero carbon dioxide emissions for the electricity we generate by 2,050. Our current plans get us a long way to that goal, but there's more work to do. We're encouraged by the significant resources being dedicated to solving the technological challenges of carbon reduction. We know it will take a variety of changes and innovation to reach net zero. Some of those possibilities include the expanded use of battery storage, carbon capture and sequestration and hydrogen.
We're actively participating in finding solutions. One example is by being an anchor sponsor of a low carbon resource initiative led by our industry. This initiative is researching and developing innovative technologies that will propel our industry to net zero carbon emissions. I encourage you to review our updated corporate responsibility report, which we released today to learn more about how we're working toward a clean energy future. You'll see that we announced a new commitment to plant 1,000,000 trees to represent the customers we're so privileged to serve.
As these trees grow, they'll capture CO2 out of the atmosphere and our customers and communities will enjoy their beauty for many years. You'll also learn about our sustainable construction practices From the early planning stages, all the way to delivering the 1st megawatt hour of energy, we're focused on sustainability. To help us demonstrate this commitment, we sought Envision certification for many of the projects we've built. We now build all of our generation projects guided by our commitment to the environment. Our clean energy transformation is not just about generation.
You'll also learn through our report that we plan to electrify our light duty vehicles by 2,030. Electrifying our fleet is important way we can increase the sustainability of our operations, while also saving our customers money through lower fuel and maintenance costs. We also continue to invest in building a strong and resilient interconnected grid, adding smart technologies and transitioning our electric distribution lines from overhead to underground. These investments will ensure the resiliency and reliability of our distribution system, reduce customer costs and allow for more distributed renewable generation on our grid. The last thing I wanted to talk about is our transparent ESG reporting practices, which are aligned with established frameworks.
We have also participated in the CDP Climate Questionnaire and this year will participate in the water portion of that disclosure. Our board provides strong governance on ESG and regularly reviews the progress we're making to achieve our ESG goals. Our Nominating and Governance Committee reviews and approves the corporate responsibility report. We believe this transparent reporting is important so that you can evaluate our sustainable results. We're proud that our progress has been recognized by several key ESG rating organizations who rate us near the top of the utility industry.
We know this is an evolving area and we will continue to improve our disclosures to meet the expectations of even more stakeholders in the future. Through all these efforts, I hope you'll see that for us, ESG is not just about checking the boxes. It's fundamental to our core values and our purpose. I'd like to thank you again for joining us for this exciting event and for your interest in Alliant Energy. Next, let me introduce you to Amy Davis, our Vice President of Marketing, Communications and Community Affairs.
She and Robert Durian, our CFO, will tie our strategy and clean energy vision to the Align Energy investment thesis.
Hi, I'm Amy Davis and I'm joined here by our CFO, Robert Durian. We'd like to spend a few minutes sharing the value that's created for investors by our clean energy transition. Robert, we just heard a lot of great things from John about Alliant Energy's transition to cleaner energy. Could you share how this transition will impact the earnings growth trajectory of the company?
Sure, Amy. As you know, we've got a strong track record of consistent earnings growth supported by our energy transition. In fact, 2020 was the 11th consecutive year of EPS growth at or above 5%.
So what do you see as you look to the future?
We have a robust and flexible capital expenditure plan that enables sustainability of our earnings growth over time. And we expect our capital expenditure run rate of about $1,400,000,000 to $1,500,000,000 per year, allowing us to grow our rate base by about 6% annually. This level of investment supports our EPS growth targets of 5% to 7% and it really minimizes our need for new common equity. And when you combine that with our cost reduction and sales growth, it really helps us maintain affordable rates for our customers.
I'm curious, how are you thinking about our transition to cleaner energy sources in terms of our CapEx?
Sure. The transition to cleaner energy sources will continue to be an important component of these capital expenditure plans and our growth. In recent years, approximately 35% of the capital expenditures has been spent on renewables, largely related to our wind expansion program in Iowa. And when we think about our capital expenditure plan for the next 4 years, it has a pretty similar amount of spend, about $2,000,000,000 mostly on solar projects in our Wisconsin and Iowa jurisdictions. This really positions us as a leader of regulated owned renewables in the United States.
And when we think about financing these, the majority of the renewables has been financed with a $1,100,000,000 of green bonds over the past few years.
And I know as we look even further into the future, we expect clean energy technology to continue to improve with additional cost reductions, allowing us to evolve our generation resource plans to really capture the best mix for our customers.
Yes, you're right, Amy. And as we think about this transition to cleaner energy, it's really an opportunity for us to continue our consistent trend of 5% to 7% EPS growth each year further into the
future. I know in order for all of this to be sustainable, we have to keep rates affordable for our customers. So could you talk a little bit about our efforts in customer affordability?
So we're very focused on maintaining customer affordability. When you think about it, our average retail electric rates in both Iowa and Wisconsin are about $0.10 to $0.11 per kilowatt hour. This is at or below the national average while having one of the highest percentage of owned renewable generation in the industry.
And I know our teams are really looking to reduce O and M. So can you tell us how much we're targeting? And what are some of the key areas we're focused on?
We're looking to make annual O and M reductions of 3% to 5% over the next few years. And we've got an investment plan that's really been focused on developing and enabling these cost reductions, including renewable energy to replace some of the more costly retiring coal plants. And we've got electric distribution spend where we're moving distribution underground into a 25 kV standard to lower our long term costs. And also technology investments to enhance the productivity and efficiencies of our processes.
So those are some of the O and M things we're doing. What are other things we're working on to reduce costs?
We're also proposing new regulatory and financing mechanisms to support customer cost objectives. This includes a levelized cost recovery mechanism in Wisconsin for a retiring coal plant that we included in one of our recent rate settlements. This recovery mechanism helps reduce customer costs during that transition from coal to solar. And we're also pursuing tax equity partnerships for our planned solar projects. These accelerate tax benefits to reduce cost for our customers.
Both of these are great examples of innovation by our employees to maintain affordable rates for our customers.
We've been reading a lot about legislation being proposed in Washington. How do you think all of that might affect us?
We're really busy advocating on behalf of our customers for this new legislation. This includes pursuing tax changes that provide further cost benefits for our renewables. And no matter the outcome of that legislation, we feel well positioned to maintain affordable rates for our customers.
I know as we've continued to grow our renewables portfolio as an organization, we've really gained a lot of experience and expertise in owning and operating renewables. So could you speak a little bit more about our approach to owning versus purchasing renewable energy? And maybe what kinds of benefits we see from our approach?
We've utilized both ownership and purchase power agreements for cleaner sources of energy in the past. Currently, our mix of renewables is about 60% owned and about 40% purchased power agreements. When we look to the future by 2025, we anticipate we'll own more than 70% of our renewables and we really have a bias to own given several advantages for our customers and our communities.
So what are those advantages?
So first off, Amy, we really think about ownership allowing us to locate renewables in our service territory as an economic development driver. We make landowner and tax payments into the communities we serve. And it also provides good paying jobs to support the local economies. Next, ownership allows us direct management of those landowner and community relationships that are so important as we're really good stewards of the land and good neighbors. 3rd, it also provides us an ability to reinvest and reinvent the sites by repowering the sites and adding batteries to the sites.
Both of these enable future investment opportunities for our customers. And lastly, we see ownership is really helping provide that long term price stability that our customers appreciate.
That's interesting, Robert. It's got me thinking. How do regulatory mechanisms support all of this?
Sure. In both states, we have pre approval processes before construction that provide more certainty with utility ownership. And specific to our Iowa rainmaking principles. This allows a higher ROE for the life of the project. And this really encourages utilities to pursue in state generation to support that economic development.
One opportunity that I know we're considering is repowering our older wind farms. Is that something you think that will happen in the near term?
So currently, we own about 600 megawatts of wind eligible for repowering. This wind was built as part of the first phase of our wind projects in the late 2000s. And it's now come to the end of its 1st 10 years of production tax credits. So when you think about repowering, it also has been enabled by the advancements in technology over the last decade. Wind projects have taller towers, longer blades, all of this resulting in increasing capacity factors from the mid-30s about a decade ago to the mid-40s to upper-40s today.
So this significant increase in energy output combined with the requalification of PTCs really makes it economically attractive to repower for our customers. And as far as the timing goes, think about this as more of a mid to the end of this decade opportunity.
I'm going to switch gears on us here just for a second. You can almost not turn on the news today without hearing about the pace of change in technology. It certainly changed the way we work and how we deliver energy to our customers and communities. So what about future technologies for us? Will we be making investments in technologies that aren't being used on the system today?
We've got a pretty clear path to about 80% carbon reduction with our clean energy transition. But when you think about that final 20% to get to net 0, it's expected to require new technology to us. It's important to note that this new technology doesn't always mean unknown technology, however. Some of that technology simply needs to improve efficiencies or lower its cost to become economic for our customers.
So what are we working that now?
First off, batteries. So we've got many smaller pilots in our service territory today utilizing batteries. And the cost of those continue to decline with time. As we look out maybe to the middle part of this decade, we expect more opportunities for larger scale storage applications. So we're evaluating opportunities to pair those batteries with our growing portfolio of renewables for our customers.
And we're also thinking about batteries as being opportunities to locate these at sites of former coal plants as peaker sites. So watch for a possible uptick in battery investments in the middle of the latter part of this decade.
So those are some of our near term things we're focused on. In addition to battery storage, is there anything further out that we're looking at?
Yes. A second area involves something called green hydrogen. So
we've got
an opportunity to use wind and solar output to produce green hydrogen for resale. We could also use some of our natural gas units to burn this green hydrogen to reduce emissions. So almost like a battery with stored energy for dispatchable clean power. We anticipate it will probably be into the next decade, however, before they have any meaningful investments in green hydrogen, but it's definitely an opportunity that we're interested in pursuing and monitoring.
Well, Robert, those are all the questions I planned for our time today. Want to thank you for sharing your insights with us.
You're welcome, Amy.
At Alliant Energy, our customers are at the heart of everything we do And while we are powering what's next, we're taking advantage of cost effective electricity generated for wind and the sun, putting renewable energy to work for our customers. This isn't new for us. We've been advancing renewable energy for more than a decade, but we want to do more. Not only is renewable energy cheaper to produce, it's better for our environment. And that's why we created our Clean Energy Blueprint.
It's a roadmap that guides us to a clean energy future, accelerating our transition to renewable energy and strengthening our communities, leading us to our ultimate destination, a sustainable energy future. Along the way, we'll try new things, embrace new technologies. For example, we're using battery storage to capture wind and solar energy and release it back onto the energy grid when the wind isn't blowing and the sun isn't shining. And we're adding smart devices on our power lines that automatically detect problems and redirect the energy to keep the lights on and the power flowing. To meet the changing energy needs and preferences of our customers, we're creating new programs and services.
We help our residential customers find energy efficient solutions for their homes and partner with our business customers to adopt the latest technologies by electrifying equipment currently powered by traditional fuels. These are just a few examples of how we are providing our customers with more choice, convenience and control over their energy use. At Allied Energy, building stronger communities is what drives and inspires our optimism for the future. Our economic development efforts include shovel ready business parks across our service territory, bringing new businesses and jobs to our region. By accelerating the transition to cleaner energy, embracing new technologies and investing in our communities, we're not only acting for tomorrow, we are powering what's next.
In the utility industry, we place a lot of emphasis on the environmental portion of ESG because it's an area where we can have a wide reaching impact. But we also devote substantial time to focusing on the social and governance aspects of ESG as well. Now when I think about the social side of ESG, I think about our purpose and the importance of building stronger communities. And how investing in a diverse and talented workforce is essential to bringing that purpose to life. Good governance wraps around everything, supported by transparent policies and Board alignment.
It's essential to delivering on our strategy. I'm joined today by a few of my colleagues for a discussion on these topics. And I thought we'd go around the table now and introduce ourselves.
Hi, I'm Diane Cook and I lead our Human Resources and Safety teams.
Hi, I'm Terry Coburn and I am the President of our Iowa Utility.
And I'm Jim Gallegos, the Corporate Secretary of Alliant Energy.
It's so nice to see all of you today in person. Now we're very much in a different spot than we were a year ago. And I can't imagine a year that our social efforts were so important for our company. Not only during the pandemic, but after the wide ranging duration that swept across our Iowa service territory. Now Terry, I know you had a firsthand account being on the ground there.
Could you a little bit of your experience?
Sure, Amy. For me, August 10, 2020 is the day I'll just never forget. We had Alliant Energy customers without power. I witnessed firsthand the devastation to homes, to businesses, to schools, farms and fields and trees across the communities we serve. The day after the storm, I woke up about 2 in the morning and naturally couldn't go back to sleep.
So I got dressed and I got on the road. And as they drove through Iowa, there was not a single light on for miles and miles. And that's an unbelievable feeling when you worked in this business for 40 years. This storm was especially tough for our customers who were already in the midst of a worldwide pandemic. Many customers even had damage to their homes that would prevent them from getting power once we'd restored the grid in their area.
It really drove home for me the importance of the work we do at Alliant Energy, building stronger communities.
Thanks for sharing that, Terry. As you were speaking, it reminded me of how after the storm, even when we were able to restore service, so many of our customers couldn't even receive power because of the damage to their homes and businesses. And it's one of the reasons that we had started Project Reconnect to help those customers make those necessary home repairs. I believe we're up to more than $300,000 now that's been contributed by employees in our company to help those customers in need. It's a reminder of how our philanthropic efforts were so important throughout the year, especially in the terms of the pandemic.
We were able to raise more than $2,000,000 and contribute that to our hometown care energy fund that helps customers pay their energy bills. And as John mentioned this morning, we just announced our goal to plant 1,000,000 trees in honor of each of our customers. It's really just another way that we're able to live our purpose. Diane, in addition to serving the diverse needs of our customers and communities, we also have to serve the diverse needs of our talented workforce. What are some of the new approaches we're taking to be able to attract and retain a diverse and talented workforce?
Well, Amy, I agree with your earlier comments about the amazing responses of our employees to the many unplanned events of 2020. We have over 3,300 employees across our Wisconsin and Iowa territories who are essential to the success of our company and to the care of our customers. We have a lot of diversity in the work we do. And overall, diversity, equity and inclusion is so important to us. We are focused on creating a sense of belonging for every employee.
When people feel that they belong, they bring their whole selves to work. And when we have that, we are best able to innovate, continuously improve and deliver on our purpose of serving customers and building strong communities.
You know, Diane, that makes me think the events of last year highlighted the importance of inclusion. So what are some of the things we're doing in response?
We increased our focus and activities in a number of ways. Last year, we held listening sessions at locations throughout our service territories. We heard from employees of color and outside speakers about their own experiences with racism and discrimination. And earlier this year, we held a series of conversations we call Days of Understanding with more than 80% of our employees attending. It resulted in great dialogue about continuing to improve inclusion at our company.
Diane, if I could share something for a moment. I was so excited to hear the enthusiasm from our employees and the personal stories they shared during these sessions. For example, one employee who works in field operations said that he wanted his fellow employees to feel comfortable at work and not worried about other issues that are distractions. This employee shared that he felt it was imperative that people feel comfortable and included to be their true selves at work and shared how he felt it would make the workplace safer. When employees feel comfortable, they can focus on the task at hand instead of worrying about how they will be perceived and that makes us all safer.
After attending the listening session, this individual was excited to support his fellow employees and advance our diversity and inclusion journey. I'm really excited to see and feel this energy and how this is changing our culture.
Thanks for sharing that, Jim. It's a great example of the power of these conversations. In addition to having a workplace that fosters inclusion and belonging, we are taking meaningful actions to bring more diverse employees into Alliant Energy. Many of our early and new and career employees are hired out of our internship programs. Our outreach includes connecting with campus groups like Society of Women Engineers and the National Society of Black Engineers to provide broader awareness and access to our internship programs.
And we are in the 2nd year of our pre apprenticeship program, which provides a pathway into our energy delivery careers for people who have not had access to traditional technical training programs. Essentially, this is an 18 month program and is open to applicants based on aptitude as opposed to our full apprenticeship program, which requires applicants to have already completed technical training.
Diane, we've heard a lot today about our transition to cleaner energy. And that's wonderful for the environment and for our customers. We don't often talk a lot about what it means for our employees who've worked for decades at our coal facilities. Could you share a little bit more about how we're thinking about that transition from the employee experience?
I'm really glad you asked that question, Amy, because such a critical element of our transition to clean energy is in how we care for those impacted employees. Our coal plants have operated safely and reliably for decades and provided the energy our communities needed. When we plan to retire our unit, we are transparent with those involved, ensuring they receive multiple years' advance notice so they can prepare for what's next. Many employees at these facilities have been with us for their entire careers and are eligible for retirement. Some are earlier in their careers, and we work with them on a plan for their future.
We provide opportunities to reskill and qualify for other roles at Alliant Energy. And we offer a severance package that includes funds for education to prepare for alternate career and employment opportunities. No two employees are exactly alike, which is why we listen to and work with each individual so we can assist them with their specific needs.
Terry, I know how important strengthening our communities is to us and a focus for you and your teams every single day. How are your teams advancing our efforts across Iowa and Wisconsin?
It sure is, Jim. And we're very fortunate to operate in 2 states with strong and resilient economies. Both of our states have a diverse mix of industrial customers, largely based on essential industries of food and agriculture with stable energy use in economic downturns such as the pandemic. We did see lower sales last year due to the pandemic, down about 2% versus 2019. And we're encouraged by the recovery we have seen now with sales generally back to normal levels, which speaks to the strength of our economies.
We believe affordability of energy plays a critical role in the strength of our communities, because it attracts new and expanding businesses to the area and makes our service territories a place where customers want to live and work.
Terri, with all that said, we've also been working a lot with our regulators and other stakeholders to bring more renewable options to our customers. Jim, would you like to share a little bit more about our customer renewable tariff options?
I'd be happy to. In Iowa, Wisconsin, we have 2 of the most constructive regulatory environments in the nation. We've worked collaboratively with our regulators in both states to create options for our customers that help them meet their renewable energy goals. One of these options is our customer hosted renewable program. We recently announced plans to build a large solar garden at one of our commercial customers.
Another option allows residential customers to get 100% of their electricity from solar, even if they live in an apartment or don't want solar panels on their home. We also have programs that allow commercial and industrial customers to contract with Alliant Energy to build renewable generation on their behalf. We're also looking at other programs that customers might be interested in.
Thanks for that, Jim. I know we've received a lot of interest in these programs from many of our customers. And really that leads me to economic development. We place a great deal of emphasis on economic development at Alliant Energy because not only does it lead to more employment opportunities for our customers and direct investments in the communities we serve, but higher sales also lead to efficiency in our operations and lowers cost across our customer base. We've seen a resurgence of activity in the first half of twenty twenty one as we continue our journey out of the pandemic.
Existing customers are ready to expand, new customers are ready to build. We have over 2,600 acres of certified land across 4 industrial park sites that we've developed to assist new industrial customers in locating to our service territory. As a result of these efforts and others, we've been named as a top utility for economic development by Site Selector Magazine 2 years running. Of course, having strong governance policies in places are really what helps all these ESG efforts come together. Jim, I know how well all our teams collaborate on governance.
Can you talk a little bit about how you think about governance overall?
Having well thought out governance processes that are transparent are critical to our long term success. It all starts out with our Board of Directors. We have a strong and experienced Board who are recognized as accomplished business leaders. They are also diverse in terms of ethnicity, gender, experience and tenure. Our compensation and personnel committee of the Board is accountable for ensuring the compensation is tied to our results, including achieving our ESG targets.
Executive compensation targets include our carbon reduction goals and increasing the diversity of our workforce.
That's interesting, Jim. We heard John speak earlier about our ESG related scores and how our board is regularly engaged and looking at those metrics. What actions have we taken recently to the governance level in response to
that? Over time, we've made changes to our ESG disclosures, including some this year. We just announced that we've adopted a human rights policy. We created a formal policy so our customers, suppliers and shareholders know where we stand on the issues of human rights. Another area we saw an opportunity to improve was adding more detail on our diversity disclosure.
This year, we're adding a disclosure related to our senior level employees and next year, we plan to expand that disclosure to every employee level. We continue to evolve our governance to make sure we have policies and disclosures that are meaningful and transparent.
Thanks Jim for those insights. And thank you Diane and Terry for joining our conversation today.
At Alliant Energy, our purpose is to serve customers and build stronger communities. How we deliver on that purpose reflects our broader responsibility to our customers, employees and shareowners. Last year, we highlighted our clean energy goals and how we're acting for a better tomorrow. This year, we're pleased to showcase even more examples of our environmental stewardship along with our efforts to address the important social needs of the communities we proudly serve. Every day, our employees use their energy and talents to deliver on our purpose and help build a cleaner future.
They're excited to help tell our story. Please take a few moments and listen to how they bring our purpose to life.
We are creating a cleaner energy future by adding more local, sustainable energy. Not only is it cost effective, it also provides sustainable benefits for our communities and for our customers. We're taking advantage of the unique landscape here in the Midwest to harness the energy of the wind and sun as we work towards our goal of fully eliminating coal from our energy mix by 2,040. It's going to take new technology and creative approaches to advance our 2,050 goal of achieving net zero carbon emissions from electricity we generate. It's one of the reasons I'm excited about our newest effort to plant 1,000,000 trees over the next 10 years.
That's one for each of our customers. In addition to providing shade, as these trees grow, they will naturally reduce greenhouse gases, improve water quality and provide wildlife habitat, making the future brighter and greener for our customers and communities for generations to come.
As the 3rd largest owner operator of regulated wind
in the United States,
we've made tremendous progress in transitioning our generation fleet to cleaner energy sources. As we look to expand our renewable portfolio, we're turning to the sun with a plan to build out nearly 1500 megawatts of solar throughout Wisconsin and Iowa over the next few years. These investments in homegrown energy will bring economic benefits to the communities we serve through job creation and provide new sources of local revenues. Not long ago, distribution of electricity was a one way street. We generated energy and we delivered it directly along transmission lines, through substations and along overhead lines and gas pipes to homes and businesses.
Now, a two way energy highway flows freely between all parts of the grid. We're investing in new battery storage systems, enhancing the cyber protection of our energy grid and continuing to improve reliability by moving power lines underground, all to make the power grid smarter and stronger.
As important as our efforts are to improve the environment, it's equally important that we thoughtfully address the social needs of the communities we proudly serve. The events of last year shaped many discussions about diversity, equity and inclusion. As a major employer in our region, we looked for ways to become an even more welcoming and inclusive workplace. Our diversity, equity and inclusion leadership team spearheaded dozens of employee gatherings throughout the year, engaging thousands of employees in conversations about what it means to be an inclusive workplace. And our 6 active employee resource groups provide ways for employees to network, support and share their personal experiences on important issues.
We've also implemented diverse interview panels and inclusive job postings, developed pre apprenticeship programs for underrepresented individuals, designed youth apprenticeship programs and an early talent careers program. And we've launched more inclusive gender self identification options for employees. Initiatives like these engage and educate employees, remove barriers and build new bridges into communities.
I'm proud that Alliant Energy is an integral part of the communities we serve. When they grow and thrive, so do we. The recent economic challenges facing our region due to the global pandemic made our commitment to philanthropy more important than ever. Our efforts focused on combating hunger and supporting housing programs for families. We also continued to support programs focused on workforce readiness, environmental stewardship and diversity, safety and well-being.
Throughout the year, our company, employees and retirees donated $8,700,000 to non profit organizations, and we volunteered more than 63,000 hours of our time, bringing our purpose to life. We celebrate our employees who live our values through volunteerism and philanthropy. They are an integral part of the fabric that makes up the communities where we live, work and play.
Customers are at the heart of all that we do. And when the economic challenges of the pandemic set in, we quickly rallied to help. We proactively contacted customers, helping them navigate available programs such as the Federal Low Income Home Energy Assistance Program and the Hometown Care Energy Fund, a local community action program funded by Alliant Energy. We also offered a new flexible payment arrangement that allows customers in need to pick a monthly payment that works for their unique circumstances, giving them personalized options to stay on track. And we launched our redesigned self-service tool, My Account, giving customers even greater control.
With My Account, customers can receive proactive notifications the way they choose, by text, email or voicemail about their energy usage, payment reminders and more.
I hope you enjoyed learning more about Alliant Energy and how we live our values every day. I encourage you to discover even more about our company by exploring our latest corporate responsibility report. At Alliant Energy, we embrace the path to a clean energy future, and we're excited to bring solutions that solve the complex challenges of our ever changing world, so you can focus on what matters most to you, because it's not just about the energy, but what it powers us all to do together.
We've assembled members of our leadership team for the question and answer portion of today's event. In addition to the people you've already met, we are joined by Jeff Hanson, the Director of Environmental Services and Corporate Sustainability. And as a reminder, we'd love to hear your questions, so please continue to answer them or excuse me, please continue to enter them onto the screen. John, as the team works to consolidate our questions, I thought I'd kick us off with one that we hear pretty frequently from investors, and that is what factors would drive our further acceleration of our carbon decarbonization goals?
Yes. Great one, because we do hear that quite often. When we think about it, I think the main factor is our customer. Talked about that a little bit earlier in the day, how important it is to make sure that the benefits that all of this transition will have for customers keeps pace with our acceleration into decarbonization. I also mentioned we've been on this journey for quite some time.
So we're getting quite good at it. We've been on the path of retiring older coal units, building, owning and operating renewables. So we get more efficient as we deploy capital and we make sure that the customer benefits stay in pace with that. We do see the opportunity to keep that momentum into the future, so very important factor on the customer front. Terry Koba, who's with us today, I know spends a lot of time in running our Iowa business talking to customers about that as well.
So Terry, if I could invite you to maybe share a few thoughts that you might have on this topic as well.
Sure, John. It's a great topic. I love talking about this. So when you think back of what we've done over the last decade or so, retiring some of that aging coal infrastructure, bringing in new exciting, cleaner renewables. And all the time, as John mentioned, focused on the customer, focused on affordability, focused on a reliable system, focused on moving to that cleaner infrastructure, just a very exciting transition in the industry and certainly in our company.
And when you think about the fact that by 2025, we will no longer be operating coal plants in Wisconsin and no longer be operating any wholly owned coal plants in Iowa. That's a pretty amazing transition over a matter of years to that cleaner energy future. And again, focused on our customers' affordability, reliability and getting to that cleaner energy future.
Great. Thanks, Terry and John. Our first question from the audience is from Darius Losney. And John, he's asking, given our experience as a co owner of Generation in Wisconsin, would we consider partnering on solar plus storage projects as other utilities in the state have done?
Yes, certainly. I appreciate the question. We would certainly look at all forms of partnerships. When you think about that, building out renewables is really all about partnerships. From the tax equity structure that we're thinking about for some of our renewables as well as partnering with local landowners all the way through quite a bit of opportunity.
So yes, absolutely open to continue to have partnerships as we think about accelerating even more renewables.
Yes.
Thanks for that. Diane, while we wait for other questions from the audience, I'd like to ask you to maybe talk about how we think about the diversity of our Board and how we've worked to increase the diversity.
Great. Well, that's a great question, Barbara, because we have a wonderful story to share. We're committed to our journey on increasing diversity in our organization and it really starts with our Board of Directors. We have 10 members of our Board, 4 are women, 2 are ethnically and racially diverse from other board members and 1 is a veteran. And we have women in leadership roles, including our lead independent director.
Our board is committed to having diversity in all aspects, the background, skills, experiences, tenure, race and gender. They know and they believe that to have that diversity brings broader statement. We know that having a Board that sets the example and models that diversity that we expect for the rest of our organization is so fundamental.
Great. Thanks, Diane. Robert, the next question is from Andrew Weisel. And he's asking, do we have any appetite to build contracted renewables outside of our service territory?
That's a great question, Andrew. We are currently just focused on inside the service territory. We see a lot of benefits, as I explained earlier in my comments, of how when you locate renewables inside of our service territory, it provides a lot of benefits to our communities, whether it's landowner payments, property tax payments. We also see it in creating really good jobs for our service territory. So we do have a bias to want to put it inside our service territory.
I would also add that in the state of Iowa, as part of the advanced rainmaking principles, they actually incentivize us to put new generation into the service territory and that really allows us to get a premium ROE. And so we're focused on our service territory for those reasons. We have in the past put some outside of our service territory, but the current plan is just to focus on our service territory.
Great. Andrew has another question I thought, Robert, that maybe you'd be in the best position to answer. And that's what's our outlook for customer bill increases over time, whether in terms of rates or an average monthly bills?
Yes, another good question, Andrew. So we are very focused on customer affordability, as I talked about earlier. Right now, we're targeting to try and keep bill increases at or below the rate of inflation. We have a good plan to do that from my perspective. The way we've set our capital expenditure targets, the way that we set our O and M cost reduction targets as well as some other cost reduction targets, I think we'll be very effective.
We've been able to do that over the long term. We may see some modest increases over time as we go through rate cycles. But over the long term, we're really targeting at or below the rate of inflation.
Great. Thanks for that, Robert. Terry, if I could direct the next question to you. It's from Michael Sullivan. And his question is, when could conversations start with Mid Am on closing the jointly owned coal plants in Iowa?
Yes, it's a really good question. And certainly, over the years, we've had discussions about that with Mid American, certainly more discussions on the horizon here. Certainly, we're part owner in a number of Mid American's units and they're part owner in our Ottumwa Generating Station. So it's really a collaborative effort as we think about going through and doing our resource plans on what's the appropriate time to retire those coal assets on behalf of our customers. So when you think about our clean energy blueprint, what we just completed in the State of Iowa, really good focus on, we're going to add another 400 megawatts of solar, We're going to add another 100 megawatts of kind of distributed energy resources, plans to switch Burlington to gas at the end of this year and retire Lansing the following year.
So we are really focused on that clean energy blueprint and we'll be having some conversation with MidAmerican in the future about what's the appropriate time on behalf of customers to retire those other coal assets.
Right. And if I can come back to you, Terri, since you're talking. Greg Orrill has another question that I think you're in the best position to answer. And that's what are our efforts around energy efficiency?
Yeah, that's really exciting part of our business. We've worked with customers for many, many, many years on wonderful energy efficiency initiatives. We'll continue to do that in the future. And when I think about that, I think about some new ones recently that were pretty exciting. In Iowa last year, we started a new initiative where we're helping customers manage their energy use using smart thermostats, really in those really hot summer days, those very cold winter days and just help them use their energy wisely.
I think about in Wisconsin last year, we started working with some small and mid side businesses to do energy assessments, help provide them with a device, how they can use their energy wisely, give them kind of monthly scorecards and how they're doing and just continue that whole process of working with them to use their energy very, very wisely. So we've got many initiatives like that in the works. We've been working with very large industrial customers and commercial customers for a long time, going through their facilities, helping them find ways to reduce energy usage, providing them with kind of a digital scorecard where they can look and see how they're doing compared to other years, other times at similar temperatures or different temperatures. So many exciting activities going on the energy efficiency front and we'll continue that in the future.
Terry, I might add to Barbara, if I may, that this is an area that our customers are very interested in and it's an item that they highly rate us on in terms of satisfaction in J. D. Power and other surveys. And so it's something that they really find a lot of value in and an area that we add value to their lives.
Great for that. Great for that add. Thank you. So Robert, the next question I think you're in the best position to answer and it's from Julian. And his question is, how do you think about the returns and specifically the return on equity on these renewable investments?
And in particular, the 400 megawatts underway in Iowa, is this still bifurcated across asset classes as we've seen before for more traditional generation investments?
I appreciate that question, Julian. As we think about renewable expansion, I kind of put it into 2 different states, Wisconsin and Iowa. Wisconsin uses more of a traditional method where what the kind of return on equity is applied to the entire rate base and right now is about 10%. When we think about Iowa though, as I indicated before, there are advanced rainmaking principles that allow you to get a different ROE for your renewables or other generation. And so historically, we've actually been successful in being able to get it to a premium ROE.
So I'd characterize it with the last wind projects that we were put into service, we actually got an 11% ROE. So we would expect that to continue as we further expand renewables and look into solar as well as storage. And we'll have more information for the investors to share when we file that filing sometime later this quarter.
Great. Thanks, Robert. And while we wait for additional questions from investors, I thought, Robert, maybe I could pivot back to you again and talk about our higher solar materials costs impacting any of our projects And how do we think about recovery of any cost overruns?
That's a great question and a very relevant topic right now when you think about what's happening. And when you think about how it impacts our 1500 megawatts of solar, I'd probably describe it in this way. So the cost of materials, labor and shipping have all increased materially in 2021. Really, as the world economies have rebounded from the COVID situation last year, We've seen the supply actually not keep up with the demand on a lot of those things and you've seen price increases as a result of that. So we have taken actions as part of our plan to try and mitigate that.
So we actually locked in some of the prices of our solar projects before the price increases. And so we're insulated somewhat from that. We also have some flexibility, what I characterize, with the timing of our projects such that we're not a buyer that's captive in the current environment and we actually can try and pace out and spread out those commitments into a later period of time when the cost may come back down. So as we think about that, it will insulate us to some degree from these price increases, but not completely. So we do expect that we'll see some additional capital expenditures beyond what we disclosed in last November's update.
And we'll share more information on that later this year. But as we think about kind of the second question as it relates to the regulatory recovery and the approval process, It's important to think about the 1500 megawatts of our projects are really at different stages right now. So the first six 70 megawatts that we have in service or going into service in our Wisconsin jurisdiction has already received regulatory approval. Last quarter, we received approval from the Public Service Commission of Wisconsin, and their approval has a cost target associated with it. And it's also important to note that there is a provision in that order though that allows us, if we deem it prudent, to be able to go beyond that cost target.
And as we think about the fact that we have locked in certain prices, we'll mitigate some of those price increases. But the price increases beyond what we've locked in, those really have occurred since the filing date to the point in time when we got approval. So we do think it is prudent what we're doing and should be able to get recovery for all of those costs and not having any of it disallowed. As we think about the next 800 megawatts, it's really split between the 2 states. We've got about 400 megawatts targeted for the Wisconsin jurisdiction.
We just filed that earlier this year. And then we've got another 400 megawatts targeted for Iowa, which we'll be filing sometime later here in Q3. Both of those approvals are targeted to be received sometime in the 2022 time frame. And so we'll be able to continue to provide updates as through the regulatory process on these cost increases. Lastly, it's important to note though, as we do the evaluation and the analysis of these solar projects, even with these cost increases, they still make the best decision as far as the next generation resource for our customers.
And we want to continue to pursue the 1500 megawatts as a result of that because we think it's the right decision for our customers. So we don't see any significant risk with being able to get approval for those projects. Great.
Thanks, Robert. John, Andrew Weisel has another question. And it's regarding the discussion we had earlier where Robert talked about opportunities related to batteries and green hydrogen. Do you see opportunities related to renewable natural gas as well?
Thanks again, Andrew. Great question. We'll give Robert a little bit of a break here. But yes, we're certainly looking at all opportunities, and we're going to keep very close in what our customers are looking for as well. So we spent a little bit of time researching and thinking about renewable natural gas.
I do think it has some potential. It's not a real, I guess, I'd say significant part of our near term plans, but that's something we're going to keep a close eye on.
Great. Thanks for that. I know we're working to consolidate more questions. So Jeff, in the meantime, something I think that might be interesting to talk about with the group is how did we make the progress that we shared on our water reduction goals? What actions have we taken that have driven those goals?
Yes, it's a great topic and great question. Love talking about this one. It's a great story to tell here because we've set a goal of 75 percent reduction in water withdrawals from 2,005 by 2,030. And we've managed to make it 66% of the way. And with the great progress that's been spearheaded by a lot of the work that we've done with transitioning our coal plants from wet ash handling to dry ash handling systems and in some new projects that we've taken on.
With the construction of new combined cycle natural gas plants and using municipal water or being designed to be more efficient than the plants that they're surpassing. A good example is our West Riverside Energy Center in Beloit, where it's located right next to the Riverside Energy Center, which is about 10 to 15 years older. And the new plant is designed to be 65% more water efficient than the existing plant. Great story to tell. I love talking about it.
Thanks for that.
Yeah. Thanks Jeff. Robert, if I can direct the next question to you and it's from Brent Miller. And the question is, are you considering the location of solar panel production as it relates to ESG with the example of labor fairness and other aspects?
Yes, it's a great question. And human rights are very important to us as we think about the social aspect of our ESG story. And I actually point you to our corporate responsibility report that we issued this morning. In it, you'll find a new human rights policy where we lay out our position regarding our code of conduct, our standards and our values as it relates to how we treat employees and the safety of our employees. You'll notice when you read through that, there's also provision there that holds our suppliers, our vendors and our contractors to the same standards that we have.
And so as we think about kind of how we made sure that our suppliers adhere to that, we have a very strong vetting process when we go through any type of selection of which vendors we want to utilize and to ensure that we're sourcing those panels from areas that don't have these labor issues. And so feel very confident in the fact that we're not going to be exposed to that given our procedures.
Thanks, Robert. Teri, another question for you. Julian has asked, how are we thinking about integrating undergrounding into our plans to mitigate future impacts from things like the derecho that we talked about earlier?
Yes, it's a great question. And we're coming up on the 1 year anniversary of derecho. So it's a timely question also as we look to think back on that. But for decades, we've been putting our systems underground, but probably about 4, 5 years ago, we started to have a significant focus on putting an extremely high percentage of our distribution system underground as opposed to building or rebuilding overhead. So we've been on that path for quite some time, even before the derecho, we'll continue to be very focused on that because as we think about that, it's gotten to the point where the life cycle costs of undergrounding is on par or less than overhead and it's certainly more reliable.
So from our customers' perspective, we think that makes a lot of sense. And so we're going to continue on that trajectory of putting an extremely high percentage of our new distribution system underground. We think that will be very beneficial for customers. And even when you think of the substations, the substations have been performing quite well during these major storms, but we'll continue to look at ways we can even improve the reliability in our substation. So excited about the undergrounding program we're on and we think that will be very, very beneficial for customers as we go forward.
Thanks for that, Terry. And Julian had a second part to that question, Robert. And it was around how we should think about our CapEx budget, given how recent the duration was. Should we assume those funds are already in the CapEx budget?
It's a great question, Julian. So yes, as we've talked about with many of our investors in the past, we're targeting roughly about 1 point $4,000,000,000 to $1,500,000,000 a year when it comes to our capital expenditure plans. Electric distribution makes up a pretty large portion of that. And so we do have some of it built into that. But we'll continue to flex that as we see more opportunities when it comes to renewables and storage.
And so think of it as a portion of it that could be growing in the future, but a lot of that will be depend on what types of other opportunities we have because we often like to let our capital compete and whatever provides the best solution for our customers is what we'll choose.
Thanks, Robert. John, if I could turn to you for the next question. This is from Darius Losney. What is the potential time frame for executing on the 600 megawatts of wind repowering that we identified earlier?
Great. Well, I'm glad you asked that question. When we think about right now in front of us, we have a great opportunity for solar build out. So that's keeping us quite active in both Iowa and Wisconsin. But our wind units, we do see that maybe towards the middle or back half of this decade, I would say, is the potential for when it would make sense for customers.
I'll keep going back to it when it makes sense for customers' economics for repowering. But we're putting a lot of thought into that right now. So I think that'd be the general time frame.
Great. Thanks for that, John. One last question now from Ellen Elberfeld. And Robert, this is probably best for you. How do you support communities where coal plants are closed, including lost jobs and tax revenues?
Yes. So great question. It's part of our social responsibility when we think about the transition away from coal to renewables. So quite a few different activities in this area. In a lot of cases, we may be repurposing the sites where these locations were.
In fact, we've got a great story when you think about actually a student actually a student center for the Beloit College. And so really helping support the community in that way. Very actively involved with ensuring that our employees find good jobs to replace the ones that they currently have if they're being displaced. Also working very actively with the communities to really replace and ensure that they have continuity of the property tax payments that they're receiving to ensure their economic viability. So quite a few different activities in that space and something we'll continue to focus on as we continue through the transition.
Thanks, Robert. Well, those are all the questions that we've received. So maybe, John, I'll turn to
you for any closing comments.
Sure. Well, thanks, Barbara. And let me say thanks to all of you. We appreciate your interest in our company, and we certainly appreciate you allowing us to tell our ESG story with you today. Before we end, though, let me share with you just a few of the many highlights that we shared with you today.
First, I've said before, we've been on this journey for a number of years. So it's not new for us and we're excited to take that into the future. Our success really comes from 3 main aspects: a clear vision, solid execution and a strong focus on our purpose. That's to serve customers and build stronger communities. We're proud of our position as a leader in the clean energy transition, and we look forward to advancing our clean energy blueprint and achieving our aspirational goal of net 0 by 2,050.
Finally, we're pleased that our clean energy vision and our transparent ESG reporting practices provides a strong investment proposition for you. So on behalf of the team that joined me today and our entire company, I want to say thank you. Have a safe and a wonderful day.