Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This MDA includes information relating to Alliant Energy, IPL and WPL, as well as AEF and Corporate Services. Where appropriate, information relating to a specific entity has been segregated and labeled as such. The following discussion and analysis should be read in conjunction with the Financial Statements and Notes included in this report. Unless otherwise noted, all “per share” references in MDA refer to earnings per diluted share.

EXECUTIVE OVERVIEW

Description of Business

General - Alliant Energy is a Midwest U.S. energy holding company whose primary subsidiaries are IPL, WPL, AEF and Corporate Services. IPL and WPL are public utilities, and AEF is the parent company for Alliant Energy’s non-utility businesses and holds all of Alliant Energy’s ATC Investment. Corporate Services provides administrative services to Alliant Energy and its subsidiaries. An illustration of Alliant Energy’s primary businesses is shown below.

		Alliant Energy
Utilities and Corporate Services				ATC Investment, Non-utility and Parent
- Retail electric and gas services in IA (IPL)				- ATC Investment (ATI)
- Retail electric and gas services in WI (WPL)				- Transportation (AEF)
- Wholesale electric service in MN, IL & IA (IPL)				- Non-utility wind investment (AEF)
- Wholesale electric service in WI (WPL)				- Sheboygan Falls Energy Facility (AEF)
- Corporate Services				- Parent Company

Utilities and Corporate Services - IPL and WPL own a portfolio of EGUs located in Iowa, Wisconsin and Minnesota with a diversified fuel mix including natural gas, renewable resources and coal. The output from these EGUs, supplemented with purchased power, is used to provide electric service to approximately 960,000 electric customers in the upper Midwest. The utility business also procures natural gas from various suppliers to provide service to approximately 410,000 retail gas customers in the upper Midwest. Alliant Energy’s utility business is its primary source of earnings and cash flows. The earnings and cash flows from the utilities and Corporate Services business are sensitive to various external factors including, but not limited to, the amount and timing of rates approved by regulatory authorities, the impact of weather and economic conditions on electric and gas sales volumes and other factors listed in “Risk Factors” in Item 1A and “Forward-looking Statements.”

ATC Investment, Non-utility Business and Parent - AEF holds all of Alliant Energy’s ATC Investment. AEF also manages various businesses including Transportation (short-line railway and barge transportation services), a non-utility wind investment, the Sheboygan Falls Energy Facility and several other modest investments.

Financial Results - Alliant Energy’s net income and EPS attributable to Alliant Energy common shareowners were as follows (dollars in millions, except per share amounts):

	2017								2016
	Income				EPS				Income (Loss)				EPS
Continuing operations:
Utilities and Corporate Services		$416.7				$1.82				$397.3				$1.75
ATC Investment	25.4				0.11				23.1				0.10
Non-utility and Parent	13.8				0.06				(46.6		)		(0.20		)
Income from continuing operations	455.9				1.99				373.8				1.65
Income (loss) from discontinued operations	1.4				—				(2.3		)		(0.01		)
Net income		$457.3				$1.99				$371.5				$1.64

The table above includes EPS from continuing operations for utilities and Corporate Services, ATC Investment, and non-utility and parent, which are non-GAAP financial measures. Alliant Energy believes these non-GAAP financial measures are useful to investors because they facilitate an understanding of segment performance and trends, and provide additional information about Alliant Energy’s operations on a basis consistent with the measures that management uses to manage its operations and evaluate its performance.

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Alliant Energy’s, IPL’s and WPL’s income from continuing operations increased (decreased) by $82 million, $1 million and ($4) million, respectively, in 2017 compared to 2016. Alliant Energy’s increase was primarily due to asset valuation charges at AEF related to the Franklin County wind farm in 2016, higher margins resulting from IPL’s interim retail electric base rate increase implemented in April 2017 and WPL’s retail electric and gas base rate increases implemented in January 2017, and the effects of Tax Reform, partially offset by higher depreciation expense, higher energy efficiency cost recovery amortization at WPL, and the estimated temperature impacts on IPL’s and WPL’s retail electric and gas sales. WPL’s decrease was also impacted by reduced equity income resulting from the transfer of WPL’s investment in ATC to ATI on December 31, 2016.

Refer to “Results of Operations” for additional details regarding the various factors impacting earnings during 2017, 2016 and 2015.

2017 Overview - In 2017, Alliant Energy, IPL and WPL focused on achieving financial objectives and executing their strategic plan. Key developments in 2017 include the following:

•

Tax Reform - In December 2017, Tax Reform was enacted. The enactment of Tax Reform had a material impact on the 2017 financial statements since changes in tax laws must be recognized in the period in which the law is enacted. The most significant provision of Tax Reform was the reduction in the federal corporate tax rate from 35% to 21%, which required a re-measurement of deferred tax assets and liabilities in December 2017. The net impacts of re-measuring deferred taxes associated with regulated utility operations were recorded in regulatory assets and regulatory liabilities and will be utilized to provide benefits to customers in the future. Refer to Note 11 for further discussion of the impacts of Tax Reform.

•	IPL’s Marshalltown Generating Station - Marshalltown, a 706 MW natural gas-fired combined-cycle EGU, was placed into service in April 2017. Final capital expenditures were $645 million to construct the EGU and a pipeline to supply natural gas to the EGU, excluding transmission network upgrades and AFUDC.

•	Franklin County Wind Farm - In April 2017, the 99 MW Franklin County wind farm was transferred from AEF to IPL.

•

IPL’s and WPL’s Potential Expansion of Wind Generation - IPL and WPL currently plan on expanding their wind generation by up to 1,000 MW and 200 MW, respectively, by the end of 2020. In 2016, IPL received approval from the IUB for the first 500 MW of wind generation. In August 2017, IPL filed an application with the IUB for advance rate-making principles for a second 500 MW of wind generation, and is currently expecting a decision from the IUB in the first quarter of 2018. In November 2017, WPL filed for approval from the PSCW and FERC to acquire 55 MW of FWEC, which is a 129 MW wind farm located in Wisconsin. WPL received approval from FERC for the FWEC acquisition in January 2018 and is currently expecting a decision from the PSCW in the first half of 2018. WPL currently expects to file for approval from the PSCW for the remaining portion of its wind expansion plan in the first half of 2018. Refer to “Strategic Overview” for further discussion. The amount and timing of these wind projects will largely depend on regulatory approvals and the acquisition of wind sites.

•

WPL’s Construction of West Riverside - In October 2017, WPL received an order from the PSCW authorizing various electric cooperatives, which currently have wholesale power supply agreements with WPL, to acquire approximately 65 MW of West Riverside while the EGU is being constructed. As part of the electric cooperatives’ acquisitions, which were finalized in January 2018, the current wholesale power supply agreements with the various electric cooperatives were extended by at least four years until 2026 with automatic continuation of such agreements unless terminated by either party, with a five-year notice requirement.

•	Non-utility Wind Investment in Oklahoma - In July 2017, a wholly-owned subsidiary of AEF acquired a 50% cash equity ownership interest in a 225 MW non-utility wind farm located in Oklahoma. Refer to Note 6(a) for further discussion.

•

IPL’s Retail Electric Rate Review (2016 Test Year) - In April 2017, IPL filed a request with the IUB to increase annual electric base rates for its Iowa retail electric customers. The request was based on a 2016 historical Test Year as adjusted for certain known and measurable changes occurring up to 12 months after the commencement of the proceeding. The key drivers for the filing included recovery of capital projects, primarily power grid modernization and investments that advance cleaner energy, including Marshalltown. An interim retail electric base rate increase of $102 million, or approximately 7%, on an annual basis, was implemented effective April 13, 2017. In September 2017, IPL reached a partial, non-unanimous settlement agreement with the Iowa Office of Consumer Advocate, the Iowa Business Energy Coalition and the Large Energy Group to increase annual retail electric base rates by $130 million, or approximately 9%. In February 2018, the IUB issued an order approving the settlement. Final rates are currently expected to be effective in the first half of 2018 once all motions for reconsideration have been addressed and final tariffs have been approved by the IUB.

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•

MISO Transmission Owner Return on Equity Complaints - A group of MISO cooperative and municipal utilities previously filed two complaints with FERC requesting a reduction to the base return on equity used by MISO transmission owners, including ITC and ATC, to determine electric transmission costs billed to utilities, including IPL and WPL. In 2016, FERC issued an order on the first complaint and established a base return on equity of 10.32%, excluding any incentive adders granted by FERC, effective September 28, 2016, and for the refund period from November 12, 2013 through February 11, 2015 (first complaint period). In 2017, Alliant Energy, IPL and WPL received the refunds for the first complaint period of $50 million, $39 million and $11 million, respectively, after final true-ups. Pursuant to IUB approval, IPL’s retail portion of the refund from ITC was refunded to its retail customers in 2017. WPL’s retail portion of the refund from ATC will remain in a regulatory liability until such refunds are approved to be returned to retail customers in a future rate proceeding. A decision from FERC on the second complaint is currently expected in 2018.

•

Credit Facility Agreement - In August 2017, Alliant Energy, IPL and WPL entered into a single new credit facility agreement, which expires in August 2022. The new credit facility agreement includes financial covenants similar to those that were included in the previous credit facility agreements. As of December 31, 2017, the short-term borrowing capacity totaled $1 billion ($400 million for Alliant Energy at the parent company level, $250 million for IPL and $350 million for WPL).

•	At-the-Market Offering Program - In 2017, Alliant Energy issued 3.1 million shares of common stock through an at-the-market offering program and received cash proceeds of $124 million, net of $1 million in commissions and fees. The proceeds from the issuances of common stock were used for general corporate purposes.

Future Developments - The following includes key items expected to impact Alliant Energy, IPL and WPL in the future:

•	Planned Utility Rate Reviews - IPL currently expects to make a retail gas rate filing in the second quarter of 2018 based on a 2017 historical Test Year. WPL currently expects to make a retail electric and gas rate filing in the second quarter of 2018 for the 2019/2020 Test Period. Refer to “Rate Matters” for further discussion.

2018 Forecast - In 2018, the following financing activities, and impacts to results of operations, are currently anticipated to occur:

•

Financing Plans - Alliant Energy currently expects to issue up to $200 million of common stock in 2018 through one or more offerings and its Shareowner Direct Plan. IPL currently expects to issue up to $700 million of long-term debt securities in 2018, of which $350 million would be used to retire long-term debt maturing in 2018. AEF currently expects to issue up to $1.0 billion of long-term debt in 2018, of which $595 million would be used to refinance expiring term loans.

•

Common Stock Dividends - Alliant Energy announced a 6% increase in its targeted 2018 annual common stock dividend to $1.34 per share, which is equivalent to a quarterly rate of $0.335 per share, beginning with the February 2018 dividend payment. The timing and amount of future dividends is subject to an approved dividend declaration from Alliant Energy’s Board of Directors, and is dependent upon earnings expectations, capital requirements, and general financial business conditions, among other factors.

•

Utility Electric and Gas Margins - Alliant Energy and IPL currently expect an increase in electric and gas margins in 2018 compared to 2017 as a result of base rate increases from final rates implemented for IPL’s retail electric rate review (2016 Test Year) and interim rates for IPL’s planned retail gas rate review (2017 Test Year). Alliant Energy and WPL currently expect an increase in electric margins from lower electric transmission service expense in 2018 compared to 2017 due to amortizations of previously over-recovered transmission expenses as approved in WPL’s retail electric rate review (2017/2018 Test Year). Refer to “Rate Matters” for further discussion of these rate reviews.

•	Depreciation and Amortization Expenses - Alliant Energy and IPL currently expect an increase in depreciation and amortization expenses in 2018 compared to 2017 due to property additions, and the implementation of updated depreciation rates for IPL as a result of a recently completed depreciation study, which are currently expected to be effective in the first half of 2018.

•	Interest Expense - Alliant Energy currently expects interest expense to increase in 2018 compared to 2017 primarily due to financings completed in 2017 and planned in 2018 as discussed above.

•	AFUDC - Alliant Energy currently expects AFUDC to increase in 2018 compared to 2017 primarily due to increased CWIP balances related to IPL’s expansion of wind generation and WPL’s West Riverside facility.

RESULTS OF OPERATIONS

Overview - “Executive Overview” provides an overview of Alliant Energy’s, IPL’s and WPL’s 2017 and 2016 earnings. Additional earnings details for 2017, 2016 and 2015 are discussed below.

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Results of operations include financial information prepared in accordance with GAAP as well as utility electric margins and utility gas margins, which are not measures of financial performance under GAAP. Utility electric margins are defined as electric operating revenues less electric production fuel, purchased power and electric transmission service expenses. Utility gas margins are defined as gas operating revenues less cost of gas sold. Utility electric margins and utility gas margins are non-GAAP financial measures because they exclude other utility and non-utility operating revenues, other operation and maintenance expenses, depreciation and amortization expenses, and taxes other than income tax expense.

Management believes that utility electric and gas margins provide a meaningful basis for evaluating and managing utility operations since electric production fuel, purchased power and electric transmission service expenses and cost of gas sold are generally passed through to customers, and therefore, result in changes to electric and gas operating revenues that are comparable to changes in such expenses. The presentation of utility electric and gas margins herein is intended to provide supplemental information for investors regarding operating performance. These utility electric and gas margins may not be comparable to how other entities define utility electric and gas margin. Furthermore, these measures are not intended to replace operating income as determined in accordance with GAAP as an indicator of operating performance.

Operating income and a reconciliation of utility electric and gas margins to the most directly comparable GAAP measure, operating income, was as follows (in millions):

	Alliant Energy												IPL												WPL
	2017				2016				2015				2017				2016				2015				2017					2016					2015
Operating income		$653.4				$537.0				$577.0				$296.9				$270.8				$241.9				$323.2					$327.0					$308.7
Electric utility operating revenues		$2,894.7				$2,875.5				$2,770.5				$1,598.9				$1,569.7				$1,503.8				$1,295.8					$1,305.8					$1,266.7
Electric production fuel and purchased power expenses	(818.1		)		(854.0		)		(837.7		)		(443.6		)		(430.5		)		(428.4		)		(374.5		)			(423.5		)			(409.3		)
Electric transmission service expense	(480.9		)		(527.9		)		(485.3		)		(310.4		)		(359.7		)		(328.2		)		(170.5		)			(168.2		)			(157.1		)
Utility Electric Margin (non-GAAP)	1,595.7				1,493.6				1,447.5				844.9				779.5				747.2				750.8					714.1					700.3
Gas utility operating revenues	400.9				355.4				381.2				226.0				204.0				217.3				174.9					151.4					163.9
Cost of gas sold	(211.4		)		(194.3		)		(219.1		)		(115.6		)		(111.0		)		(123.3		)		(95.8		)	—		(83.3		)	—		(95.8		)
Utility Gas Margin (non-GAAP)	189.5				161.1				162.1				110.4				93.0				94.0				79.1					68.1					68.1
Other utility operating revenues	47.5				48.6				57.9				45.4				46.7				53.4				2.1					1.9					4.5
Non-utility operating revenues	39.1				40.5				44.0				—				—				—				—					—					—
Asset valuation charges for Franklin County wind farm	—				(86.4		)		—				—				—				—				—					—					—
Other operation and maintenance expenses	(651.0		)		(606.5		)		(629.5		)		(403.8		)		(383.7		)		(389.9		)		(249.0		)			(219.8		)			(235.4		)
Depreciation and amortization expenses	(461.8		)		(411.6		)		(401.3		)		(245.0		)		(210.8		)		(207.2		)		(212.9		)			(192.5		)			(184.3		)
Taxes other than income tax expense	(105.6		)		(102.3		)		(103.7		)		(55.0		)		(53.9		)		(55.6		)		(46.9		)			(44.8		)			(44.5		)
Operating income		$653.4				$537.0				$577.0				$296.9				$270.8				$241.9				$323.2					$327.0					$308.7

Operating Income Variances - Variances between periods in operating income were as follows (in millions):

2017 vs. 2016:	Alliant Energy				IPL				WPL
Asset valuation charges for Franklin County wind farm in 2016 (Refer to Note 3 for details)		$86				$—				$—
Total higher utility electric margin variance (Refer to details below)	102				65				37
Total higher utility gas margin variance (Refer to details below)	28				17				11
Higher other operation and maintenance expenses variance (Refer to details below)	(45		)		(20		)		(29		)
Higher depreciation and amortization expense primarily due to additional plant in service in 2017, including impacts from Marshalltown	(33		)		(29		)		(8		)
Higher depreciation expense at WPL due to updated depreciation rates effective January 2017 approved by the PSCW and FERC (Refer to Note 1(e) for details)	(12		)		—				(12		)
Higher depreciation expense at IPL due to write-down of regulatory assets resulting from the IPL electric rate review settlement in 2017 (Refer to Note 2 for details)	(5		)		(5		)		—
Other	(5		)		(2		)		(3		)
		$116				$26				($4	)

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2016 vs. 2015:	Alliant Energy				IPL				WPL
Asset valuation charges for Franklin County wind farm in 2016 (Refer to Note 3 for details)		($86	)			$—				$—
Total higher utility electric margin variance (Refer to details below)	46				32				14
Total lower utility gas margin variance (Refer to details below)	(1		)		(1		)		—
Total lower other operation and maintenance expenses variance (Refer to details below)	23				6				16
Higher amortization expense from the new customer billing and information system placed in service in 2015	(8		)		(4		)		(4		)
Higher depreciation and amortization expense primarily due to additional plant in service in 2016	(2		)		—				(4		)
Other	(12		)		(4		)		(4		)
		($40	)			$29				$18

Electric Revenues and Sales Summary - Electric revenues (in millions), and MWh sales (in thousands), were as follows:

	Revenues												MWhs Sold
	2017				2016				2015				2017			2016			2015
Alliant Energy
Retail		$2,569.6				$2,564.8				$2,474.1			25,095			25,339			25,380
Sales for resale	268.8				266.7				249.5				5,003			4,399			4,842
Other	56.3				44.0				46.9				94			100			129
		$2,894.7				$2,875.5				$2,770.5			30,192			29,838			30,351
IPL
Retail		$1,448.0				$1,442.5				$1,410.2			14,356			14,523			14,824
Sales for resale	114.6				97.8				61.5				2,169			1,406			1,023
Other	36.3				29.4				32.1				38			41			67
		$1,598.9				$1,569.7				$1,503.8			16,563			15,970			15,914
WPL
Retail		$1,121.6				$1,122.3				$1,063.9			10,739			10,816			10,556
Sales for resale	154.2				168.9				188.0				2,834			2,993			3,819
Other	20.0				14.6				14.8				56			59			62
		$1,295.8				$1,305.8				$1,266.7			13,629			13,868			14,437

Gas Revenues and Sales Summary - Gas revenues (in millions), and Dth sales (in thousands), were as follows:

	Revenues												Dths Sold
	2017				2016				2015				2017			2016			2015
Alliant Energy
Retail		$364.6				$322.4				$349.9			49,250			47,743			48,635
Transportation/Other	36.3				33.0				31.3				76,916			77,485			74,162
		$400.9				$355.4				$381.2			126,166			125,228			122,797
IPL
Retail		$202.2				$183.1				$198.4			26,580			26,230			26,877
Transportation/Other	23.8				20.9				18.9				39,365			37,158			34,129
		$226.0				$204.0				$217.3			65,945			63,388			61,006
WPL
Retail		$162.4				$139.3				$151.5			22,670			21,513			21,758
Transportation/Other	12.5				12.1				12.4				37,551			40,327			40,033
		$174.9				$151.4				$163.9			60,221			61,840			61,791

Temperatures - Estimated increases (decreases) to electric and gas margins from the impacts of temperatures were as follows (in millions):

	Electric Margins												Gas Margins
	2017				2016				2015				2017				2016				2015
IPL		($8	)			$3				($7	)			($4	)			($4	)			($2	)
WPL	(8		)		1				(4		)		(2		)		(3		)		(2		)
Total Alliant Energy		($16	)			$4				($11	)			($6	)			($7	)			($4	)

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Utility Electric Margin Variances - The following items contributed to increased (decreased) utility electric margins as follows (in millions):

2017 vs. 2016:	Alliant Energy				IPL				WPL
Higher margins at IPL from the impact of its 2016 Test Year interim retail electric base rate increase (Refer to Note 2 for details)		$77				$77				$—
Higher margins at WPL from the impact of its 2017/2018 Test Period retail electric base rate increase (Refer to Note 2 for details)	63				—				63
Higher revenues at IPL due to 2016 retail electric customer billing credits related to the approved retail electric base rate freeze through 2016 (Refer to Note 2 for details)	9				9				—
Higher electric revenues from reimbursements for hurricane assistance relief in 2017 (hurricane assistance electric revenues are offset in other operation and maintenance expenses)	6				3				3
Estimated changes in sales volumes caused by temperatures (Refer to “Temperatures” above for details)	(20		)		(11		)		(9		)
Revenue requirement adjustment in 2016 related to certain tax benefits (Refer to Note 2 for details)	(14		)		(14		)		—
Changes in electric fuel-related costs, net of recoveries at WPL (a)	(12		)		—				(12		)
Lower wholesale margins at WPL primarily due to the expiration of a wholesale power supply agreement on May 31, 2017	(8		)		—				(8		)
Other	1				1				—
		$102				$65				$37

2016 vs. 2015:	Alliant Energy				IPL				WPL
Higher revenues at IPL due to lower retail electric customer billing credits related to the approved retail electric base rate freeze through 2016 (Refer to Note 2 for details)		$15				$15				$—
Estimated changes in sales volumes caused by temperatures (Refer to “Temperatures” above for details)	15				10				5
Higher revenues at IPL due to fewer electric tax benefit rider credits on customers’ bills (Refer to Note 2 for details)	8				8				—
Higher electric transmission service expense at WPL	(11		)		—				(11		)
Other (b)	19				(1		)		20
		$46				$32				$14

(a)	WPL estimates the increase (decrease) to electric margins from amounts within the approved bandwidth of plus or minus 2% of forecasted fuel-related expenses determined by the PSCW each year was approximately ($6) million, $6 million and $6 million in 2017, 2016 and 2015, respectively.

(b)	Includes increases in temperature-normalized retail sales volumes at WPL in 2016. Refer to “Electric Sales Trends” below for more information.

Electric Sales Trends - Alliant Energy’s retail electric sales volumes decreased 1% in 2017 and remained unchanged in 2016. During 2017, the decrease was primarily due to the impact of lower residential and commercial sales due to cooler summer temperatures during 2017 compared to the same period in 2016 and an extra day of retail sales during 2016 due to the leap year, partially offset by increases in WPL’s industrial sales from higher customer production and customer expansions.

During 2016, retail electric sales remained unchanged. Increases from the impact of temperatures on residential and commercial sales resulting in higher cooling demand, an extra day of retail sales during the first quarter of 2016 due to the leap year, and higher commercial and industrial sales driven by customer expansions were offset by decreases from IPL’s sale of its Minnesota electric distribution assets in 2015.

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Utility Gas Margin Variances - The following items contributed to increased (decreased) utility gas margins as follows (in millions):

2017 vs. 2016:	Alliant Energy				IPL				WPL
Higher margins at WPL from the impact of its 2017/2018 Test Period retail gas base rate increase (Refer to Note 2 for details)		$9				$—				$9
Higher revenues at IPL related to changes in recovery amounts for energy efficiency costs through the energy efficiency rider (a)	8				8				—
Higher revenues at IPL due to lower gas tax benefit rider credits on customer’s bills (Refer to Note 2 for details)	6				6				—
Estimated changes in sales volumes caused by temperatures (Refer to “Temperatures” above for details)	1				—				1
Other	4				3				1
		$28				$17				$11

2016 vs. 2015:	Alliant Energy				IPL				WPL
Estimated changes in sales volumes caused by temperatures (Refer to “Temperatures” above for details)		($3	)			($2	)			($1	)
Other	2				1				1
		($1	)			($1	)			$—

(a)	Changes in gas energy efficiency revenues were mostly offset by changes in energy efficiency expense included in other operation and maintenance expenses.

Other Operation and Maintenance Expenses - The following items contributed to (increased) decreased other operation and maintenance expenses as follows (in millions):

2017 vs. 2016:	Alliant Energy				IPL				WPL
Higher energy efficiency cost recovery amortizations at WPL (a)		($27	)			$—				($27	)
Charges related to cancelled software projects in 2017	(6		)		(3		)		(3		)
Higher distribution expense for hurricane assistance relief in 2017 (hurricane assistance relief expenses are offset in electric margins)	(6		)		(3		)		(3		)
Write-down of regulatory assets due to the IPL electric rate review settlement in 2017 (Refer to Note 2 for details)	(4		)		(4		)		—
Higher energy efficiency expense at IPL (primarily offset by gas revenues)	(3		)		(3		)		—
Other	1				(7		)		4
		($45	)			($20	)			($29	)

2016 vs. 2015:	Alliant Energy				IPL				WPL
Lower energy efficiency cost recovery amortizations at WPL (a)		$15				$—				$15
Losses on sales of IPL’s Minnesota distribution assets recorded in 2015 (Refer to Note 3 for details)	14				14				—
Voluntary employee separation charges in 2015 (Refer to Note 12(a) for details)	8				5				3
Higher bad debt expense at IPL (b)	(9		)		(9		)		—
Higher stock-based performance compensation expense (Refer to Note 12(b) for details)	(7		)		(4		)		(3		)
Higher employee benefits-related expense (c)	(7		)		(5		)		(2		)
Other (includes lower costs due to cost controls and operational efficiencies)	9				5				3
		$23				$6				$16

(a)

The December 2016 PSCW order for WPL’s 2017/2018 Test Period electric and gas base rate review authorized changes in energy efficiency cost recovery amortizations for 2017 and 2018. The July 2014 PSCW order for WPL’s 2015/2016 Test Period electric and gas base rate review authorized changes in energy efficiency cost recovery amortizations for 2015 and 2016. Regulatory amortizations at WPL related to energy efficiency costs were $16 million, ($11) million and $4 million in 2017, 2016 and 2015, respectively.

(b)	Primarily due to an increase in IPL’s allowance for doubtful accounts as a result of increases in past due accounts receivable.

(c)	Primarily due to an increase in retirement plans costs and other employee benefits-related costs. The increased retirement plan costs in 2016 were largely due to lower than expected returns on plan assets in 2015.

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Interest Expense and Other Variances - The following items contributed to (increased) decreased interest expense and other as follows (in millions):

2017 vs. 2016:	Alliant Energy				IPL				WPL
Higher interest expense primarily due to higher average outstanding long-term debt balances (Refer to Note 9(b) for details)		($19	)			($9	)			($2	)
Higher (lower) equity income from ATC Investment (a)	3				—				(39		)
Higher (lower) AFUDC primarily due to increased (decreased) CWIP balances (b)	(13		)		(21		)		8
Other	2				—				(1		)
		($27	)			($30	)			($34	)

2016 vs. 2015:	Alliant Energy				IPL				WPL
Higher (lower) interest expense primarily due to higher (lower) average outstanding long-term debt balances		($9	)			($6	)			$1
Higher AFUDC primarily due to increased CWIP balances (b)	26				24				2
Other	5				—				4
		$22				$18				$7

(a)	Alliant Energy’s increase was primarily due to return on equity complaint reserves recorded in 2016, partially offset by a reserve established in 2017 for an anticipated future refund to be made to ATC’s customers. WPL’s decrease was due to the transfer of its investment in ATC to ATI on December 31, 2016. Refer to Note 6(a) for details.

(b)	Changes in AFUDC were primarily due to AFUDC recognized for Marshalltown.

Income Taxes - Refer to Note 11 for details of effective income tax rates for continuing operations.

STRATEGIC OVERVIEW

Strategic Plan - The strategic plan focuses on creating customer value across IPL’s and WPL’s service territories. Customers have evolving expectations and access to increasingly competitive alternatives for energy. As a result, providing customized energy solutions, while aggressively managing customer prices, remains at the center of the strategic plan. Alliant Energy, IPL and WPL are focused on delivering reliable and affordable electricity with lower electric generation CO2 emissions. By adopting a long-term strategy independent of changing policies and political landscape, Alliant Energy, IPL and WPL remain flexible on environmental compliance plans, while ensuring their electric supply provides economic and sustainable value to their customers and service territories. The strategic plan is evaluated through the integrated resource planning process, subject to review and approval by regulatory agencies and Alliant Energy’s Board of Directors. Successful implementation of the strategic plan is expected to result in increased earnings for Alliant Energy, IPL and WPL while limiting cost increases for IPL’s and WPL’s customers. The strategic plan is built upon two key elements: Growth and Optimization.

Growth - The growth element of the strategic plan includes accelerating the growth of customers’ electric and gas usage and expanding the portfolio of energy resources by adding cleaner and renewable energy, with a focus on long-term generation solutions. Increasing electric and gas usage in IPL’s and WPL’s service territories is expected to help minimize individual customer prices. Expanding cleaner and renewable energy is part of Alliant Energy’s long-term plan to reduce fossil-fueled EGU CO2 emissions and may also help support customers’ electric usage sustainability efforts.

Accelerate Electric and Gas Usage Growth - Actions to accelerate the growth of customers’ electric and gas usage include: retention and growth of current customers, as well as growth of new customers; economic development opportunities designed to attract new customers (e.g. industrial park expansions); and efforts to promote additional markets for electricity and gas, such as the electrification of the transportation sector (e.g. electric vehicles and charging stations).

To help support retention and growth of current customers, the strategic plan focuses on promoting energy efficiency and using new and existing technologies and customized energy solutions, which are expected to help reduce energy costs, provide flexibility, increase productivity, and focus on responding to customers’ increased interest in energy-related sustainability initiatives.

Economic development across Iowa and Wisconsin is focused on attracting new businesses by providing planning resources and energy solutions that encourage companies to invest in IPL’s and WPL’s service territories. For example, the Big Cedar Industrial Center is a 1,300 acre rail-served manufacturing and industrial site in Cedar Rapids, Iowa. This ready-to-build site is in close proximity to regional airport and interstate freeways and offers access to IPL’s electric services. IPL has also identified various other development-ready sites, including Prairie View Industrial Center, a 730 acre site in Ames, Iowa;

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Indianhead South, a 145 acre site in Mason City, Iowa; and Helgerson Flats Industrial Center, an 80 acre site in Ottumwa, Iowa. WPL is also exploring development-ready sites in Wisconsin.

In addition, investments are expected to be made to extend various gas distribution systems in IPL’s and WPL’s service territories to serve new customer demand for natural gas.

Expand Cleaner and Renewable Energy - The expansion of cleaner and renewable energy contributes to a more diverse energy portfolio and over the long-term, reduces emissions from EGUs. Alliant Energy is expanding its renewable generation portfolio with the planned expansion of up to 1,200 MW of wind generation at IPL and WPL in aggregate. In addition, Alliant Energy completed construction of Marshalltown in 2017 and is currently constructing West Riverside, which are highly efficient natural gas-fired combined-cycle EGUs. IPL and WPL have also completed various solar projects, and have plans to construct additional solar generation at Marshalltown and West Riverside, respectively. These new generation projects are expected to increase customer access to low-cost energy resources, and also support the retirement of various older, smaller and less efficient coal-fired EGUs, resulting in Alliant Energy reducing its CO2 emissions. These new generation projects and EGU retirements also support a cleaner electricity supply portfolio, which may assist with Alliant Energy’s customers’ increasing sustainability efforts.

Optimization - The second key element of the strategic plan focuses resources on providing reliable electric and natural gas service to customers in IPL’s and WPL’s service territories in a cost effective manner through continued modernization of the power grid and gas distribution system, and optimization of the generation fleet. Modernizing, upgrading and optimizing the distribution and generation assets are expected to maximize the value of Alliant Energy’s existing infrastructure, strengthen and enhance the safety of its systems, expand customer options with smart technology, and be more price-competitive and market-responsive for customers. For example, customer engagement initiatives include new pricing options and enhanced communication through mobile devices for customers. In addition, IPL and WPL are working with their respective regulatory commissions to determine the appropriate treatment for Tax Reform impacts, which are currently expected to be utilized for future customer benefits.

Alliant Energy is modernizing the power grid to accommodate a growing two-way flow of electricity and information. This includes targeted investments to replace and upgrade aging infrastructure in the electric distribution system. This also includes investments in advanced metering infrastructure, which support the integration of new technologies, as well as improve the security, reliability and resiliency of the power grid.

Since 2010, Alliant Energy has retired or fuel-switched approximately 40% of its older, smaller, less efficient and more costly coal-fired EGUs, and has made investments in its newer, more efficient coal-fired EGUs. Additionally, Alliant Energy has retired or fuel-switched approximately 75% of its combustion turbines and oil-fired EGUs. Alliant Energy is also investing in responsive and cost-effective natural gas-fired generation, which complements its growing investments in renewable energy. These investments are expected to help reduce costs and provide competitively-priced electricity for customers.

Generation Plans - A diversified fuel mix for EGUs is important to meeting the energy needs of customers and also recognizes the importance of using resources in efficient and environmentally responsible ways for the benefit of future generations. The current strategic plan includes the following portfolio of energy resources:

•	Natural gas - operating, constructing, and/or converting to, natural gas-fired EGUs.

•	Renewables - operating wind farms, solar projects and hydroelectric generators, as well as developing future wind sites and solar projects.

•	PPAs - purchasing electricity to meet a portion of customers’ demand for electricity, including wind, solar power and nuclear generation PPAs.

•	Coal - completing the installation of remaining environmental controls at newer, larger and more efficient coal-fired EGUs, and fuel switching at, and retirement of, certain older, smaller and less efficient coal-fired EGUs.

Increasing levels of energy produced by natural gas-fired EGUs, wind farms and other renewable energy resources, and installing environmental controls at the more efficient coal-fired EGUs, result in significant environmental benefits. As a result of these efforts, mercury emissions have been reduced by approximately 95% from 2005 levels. In addition, SO2 and NOx emissions are currently targeted to be reduced by approximately 90% and 80%, respectively, from 2005 levels by 2020. Electric generation CO2 emissions are currently targeted to be reduced by approximately 40% from 2005 levels by 2030. Water withdrawals at fossil-fueled EGUs are currently targeted to be reduced by approximately 75% from 2005 levels by 2030.

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Alliant Energy, IPL and WPL are currently evaluating the types of capacity and energy additions they will pursue to meet their customers’ long-term electricity needs, with a focus on clean, reliable and affordable energy, and are monitoring several related external factors that could influence those evaluations. Some of the external factors impacting these plans include regulatory policies and decisions; changes in long-term projections of customer demand; changing customer demand for renewable energy; availability and cost effectiveness of different generation and emission reduction technologies; developments related to environmental regulations; settlements reached with environmental agencies and citizens groups; forward market prices for fossil fuels and electricity; market conditions for obtaining financing; developments related to federal and state renewable portfolio standards; environmental requirements, such as any future requirements relating to GHG emissions or renewable energy sources; and federal and state tax incentives. Environmental compliance plans have also been developed to ensure cost effective compliance with current and proposed environmental laws and regulations impacting existing EGUs. Refer to “Environmental Matters” for details of current and proposed environmental regulations and requirements.

Natural Gas-Fired Generation -

IPL’s Construction of Marshalltown - In 2013, the IUB issued an order approving a siting certificate and establishing rate-making principles for IPL’s construction of the 706 MW natural gas-fired combined-cycle EGU in Marshalltown, Iowa, referred to as Marshalltown. IPL’s construction of Marshalltown began in 2014 and the EGU was placed into service in April 2017. Marshalltown replaces energy and capacity being eliminated with the 2017 and 2018 retirements of Sutherland Units 1 and 3, Fox Lake Units 1 and 3, Burlington Combustion Turbines Units 1-4, Dubuque Units 3 and 4, Centerville Combustion Turbines Units 1 and 2, Grinnell Combustion Turbines Units 1 and 2, and Red Cedar Combustion Turbine Unit 1, which in aggregate had a nameplate capacity of approximately 480 MW.

ITC constructed the majority of the required transmission network upgrades for Marshalltown and elected to pursue an option under the terms of MISO’s Attachment “X” tariff to self-fund these transmission network upgrades. As a result, ITC has incurred the capital expenditures to construct the transmission network upgrades and has started billing IPL a direct charge for such transmission network upgrade costs.

Refer to Note 3 for further discussion of Marshalltown.

WPL’s Construction of West Riverside - In 2016, WPL received an order from the PSCW authorizing WPL to construct an approximate 730 MW natural gas-fired combined-cycle EGU in Beloit, Wisconsin, referred to as West Riverside. WPL’s construction of West Riverside began in 2016 and the EGU is currently expected to be placed in service by early 2020. WPL’s estimated portion of capital expenditures is currently expected to be approximately $640 million. The capital expenditures include costs to construct the EGU and a pipeline to supply natural gas to the EGU, and exclude transmission network upgrades and AFUDC. West Riverside will replace energy and capacity being eliminated with the 2015 retirements of Nelson Dewey Units 1 and 2 and Edgewater Unit 3, and the planned retirements of Edgewater Unit 4 and the Rock River and Sheepskin Combustion Turbine Units, which in aggregate have a nameplate capacity of approximately 700 MW.

WPL entered into agreements with neighboring utilities and electric cooperatives that provide each of the neighboring utilities and electric cooperatives options to purchase a partial ownership interest in West Riverside. The purchase price for such options is based on the ownership interest acquired and the net book value of West Riverside on the date of the purchase. The exercise of each option is subject to PSCW approval, and the timing and ownership amounts of the options are as follows:

Counterparty		Option Amount		Option Timing
Wisconsin Public Service Corporation (WPSC)		Up to 200 MW (no more than 100 MW to be acquired in first two years) (a)		2020-2024 (b)
Madison Gas and Electric Company (MGE)		Up to 50 MW (no more than 25 MW to be acquired in first two years)		2020-2025 (b)
Electric cooperatives		Approximately 65 MW		During construction of the EGU

(a)	If WPSC exercises its options, WPL may exercise reciprocal options, subject to approval by the PSCW, to purchase up to 200 MW of any natural-gas combined-cycle EGU that either WPSC or its affiliated utility, Wisconsin Electric Power Company (Wisconsin Electric), places in service within 10 years of the date West Riverside is placed in service.

(b)	Assumes an in-service date by early 2020.

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WPSC and MGE Options - In conjunction with the agreements WPL entered into with WPSC and MGE associated with West Riverside, WPL also entered into amendments to the Columbia joint operating agreement. In November 2016, WPL received an order from the PSCW approving amendments to the Columbia joint operating agreement, which allow WPSC and MGE to forgo certain capital expenditures at Columbia. Based on the additional capital expenditures WPL currently expects to incur through June 1, 2020, WPL’s ownership interest in Columbia is expected to increase from 46.2% (as of December 31, 2016) to 53.4%. Refer to Note 4 for further discussion of these amendments.

Renewable Generation Joint Development Agreement - In 2016, WPL, Wisconsin Electric and WPSC executed a separate joint development agreement for the purpose of cooperatively developing any renewable resources greater than 50 MW in Wisconsin for the benefit of their respective customers. The agreement has a 10-year term beginning June 1, 2016, and the utility that originates such renewable resource would hold a majority ownership and operational control of the renewable resource. The other two utilities would have the right to acquire a minority interest in the other utility’s renewable resource. Refer to “WPL’s Expansion of Wind Generation” below for discussion of definitive agreements entered into by WPL, WPSC and MGE to acquire the assets of FWEC, which is a 129 MW wind farm located in Wisconsin.

Electric Cooperatives’ Options - In October 2017, WPL received an order from the PSCW authorizing various electric cooperatives, which currently have wholesale power supply agreements with WPL, to acquire approximately 65 MW of West Riverside while the EGU is being constructed. As part of the electric cooperatives’ acquisitions, which were finalized in January 2018, the current wholesale power supply agreements with the various electric cooperatives were extended by at least four years until 2026 with automatic continuation of such agreements unless terminated by either party, with a five-year notice requirement.

Wind Generation - The strategic plan includes the planned expansion of up to 1,200 MW of wind generation in aggregate (up to 1,000 MW at IPL and up to 200 MW at WPL). IPL and WPL believe their respective planned expansion of wind generation will qualify for the full level of production tax credits as a result of progress payments in 2016 for wind turbines, and plan to place these wind projects into service by the end of 2020. The amount and timing of these wind projects will largely depend on regulatory approvals, federal and state tax incentives and the acquisition of wind sites. Estimated capital expenditures for the planned wind generation projects for 2018 through 2020 are included in the “Renewable projects” line in the construction and acquisition expenditures table in “Liquidity and Capital Resources.”

IPL’s Expansion of Wind Generation - In October 2016, IPL received approval from the IUB for up to 500 MW of new wind generation. In August 2017, IPL filed an application with the IUB for advance rate-making principles for up to 500 MW of additional wind generation, and a decision from the IUB is currently expected in the first quarter of 2018. The advance rate-making principles approved by the IUB in October 2016 and requested by IPL in the August 2017 application were as follows:

•

Additional wind generation that qualifies for the full level of production tax credits, as long as the projects are located in Iowa. The October 2016 IUB approval has a cost cap of $1,830/kilowatt, including AFUDC and transmission costs, and the August 2017 application has a cost cap of $1,780/kilowatt, including AFUDC and transmission costs. Any costs incurred in excess of the respective cost cap are expected to be incorporated into rates if determined to be reasonable and prudent.

•	A depreciable life of the wind generation facilities of 40 years, unless changed as a result of a contested case before the IUB.

•	An 11.0% return on common equity, with the exception of certain transmission facilities classified as intangible assets, which would earn the rate of return on common equity the IUB finds reasonable in each future retail electric rate proceeding.

•	A return on common equity for the calculation of AFUDC during the construction period that is the greater of 10.0% or whatever percentage the IUB finds reasonable during IPL’s most recent retail electric rate proceeding.

•	The application of double leverage is deferred until a future retail electric rate proceeding.

•	Amortization over a 10-year period of IPL’s prudently incurred and unreimbursed costs, effective with IPL’s next retail electric base rate proceeding, if IPL cancels the construction of the wind generation facilities.

IPL currently has on-going, new wind project development as follows:

Wind Site		Nameplate Capacity		Location
Upland Prairie		Up to 300 MW		Clay and Dickinson Counties, Iowa
Whispering Willow		Up to 200 MW		Franklin County, Iowa
English Farms		Up to 170 MW		Poweshiek County, Iowa

IPL continues to explore other development opportunities for its planned expansion of wind generation.

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WPL’s Expansion of Wind Generation - In October 2017, WPL, along with WPSC and MGE, entered into definitive agreements, subject to regulatory approval, to acquire the assets of FWEC, which is a 129 MW wind farm located in Wisconsin. WPL currently expects to acquire 55 MW of FWEC for approximately $74 million. In November 2017, WPL filed for approval from the PSCW to acquire the assets of FWEC, and a decision from the PSCW is currently expected in the first half of 2018. In January 2018, FERC approved WPL’s request to acquire the assets of FWEC. WPL, WPSC and MGE have been receiving electricity from FWEC under PPAs since FWEC began commercial operations in 2008. Upon completion of the acquisitions, such PPAs will terminate.

WPL currently expects to file for approval from the PSCW for the remaining portion of its wind expansion plan in the first half of 2018.

Franklin County Wind Farm - Refer to Note 3 for discussion of the transfer of the 99 MW Franklin County wind farm assets from AEF to IPL in April 2017.

Solar Generation - In 2016, WPL began providing customers with energy from the 2.3 MW Rock River solar project through a 10-year PPA. The solar field is located at WPL’s Rock River landfill site in Beloit, Wisconsin. In 2017, IPL installed approximately 5 MW of solar arrays in Dubuque, Iowa. In addition, IPL and WPL have plans to construct solar generation at Marshalltown and West Riverside, respectively.

Coal-Fired Generation -

Environmental Controls Projects - The strategic plan includes adding environmental controls at newer, larger and more efficient coal-fired EGUs to continue producing affordable energy for customers and to benefit the environment. Current projects include installing SCRs at IPL’s Ottumwa Unit 1 and WPL’s Columbia Unit 2 to achieve compliance obligations under CSAPR and the Consent Decrees. SCR is a post-combustion process that injects ammonia or urea into the stream of gases leaving the EGU boiler to convert NOx emissions into nitrogen and water. The use of a catalyst enhances the effectiveness of the conversion, enabling NOx emissions reductions of up to 90%. Refer to Note 16(e) for discussion of the Consent Decrees.

IPL - Under Iowa law, IPL is required to file an EPB biennially. Filing of periodic reports regarding the implementation of IPL’s compliance plan and related budget identified in an EPB is also currently required under a settlement agreement between IPL and the Iowa Office of Consumer Advocate, among others. An EPB provides a utility’s compliance plan and related budget for managing regulated emissions from its coal-fired EGUs in a cost-effective manner. IUB approval of an EPB demonstrates that the EPB is reasonably expected to achieve cost-effective compliance with applicable state environmental requirements. In May 2017, the IUB approved IPL’s most recent emissions plan and budget, which includes the SCR for Ottumwa Unit 1. The SCR at Ottumwa Unit 1 is currently expected to be placed in service in 2018. IPL’s portion of capital expenditures (past and future) for the SCR is expected to be $60 million to $70 million.

WPL - WPL must file a CA application and receive authorization from the PSCW to proceed with any individual environmental controls project with an estimated project cost of $10.7 million or more. WPL is currently constructing the SCR at Columbia Unit 2 pursuant to a 2015 PSCW order and expects to place it in service in 2018. WPL’s portion of capital expenditures (past and future) for the SCR is expected to be $40 million to $50 million.

Plant Retirements and Fuel Switching - In 2017, IPL retired Sutherland Units 1 and 3, Dubuque Units 3 and 4, Fox Lake Units 1 and 3, and various other units, as well as fuel switched Prairie Creek Unit 4 from coal to natural gas and Marshalltown Combustion Turbine Units 1-3 from oil to natural gas. The current strategic plan includes the retirement, or fuel switch from coal to natural gas, of several older, smaller and less efficient EGUs in the next several years. The plan includes the following EGUs, with net book values as of December 31, 2017 (dollars in millions; Combustion Turbine (CT)). Refer to “Properties” in Item 2 for additional details, including nameplate capacity.

IPL								WPL
		Expected		Net Book						Expected		Net Book
EGU		Action		Value				EGU		Action		Value
Red Cedar CT Unit 1		Retire by 6/1/18			$3			Edgewater Unit 4		Retire by 9/30/18			$33
Burlington CT Units 1-4		Retire by 6/1/18		—				Rock River CT Units 3-6		Retire by 12/31/20		1
Burlington Unit 1		Fuel switch by 12/31/21		60				Sheepskin CT Unit 1		Retire by 12/31/20		—
Prairie Creek Units 1 and 3		Fuel switch or retire by 12/31/25		89

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Alliant Energy, IPL and WPL are working with MISO, state regulatory commissions and other regulatory agencies, as required, to determine the final timing of these actions. The expected dates for the retirement and fuel switching of these EGUs are subject to change depending on operational, regulatory, market and other factors. The potential retirement of other EGUs within the generation fleet continues to be evaluated.

Electric and Gas Distribution Systems - The strategic plan includes investments targeted at replacing, modernizing and upgrading infrastructure in the electric and gas distribution systems. Estimated capital expenditures for expected and current electric and gas distribution infrastructure projects for 2018 through 2021 are included in the “Electric and gas distributions systems” lines in the construction and acquisition expenditures table in “Liquidity and Capital Resources.”

Gas Pipeline Expansion - IPL and WPL currently expect to make investments to extend various gas distribution systems to provide natural gas to unserved or underserved areas in their service territories. For example, in March 2017, IPL placed into service the Clinton natural gas pipeline, located in Scott and Clinton Counties in Iowa, which provides capacity for anticipated customer growth in Clinton County.

Pipeline and Hazardous Materials Safety Administration - In April 2016, the Pipeline and Hazardous Materials Safety Administration published proposed regulations to update safety requirements for gas transmission pipelines, which would add new assessment and repair criteria for gas pipelines, and require a systematic approach to verify a pipeline’s maximum allowable operating pressure. Given that the Pipeline and Hazardous Materials Safety Administration has not finalized these gas transmission regulations, Alliant Energy, IPL and WPL are currently unable to predict with certainty the impact of these regulations on their financial condition and results of operations. In anticipation of these pending rule changes, Alliant Energy, IPL and WPL have started proactively replacing certain of IPL’s transmission pipelines and making modifications to certain of WPL’s transmission pipelines.

Advanced Metering Infrastructure (AMI) - IPL currently plans to install AMI in its electric and gas service territories in Iowa through a phased approach from 2017 through 2019. AMI is a system of meters, communications networks and data management systems that enables two-way communication between utilities and its customers. AMI allows for remote meter reading, automatic outage notification, and remote disconnects and reconnects. AMI technology is expected to enhance the communication infrastructure in Alliant Energy’s service territories, improve customer service, enhance energy management initiatives and provide operational savings through increased efficiencies.

Non-utility Operations - The strategic plan for Alliant Energy’s non-utility operations involves maintaining a modest portfolio of businesses that are accretive to earnings and cash flows. The non-utility strategic plan continues to evolve through exploration of modest investment opportunities within and outside of Alliant Energy’s service territories.

RATE MATTERS

Overview - IPL and WPL are subject to federal regulation by FERC, which has jurisdiction over wholesale electric rates and certain natural gas facilities, and state regulation in Iowa and Wisconsin for retail utility rates and standards of service. Such regulatory oversight also covers IPL’s and WPL’s plans for construction and financing of new EGUs and related activities.

Retail Base Rate Filings - Base rate changes reflect both returns on additions to infrastructure and recovery of changes in costs incurred or expected to be incurred. Given that a portion of the rate changes will offset changes in costs, revenues from rate changes should not be expected to result in an equal change in net income for either IPL or WPL.

IPL’s Retail Electric Rate Review (2016 Test Year) - In April 2017, IPL filed a request with the IUB to increase annual electric base rates for its Iowa retail electric customers and interim rates were implemented effective April 13, 2017. In September 2017, IPL reached a partial, non-unanimous settlement agreement with the Iowa Office of Consumer Advocate, the Iowa Business Energy Coalition and the Large Energy Group. In February 2018, the IUB issued an order approving the settlement. Final rates are currently expected to be effective in the first half of 2018 once all motions for reconsideration have been addressed and final tariffs have been approved by the IUB. The requested interim and final rate increases were calculated based on the following (Return on Common Equity (ROE)):

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	Interim Rates		Final Rates
Annual retail electric base rate increase	$102 million		$130 million
Regulatory capital structure:
Common equity	49.1%		49.0%
Long-term debt	46.3%		46.8%
Preferred equity	4.6%		4.2%
After-tax weighted-average cost of capital:
Marshalltown (ROE - 11.0%)	8.1%		8.0%
Emery (ROE - 12.23%)	8.7%		8.6%
Whispering Willow - East (ROE - 11.7%)	8.4%		8.3%
Other (ROE - 9.6%) (a)	7.4%		7.3%
Retail electric rate base (b)	$3.8 billion		$4.0 billion

(a)	Other ROE of 9.6% for interim rates reflects the application of double leverage. Prior to application of double leverage, Other ROE for interim rates was 10.0%. Other ROE of 9.6% for final rates does not reflect the application of double leverage.

(b)

The retail electric rate base for interim rates includes post-test year capital additions placed in service prior to the rate filing in April 2017, including Marshalltown and the Franklin County wind farm. The retail electric rate base for final rates also includes deferred tax assets for production tax credits generated by Whispering Willow - East and post-test year capital additions placed in service by September 30, 2017.

Refer to Note 2 for discussion of IPL’s initial request, interim rates, settlement and final rates, as well as details for a write-down of regulatory assets recorded by IPL in 2017 related to the settlement.

WPL’s Retail Electric and Gas Rate Review (2017/2018 Test Period) - In December 2016, WPL received an order from the PSCW authorizing WPL to implement an increase in annual retail electric rates of $9 million, or approximately 1%, and an increase in annual retail gas rates of $9 million, or approximately 13%. The $9 million net annual retail electric rate increase reflects a $60 million increase in base rates, partially offset by a $51 million reduction in fuel-related costs, using an estimate for 2017 fuel-related costs. These increases are effective January 1, 2017 and extend through the end of 2018. The increases reflect recovery of the costs for environmental controls projects at Edgewater and Columbia, and investments in electric and gas distribution systems, including expansion of natural gas pipeline infrastructure. These rate increases were partially offset by utilization of amounts that WPL previously over-recovered from its customers for energy efficiency cost recovery and electric transmission cost recovery, as well as amounts deferred under the earnings sharing mechanism for the 2013/2014 Test Period. The order included a return on common equity of 10.0% and continues an earnings sharing mechanism, whereby WPL must defer a portion of its earnings and return this amount to its retail electric and gas customers if its annual regulatory return on common equity exceeds 10.25% during the 2017 and 2018 Test Period. WPL must defer 50% of its excess earnings between 10.25% and 11.00%, and 100% of any excess earnings above 11.00%. As of December 31, 2017, WPL has not deferred any 2017 earnings for this provision. Refer to Note 7 for details of WPL’s regulatory limitation on distributions of common stock dividends to its parent company in 2018.

The order reflected the impact of the transfer of WPL’s investment in ATC to ATI on December 31, 2016 as discussed in Note 6(a), approved changes to depreciation rates pursuant to a September 2016 PSCW order, continued escrow treatment of transmission and energy conservation charges, and application of AFUDC rates to 100% of the retail portion of the CWIP balances for West Riverside. The order also requires deferral of any potential changes in revenue requirement due to anticipated increases in WPL’s ownership share of Columbia resulting from the West Riverside agreements WPL previously entered into with neighboring utilities. As of December 31, 2017, WPL’s deferral amount related to such provision was not material. The order also approved changes to retail rates, which result in a higher percentage of costs being recovered from customers through fixed and demand charges.

WPL’s Retail Electric and Gas Rate Review (2015/2016 Test Period) - Refer to Note 2 for details of a July 2014 PSCW order, which included a provision that required WPL to defer a portion of its earnings if its annual regulatory return on common equity exceeded 10.65% during 2015 and 2016. As of December 31, 2017, Alliant Energy and WPL deferred $5 million of WPL’s 2016 earnings for this provision, which WPL currently expects will be refunded to its customers in a future rate review or other proceeding.

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IPL’s 2014 Retail Electric Rate Settlement Agreement - The IUB approved a settlement agreement in 2014 related to rates charged to IPL’s Iowa retail electric customers. The settlement agreement extended IPL’s Iowa retail electric base rates authorized in its 2009 Test Year rate review through 2016 and provided targeted retail electric customer billing credits of $105 million in aggregate. In 2016, 2015 and 2014, IPL recorded $9 million, $24 million and $72 million of such credits, respectively.

WPL’s Retail Fuel-related Rate Filings - Refer to Note 2 for discussion of WPL’s retail fuel-related rate filings for Test Years 2016 through 2018.

Tax Reform - In January 2018, the IUB issued an order initiating investigation of the impacts of Tax Reform. The order requires IPL and other investor-owned utilities in Iowa to track all calculated differences since January 1, 2018 resulting from Tax Reform, such that any over-collections can be refunded to its customers at a future date, if appropriate. In January 2018, the PSCW issued an order directing WPL and other investor-owned utilities in Wisconsin to defer and to accrue carrying costs on the revenue requirement impacts resulting from Tax Reform since its inception. IPL and WPL are working with the IUB and PSCW, respectively, to determine the amount and appropriate mechanism to provide these benefits to their customers. Refer to Note 11 for further discussion of customer benefits related to Tax Reform.

Depreciation Studies - In September 2016, the PSCW issued an order approving the implementation of updated depreciation rates for WPL effective January 1, 2017 as a result of a recently completed depreciation study. The September 2016 PSCW order also authorized WPL to recover the remaining net book value of Edgewater Unit 4 over a 10-year period beginning the later of the retirement date of the EGU or January 1, 2019. In December 2016, FERC issued an order approving the implementation and inclusion of the updated depreciation rates in WPL’s wholesale formula rates effective January 1, 2017.

Refer to Note 1(e) for discussion of the IUB’s February 2018 order approving the implementation of updated depreciation rates for IPL, which are currently expected to be effective in the first half of 2018, as a result of a recently completed depreciation study.

IPL’s Tax Benefit Riders - The IUB has approved electric and gas tax benefit riders proposed by IPL, which utilize regulatory liabilities generated from tax benefits and rate-making accounting changes to credit bills of IPL’s Iowa retail electric customers (beginning in 2011) and gas customers (beginning in 2013) to help offset the impact of rate increases on such customers. IPL’s tax benefit riders regulatory liability account has been, and plans to be, utilized to credit bills of Iowa retail electric and gas customers as follows (in millions):

	Electric				Gas				Total
Regulatory liability account balance approved by IUB		$520				$55				$575
2011 through 2017 customer billing credits	(509		)		(53		)		(562		)
Regulatory liability benefits recorded in 2017 from rate-making accounting change	16				1				17
Tax Reform adjustment recorded in 2017	(5		)		—				(5		)
2018 customer billing credits (estimate)	(19		)		(3		)		(22		)
Remaining balance available for future periods		$3				$—				$3

Refer to Notes 2 and 11 for additional discussion of the impacts of the electric and gas tax benefit riders on Alliant Energy’s and IPL’s regulatory assets and regulatory liabilities, income tax expense and effective income tax rates, as well as impacts from Tax Reform.

Planned Utility Rate Reviews -

IPL’s Retail Gas Rate Review (2017 Test Year) - IPL currently expects to make a retail gas rate filing in the second quarter of 2018 based on a 2017 historical Test Year. The key drivers for the anticipated filing include recovery of capital projects, partially offset by the benefits of Tax Reform. Any rate changes are expected to be implemented in two phases with interim rates effective approximately 10 days after the filing and final rates effective after IUB approval. The IUB must decide on requests for retail rate changes within 10 months of the date of the application for which changes are filed, or the interim rates granted become permanent.

WPL’s Retail Electric and Gas Rate Review (2019/2020 Test Period) - WPL currently expects to make a retail electric and gas rate filing in the second quarter of 2018 for the 2019/2020 Test Period. The key drivers for the anticipated filing include recovery of capital projects, offset by the benefits of Tax Reform and fuel-related cost savings. Any rate changes granted from this request are expected to be effective on January 1, 2019. WPL currently expects a decision from the PSCW regarding this rate filing by the end of 2018.

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Rate Review Details - Details related to IPL’s and WPL’s key jurisdictions were as follows (Common Equity (CE); Preferred Equity (PE); Long-term Debt (LD); Short-term Debt (SD)):

				Authorized Return													Average
		Test		on Common			Regulatory Capital Structure								After-tax		Rate Base
Jurisdictions		Period/Year		Equity (a)			CE		PE		LD		SD		WACC		(in millions)
IPL:
Iowa retail (IUB):
Electric:
Marshalltown		2016		11.00	%		49.0%		4.2%		46.8%		N/A		7.99%		$597 (b)
Emery		2016		12.23	%		49.0%		4.2%		46.8%		N/A		8.59%		197 (b)
Whispering Willow - East		2016		11.70	%		49.0%		4.2%		46.8%		N/A		8.33%		213 (b)
Other		2016		9.60	%		49.0%		4.2%		46.8%		N/A		7.30%		3,020 (b)
Gas (c)		2011		9.56	%		48.8%		5.0%		46.2%		N/A		7.76%		255 (b)
Wholesale electric (FERC) (d)		2017		10.97	%		48.3%		4.0%		47.7%		N/A		7.75%		141 (e)
WPL:
Wisconsin retail (PSCW):
Electric		2018		10.00	%		52.2%		N/A		45.2%		2.6%		7.59%		2,851 (f)
Gas		2018		10.00	%		52.2%		N/A		45.2%		2.6%		7.59%		284 (f)
Wholesale electric (FERC) (g)		2017		10.90	%		55.0%		N/A		45.0%		N/A		8.30%		274 (e)

(a)	Authorized returns on common equity may not be indicative of actual returns earned or projections of future returns.

(b)	Average rate base was calculated using balances as of the end of the test year, adjusted for post-test year capital additions placed in service by September 30 following the end of the test year.

(c)	Authorized returns on common equity and after-tax WACC reflect application of double leverage pursuant to the unanimous settlement agreement approved in the IUB’s November 2012 order. Prior to the application of double leverage, authorized return on common equity was 10.0% and after-tax WACC was 8.0%.

(d)	IPL’s wholesale formula rates reflect annual changes in CE, PE, LD, WACC and estimated rate base, effective July 1, 2018.

(e)	Wholesale average rate base reflects production-related rate base calculated as the simple average of the beginning of the test year and end of the test year balances in accordance with the respectively approved formula rates.

(f)	Average rate base amounts do not include CWIP or a cash working capital allowance and were calculated using a forecasted 13-month average for the test period. The PSCW provides a return on selected CWIP and a cash working capital allowance by adjusting the percentage return on rate base.

(g)	WPL’s wholesale formula rates reflect annual changes in WACC and rate base, which includes the wholesale jurisdictional share impacted by the departure of a wholesale customer in 2017.

ENVIRONMENTAL MATTERS

Overview - Alliant Energy, IPL and WPL are subject to regulation of environmental matters by federal, state and local authorities as a result of their current and past operations. Alliant Energy, IPL and WPL monitor these environmental matters and address them by installing controls that reduce emissions and by implementing operational modifications or other measures to address compliance obligations. There is currently significant regulatory uncertainty with respect to a number of environmental rules and regulations discussed below. Given the dynamic nature of environmental regulations and other related regulatory requirements, Alliant Energy, IPL and WPL have compliance plans to address these environmental obligations. Prudent expenditures incurred by IPL and WPL to comply with environmental requirements would likely be recovered in rates from their customers. Refer to “Strategic Overview” for details of environmental compliance plans. The following are major environmental matters that could potentially have a significant impact on financial condition and results of operations.

Air Quality - The CAA and its amendments mandate preservation or enhancement of air quality through existing regulations and periodic reviews to ensure adequacy of the CAA provisions based on scientific data. As part of the basic framework under the CAA, the EPA is required to establish NAAQS, which serve to protect public health and welfare. These standards address six “criteria” pollutants, four of which (NOx, SO2, particulate matter and ozone) are particularly relevant to electric utility operations. Ozone is not directly emitted from EGUs; however, NOx emissions may contribute to its formation in the atmosphere. Fine particulate matter may also be formed in the atmosphere from SO2 and NOx emissions. Alliant Energy, IPL and WPL also maintain compliance with additional emissions standards that apply under the CAA regulatory framework beyond NAAQS. The specific federal and state air quality rules that may materially affect future operations are listed in the table below. Refer to the sections below the following table for detailed discussion of these air quality rules.

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Environmental Rule		Emissions Regulated		Alliant Energy’s Primary Facilities Potentially Affected		Actual/Anticipated Compliance Deadline
CSAPR		SO2, NOx		Fossil-fueled EGUs over 25 MW capacity in IA and WI		Phase I - 2015; Phase II - 2017
CAA Section 111(d)		CO2		Existing fossil-fueled EGUs over 25 MW capacity		Phase I - 2022-2029; Phase II - 2030
CAA Section 111(b)		CO2		IPL’s Marshalltown facility and WPL’s West Riverside facility		Upon startup of EGU

Refer to “Properties” in Item 2 for a list of IPL’s and WPL’s EGUs by primary fuel type that they currently own or operate, as well as discussion of various EGUs that may be retired or changed from coal-fired to an alternative fuel source in the future.

CSAPR - CSAPR is a regional SO2 and NOx cap-and-trade program, where compliance with emission limits may be achieved by purchasing emission allowances and/or reducing emissions through changes in operations or the additions of environmental controls. CSAPR emission allowances may be banked for future year compliance. CSAPR establishes state-specific annual SO2 and NOx emission caps and ozone season NOx emission caps. Compliance with CSAPR emission limits began in 2015, with additional emission limits reductions beginning in 2017. Alliant Energy, IPL and WPL are currently in compliance with applicable CSAPR emission limits. Alliant Energy, IPL and WPL will continue to monitor legal and regulatory developments related to CSAPR and currently expect to continue meeting the existing CSAPR compliance requirements.

GHG Emissions - There is continued debate regarding the public policy response that the U.S. should adopt to address climate change, involving both domestic actions and international efforts. In 2007, the Supreme Court provided direction on the EPA’s authority to regulate GHG and ruled that these emissions are covered by the CAA. In 2009, the EPA issued a ruling that found GHG emissions contribute to climate change, and therefore, threaten public health and welfare, which was the prerequisite for implementing carbon reduction standards under the CAA. While the EPA’s rules to regulate GHG issued under the authority of the CAA remain subject to further review, growing awareness of climate change is driving efforts to decarbonize the environment through voluntary emissions reductions. The primary GHG emitted from Alliant Energy’s, IPL’s and WPL’s utility operations is CO2 from the combustion of fossil fuels at their larger EGUs. Refer to “Strategic Overview” for discussion of Alliant Energy’s, IPL’s and WPL’s voluntary target to reduce CO2 emissions, as well as their long-term strategy to meet the energy needs of customers while recognizing the importance of using resources in efficient and environmentally responsible ways.

Clean Air Act Section 111(d) - In 2015, the EPA published final standards under Section 111(d) of the CAA, referred to as the Clean Power Plan, which establish guidelines for states to follow in developing plans to reduce CO2 emissions from existing fossil-fueled EGUs. In 2016, the Supreme Court issued a stay of the Clean Power Plan, which placed implementation of the final standards on hold indefinitely. The EPA is currently expected to publish a proposed Clean Power Plan replacement, as well as repeal the original Clean Power Plan, in 2018. Litigation related to the Clean Power Plan is suspended while the EPA proceeds with its repeal and replacement rulemaking processes. Alliant Energy, IPL and WPL are currently unable to predict with certainty the final outcome of the Clean Power Plan, or the impact of the final compliance requirements on their financial condition and results of operations, but expect that expenditures to comply with such requirements could be significant.

Clean Air Act Section 111(b) - In 2015, the EPA published final standards under Section 111(b) of the CAA, which establish CO2 emissions limits for certain new fossil-fueled EGUs. Marshalltown and West Riverside are subject to the EPA’s Section 111(b) regulation and have been designed to achieve compliance with these standards. Litigation related to Section 111(b) is suspended while the EPA proceeds with an administrative review of Section 111(b). Given the EPA’s Section 111(b) rulemaking remains subject to the EPA’s review, Alliant Energy, IPL and WPL are currently unable to predict with certainty the impact of these standards.

In addition, in order for the EPA to regulate existing fossil-fueled EGUs under Section 111(d) of the CAA, the EPA must have valid regulation of new fossil-fueled EGUs under Section 111(b) of the CAA. If Section 111(b) is vacated, the EPA’s ability to implement regulations for CO2 emissions at existing fossil-fueled EGUs, as well as any future Clean Power Plan replacement rule, could be limited.

WPL Consent Decree - Refer to Note 16(e) for discussion of a Consent Decree approved by the U.S. District Court for the Western District of Wisconsin in 2013 and WPL’s obligations thereunder. The Consent Decree resolves a notice of violation issued by the EPA in 2009 and complaints filed by the Sierra Club in 2010 regarding alleged air permitting violations at Columbia, Edgewater and Nelson Dewey.

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IPL Consent Decree - Refer to Note 16(e) for discussion of a Consent Decree approved by the U.S. District Court for the Northern District of Iowa in 2015 and IPL’s obligations thereunder. The Consent Decree resolves potential CAA issues associated with emissions from IPL’s coal-fired generating facilities in Iowa.

Water Quality -

Effluent Limitation Guidelines - In 2015, the EPA published final effluent limitation guidelines, which are expected to require changes to discharge limits for wastewater from certain IPL and WPL steam generating facilities. Compliance with the final guidelines for existing steam generating facilities is determined by each facility’s wastewater discharge permit, and will be required by December 31, 2023. Effective January 2016, compliance for new steam generating facilities is required immediately upon operation. Projects required for compliance with these guidelines are facility specific. Alliant Energy, IPL and WPL currently believe the expenditures to comply with these guidelines could be significant.

Land and Solid Waste -

Coal Combustion Residuals Rule - The final CCR Rule, which regulates CCR as a non-hazardous waste, was published and became effective in 2015. IPL and WPL have seven and three coal-fired EGUs, respectively, with coal ash ponds that are impacted by this rule. In addition, IPL and WPL have three and two active CCR landfills, respectively, that are impacted by this rule. Actual costs resulting from the CCR Rule may be different than the amounts recorded due to potential changes in compliance strategies that will be used, as well as other potential cost estimate changes. Expenditures incurred by IPL and WPL to comply with the CCR Rule are anticipated to be recovered in rates from their customers.

MGP Sites - Refer to Note 16(e) for discussion of IPL’s and WPL’s MGP sites.

Other - Refer to Note 16(e), Item 1 Business, “Strategic Overview” and “Liquidity and Capital Resources” for further discussion of environmental matters, including discussion of specific projects and the associated estimated capital expenditures.

LIQUIDITY AND CAPITAL RESOURCES

Overview - Alliant Energy, IPL and WPL expect to maintain adequate liquidity to operate their businesses and implement their strategic plan as a result of operating cash flows generated by their utility business, and available capacity under a single revolving credit facility and IPL’s sales of accounts receivable program, supplemented by periodic issuances of long-term debt and Alliant Energy equity securities.

Liquidity Position - At December 31, 2017, Alliant Energy had $28 million of cash and cash equivalents, $680 million ($105 million at the parent company, $250 million at IPL and $325 million at WPL) of available capacity under the single revolving credit facility and $92 million of available capacity at IPL under its sales of accounts receivable program. Refer to “Short-term Debt” below and Note 9(a) for further discussion of the credit facility. Refer to Note 5(b) for additional information on IPL’s sales of accounts receivable program.

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Capital Structure - Alliant Energy, IPL and WPL plan to maintain debt-to-total capitalization ratios that are consistent with investment-grade credit ratings. IPL and WPL expect to maintain capital structures consistent with their authorized levels. Alliant Energy expects to maintain consolidated debt at approximately 55% of total capital and consolidated preferred stock at less than 10% of total capital. These targets may be adjusted depending on subsequent developments and the impact on their respective WACC and investment-grade credit ratings. Capital structures as of December 31, 2017 were as follows (Common Equity (CE); IPL’s Preferred Stock (PS); Long-term Debt (including current maturities) (LD); Short-term Debt (SD)):

Alliant Energy, IPL and WPL intend to manage their capital structures and liquidity positions in such a way that facilitates their ability to raise the necessary funds reliably and on reasonable terms and conditions, while maintaining capital structures consistent with those approved by regulators. In addition to capital structures, other important factors used to determine the characteristics of future financings include financial coverage ratios, capital spending plans, regulatory orders and rate-making considerations, levels of debt imputed by rating agencies, market conditions, the impact of tax initiatives and legislation, and anticipated proceeds from asset sales. The PSCW factors certain imputed debt adjustments in establishing a regulatory capital structure as part of WPL’s retail rate reviews. The IUB does not make any explicit adjustments for imputed debt in establishing capital ratios used in determining customer rates, although such adjustments are considered by IPL in recommending an appropriate capital structure. The most significant debt imputations by rating agencies or state regulators relate to the DAEC PPA, pension and OPEB obligations and the sales of accounts receivable program.

Credit and Capital Markets - Alliant Energy, IPL and WPL are aware of the potential implications that credit and capital market disruptions might have on their ability to raise external funding required for their respective operations and capital expenditure plans. Alliant Energy, IPL and WPL maintain a single revolving credit facility to provide backstop liquidity to their commercial paper programs, and ensure a committed source of liquidity in the event the commercial paper market becomes disrupted. In addition, IPL maintains a sales of accounts receivable program as an alternative financing source.

Primary Sources and Uses of Cash - Alliant Energy’s most significant source of cash is from electric and gas sales to IPL’s and WPL’s customers. Cash from these sales reimburses IPL and WPL for prudently-incurred expenses to provide service to their utility customers and provides IPL and WPL a return of and a return on the assets used to provide such services. Utility operating cash flows are expected to cover IPL’s and WPL’s capital expenditures required to maintain their current infrastructure and dividends paid to Alliant Energy’s shareowners. Capital needed to retire debt and fund capital expenditures related to large strategic projects is expected to be met primarily through external financings.

Tax Reform - In December 2017, Tax Reform was enacted. The net impacts of re-measuring deferred taxes associated with regulated utility operations were recorded in regulatory assets and regulatory liabilities and will be utilized to provide benefits to customers in the future. Alliant Energy, IPL and WPL are awaiting decisions from state and federal regulators regarding the timing, amount and method of delivering net tax benefits from utility operations to its utility customers; however, impacts from these decisions may include changes in cash flow from operations, credit ratings, liquidity, and capital needs. Alliant Energy, IPL and WPL are currently unable to quantify these impacts. Refer to Note 11 for further discussion of Tax Reform.

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Cash Flows - Selected information from the cash flows statements was as follows (in millions):

	Alliant Energy										IPL										WPL
	2017			2016			2015				2017			2016			2015				2017			2016			2015
Cash and cash equivalents, January 1		$8.2			$5.8			$56.9				$3.3			$4.5			$5.3				$4.2			$0.4			$46.7
Cash flows from (used for):
Operating activities	983.4			859.6			871.2				440.0			361.9			385.0				465.7			521.4			449.8
Investing activities	(1,496.3		)	(1,186.5		)	(919.2		)		(706.4		)	(693.6		)	(511.9		)		(665.7		)	(478.9		)	(358.2		)
Financing activities	532.6			329.3			(3.1		)		266.7			330.5			126.1				218.9			(38.7		)	(137.9		)
Net increase (decrease)	19.7			2.4			(51.1		)		0.3			(1.2		)	(0.8		)		18.9			3.8			(46.3		)
Cash and cash equivalents, December 31		$27.9			$8.2			$5.8				$3.6			$3.3			$4.5				$23.1			$4.2			$0.4

Operating Activities - The following items contributed to increased (decreased) operating activity cash flows (in millions):

2017 vs. 2016	Alliant Energy				IPL				WPL
Higher collections at IPL due to interim retail electric base rate increase effective April 13, 2017		$77				$77				$—
Higher collections at WPL due to new retail electric and gas base rates in 2017	72				—				72
Changes in cash collateral balances	30				—				—
Timing of WPL’s fuel-related cost recoveries from customers	(50		)		—				(50		)
Changes in the level of cash proceeds from IPL’s sales of accounts receivable	(25		)		(25		)		—
Lower distributions received at WPL from its investment in ATC due to the transfer of the investment in ATC to ATI on December 31, 2016	—				—				(27		)
Changes in income taxes paid/refunded	(1		)		20				(36		)
Other (primarily due to other changes in working capital)	21				6				(15		)
		$124				$78				($56	)

2016 vs. 2015	Alliant Energy				IPL				WPL
Decreased collections from IPL’s retail customers due to increased past due amounts		($33	)			($33	)			$—
Changes in cash collateral balances	(27		)		—				—
Changes in income taxes paid/refunded	(10		)		(30		)		35
Changes in the level of cash proceeds from IPL’s sales of accounts receivable	33				33				—
Timing of WPL’s fuel-related cost recoveries from customers	17				—				17
Changes in collections at IPL from higher revenues from retail electric customer billing credits related to the approved retail electric base rate freeze through 2016	15				15				—
Other (includes other changes in working capital largely related to changes in inventory levels)	(7		)		(8		)		20
		($12	)			($23	)			$72

Income Tax Payments and Refunds - Income tax (payments) refunds were as follows (in millions):

	2017				2016				2015
IPL		$9				($11	)			$19
WPL	(8		)		28				(7		)
Other subsidiaries	(12		)		(27		)		(12		)
Alliant Energy		($11	)			($10	)			$—

Alliant Energy, IPL and WPL currently do not expect to make any significant federal income tax payments through 2024 based on their current federal net operating loss and credit carryforward positions. While no significant federal income tax payments through 2024 are expected to occur, some tax payments and refunds may occur for state taxes and between consolidated group members (including IPL and WPL) under the tax sharing agreement between Alliant Energy and its subsidiaries. Refer to Note 11 for discussion of the carryforward positions.

Pension Plan Contributions - Alliant Energy, IPL and WPL currently do not expect to make any significant pension plan contributions in 2018 based on the funded status and assumed return on assets for each plan as of the December 31, 2017 measurement date. Refer to Note 12(a) for discussion of the current funded levels of pension plans.

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Investing Activities - The following items contributed to increased (decreased) investing activity cash flows (in millions):

2017 vs. 2016	Alliant Energy				IPL				WPL
Lower (higher) utility construction expenditures (a)		($151	)			$14				($184	)
Non-utility wind investment in Oklahoma (Refer to Note 6(a) for details)	(98		)		—				—
Proceeds from the liquidation of company-owned life insurance policies in 2016	(31		)		(19		)		—
Other	(30		)		(8		)		(3		)
		($310	)			($13	)			($187	)

2016 vs. 2015	Alliant Energy				IPL				WPL
Higher utility construction expenditures (b)		($171	)			($70	)			($109	)
Proceeds from IPL’s Minnesota distribution asset sales in 2015 (Refer to Note 3 for details)	(140		)		(140		)		—
Proceeds from the liquidation of company-owned life insurance policies in 2016	31				19				—
Other	13				9				(12		)
		($267	)			($182	)			($121	)

(a)	Largely due to higher expenditures for WPL’s West Riverside facility, IPL’s and WPL’s electric and gas distribution systems and IPL’s expansion of wind generation, partially offset by lower expenditures for IPL’s Marshalltown facility.

(b)	Largely due to higher expenditures for IPL’s expansion of wind generation, IPL’s and WPL’s electric and gas distribution systems, and WPL’s West Riverside facility, partially offset by lower expenditures for IPL’s Marshalltown facility and environmental controls projects at WPL’s Edgewater Unit 5.

Construction and Acquisition Expenditures - Construction and acquisition expenditures and financing plans are reviewed, approved and updated as part of the financial planning processes. Changes may result from a number of reasons, including regulatory requirements, changing legislation, not obtaining favorable and acceptable regulatory approval on certain projects, improvements in technology, improvements to ensure reliability of the electric and gas distribution systems, and new opportunities. Alliant Energy, IPL and WPL have not yet entered into contractual commitments relating to the majority of their anticipated future construction and acquisition expenditures. As a result, they have some discretion with regard to the level and timing of these expenditures. The table below summarizes anticipated construction and acquisition expenditures (in millions). Cost estimates represent Alliant Energy’s, IPL’s and WPL’s portion of total escalated construction expenditures and exclude AFUDC and capitalized interest, if applicable. Such estimates reflect impacts to Alliant Energy’s and WPL’s capital expenditures resulting from purchase options by certain electric cooperatives for a partial ownership interest in West Riverside, as well as additional capital expenditures related to Columbia that WPL is expected to incur related to agreements entered into with WPSC and MGE. Refer to “Strategic Overview” for further discussion of certain key projects impacting construction and acquisition plans related to the utility business.

	Alliant Energy													IPL													WPL
	2018			2019			2020			2021				2018			2019			2020			2021				2018			2019			2020			2021
Generation:
Renewable projects		$655			$850			$140			$85				$565			$725			$50			$85				$90			$125			$90			$—
West Riverside	225			90			10			—				—			—			—			—				225			90			10			—
Other	140			95			150			140				60			50			80			75				80			45			70			65
Distribution:
Electric systems	440			435			485			560				260			250			290			345				180			185			195			215
Gas systems	130			95			90			115				75			50			55			65				55			45			35			50
Other	130			110			125			100				25			20			25			20				10			10			10			10
		$1,720			$1,675			$1,000			$1,000				$985			$1,095			$500			$590				$640			$500			$410			$340

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Financing Activities - The following items contributed to increased (decreased) financing activity cash flows (in millions):

2017 vs. 2016	Alliant Energy				IPL				WPL
Lower payments to retire long-term debt		$309				$—				$—
Higher net proceeds from common stock issuances	123				—				—
Net changes in the amount of commercial paper outstanding and other short-term borrowings outstanding	87				—				(60		)
Higher (lower) net proceeds from issuance of long-term debt	(250		)		(50		)		300
Higher capital contributions from IPL’s and WPL’s parent company, Alliant Energy	—				10				30
Other (includes higher dividend payments in 2017)	(66		)		(24		)		(12		)
		$203				($64	)			$258

2016 vs. 2015	Alliant Energy				IPL				WPL
Proceeds from long-term debt issued in 2016 (Refer to “Long-term Debt” below)		$800				$300				$—
Payments to retire long-term debt in 2015 (Refer to “Long-term Debt” below)	181				150				31
Net changes in the amount of commercial paper outstanding	66				—				13
Payments to retire long-term debt in 2016 (Refer to “Long-term Debt” below)	(310		)		—				—
Proceeds from long-term debt issued in 2015 (Refer to “Long-term Debt” below)	(250		)		(250		)		—
Lower net proceeds from common stock issuances	(125		)		—				—
Higher capital contributions from IPL’s and WPL’s parent company, Alliant Energy	—				25				60
Other (includes higher dividend payments in 2016)	(30		)		(21		)		(5		)
		$332				$204				$99

FERC and Public Utility Holding Company Act Financing Authorizations - Under the Public Utility Holding Company Act of 2005, FERC has authority over the issuance of utility securities, except to the extent that a public utility’s primary state regulatory commission has retained jurisdiction over such matters. FERC currently has authority over the issuance of securities by IPL. FERC does not have authority over the issuance of securities by Alliant Energy, WPL, AEF or Corporate Services.

In November 2017, IPL received authorization, and has current remaining authority, from FERC through December 31, 2019 for the following (in millions):

Long-term debt securities issuances in aggregate		$1,100
Short-term debt securities outstanding at any time (including borrowings from its parent)	300
Preferred stock issuances in aggregate	300

State Regulatory Financing Authorizations - In August 2017, WPL received authorization from the PSCW to have up to $400 million of short-term borrowings and/or letters of credit outstanding at any time through the earlier of the expiration date of WPL’s credit facility agreement (including extensions) or December 2024. In December 2016, WPL received authorization from the PSCW to issue up to $1 billion of long-term debt securities in aggregate during 2017 through 2019, with no more than $650 million to be issued in any year. WPL’s current remaining authority for issuances of long-term debt securities is $700 million in aggregate through 2019.

Shelf Registrations - Alliant Energy, IPL and WPL have current shelf registration statements on file with the SEC for availability to issue unspecified amounts of securities through December 2020. Alliant Energy’s shelf registration statement may be used to issue common stock, debt and other securities. IPL’s and WPL’s shelf registration statements may be used to issue preferred stock and debt securities.

Common Stock Dividends - Payment of common stock dividends is subject to dividend declaration by Alliant Energy’s Board of Directors. Alliant Energy’s general long-term goal is to maintain a dividend payout ratio that is competitive with the industry average. Based on that, Alliant Energy’s goal is to maintain a dividend payout ratio of approximately 60% to 70% of consolidated earnings from continuing operations. IPL’s and WPL’s goal is to maintain dividend payout ratios of approximately 65% to 75%. Alliant Energy’s, IPL’s and WPL’s dividend payout ratios were 63%, 72% and 67% of their consolidated earnings from continuing operations in 2017, respectively. Refer to “Executive Overview” for discussion of expected common stock dividends in 2018. Refer to Note 7 for discussion of IPL’s and WPL’s dividend payment restrictions based on the terms of applicable regulatory limitations and IPL’s outstanding preferred stock.

Common Stock Issuances - Refer to Note 7 for discussion of common stock issuances by Alliant Energy in 2015 through 2017. Refer to “Executive Overview” for discussion of expected issuances of common stock in 2018.

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Short-term Debt - In August 2017, Alliant Energy, IPL and WPL entered into a single new revolving credit facility agreement, which expires in August 2022, to provide short-term borrowing flexibility and backstop liquidity for commercial paper outstanding. As of December 31, 2017, the short-term borrowing capacity totaled $1 billion ($400 million for Alliant Energy at the parent company level, $250 million for IPL and $350 million for WPL). There are currently 13 lenders that participate in the credit facility, with aggregate respective commitments ranging from $20 million to $130 million. The credit facility includes a $100 million letter of credit commitment and $50 million swingline commitment, which are available to each of Alliant Energy, IPL and WPL. Subject to certain conditions, Alliant Energy, IPL and WPL may each reallocate and change its sublimit up to $500 million, $400 million and $500 million, respectively, within the $1 billion total commitment. Subject to certain conditions, Alliant Energy, IPL and WPL may exercise two extension options, each extending the maturity date by one year. The credit facility has a provision to expand the facility size up to an additional $300 million, for a potential total commitment of $1.3 billion, subject to lender approval for Alliant Energy and subject to lender and regulatory approvals for IPL and WPL.

The credit agreement contains provisions that prohibit placing liens on any of the property of Alliant Energy, IPL or WPL or their respective subsidiaries with certain exceptions. Exceptions include among others, liens to secure obligations of up to 10% of the consolidated tangible assets of the applicable borrower (valued at carrying value), liens imposed by government entities, materialmen’s and similar liens, judgment liens, liens to secure additional non-recourse debt not to exceed $100 million outstanding at any one time at each of Alliant Energy, IPL and WPL, and purchase money liens.

The credit agreement contains provisions that require, during its term, any proceeds from asset sales, with certain exclusions, in excess of 25% of Alliant Energy’s, IPL’s and WPL’s respective consolidated assets be used to reduce certain of their respective debt commitments. Exclusions include, among others, certain sale and lease-back transactions, sales of non-utility assets, intercompany asset sales and sales of certain contracts and accounts receivable.

The credit agreement contains customary events of default, including a cross-default provision that would be triggered if Alliant Energy or certain of its significant subsidiaries (including IPL and WPL) defaults on debt (other than non-recourse debt) totaling $100 million or more. IPL and WPL are subject to a similar cross-default provision with respect to their own respective consolidated debt. A default by Alliant Energy or its non-utility subsidiaries would not trigger a cross-default at IPL or WPL, nor would a default by either of IPL or WPL constitute a cross-default event for the other. If an event of default under the credit agreement occurs and is continuing, then the lenders may declare any outstanding obligations of the defaulting borrower under the credit agreement immediately due and payable. In addition, if any order for relief is entered under bankruptcy laws with respect to (a) Alliant Energy, IPL or WPL, then any outstanding obligations of Alliant Energy under the credit agreement would be immediately due and payable, or (b) IPL or WPL, then any outstanding obligations of IPL or WPL, respectively, under the credit agreement would be immediately due and payable.

A material adverse change representation is not required for borrowings under the credit agreement.

Refer to Note 9(a) for discussion of financial covenants required under the credit agreement, as well as additional information on the credit facility, commercial paper outstanding and AEF’s $95 million, 364-day variable-rate term loan credit agreement related to the acquisition of an equity ownership interest in a non-utility wind farm located in Oklahoma. At December 31, 2017, Alliant Energy, IPL and WPL were in compliance with financial covenants of the credit agreement.

Long-term Debt - Refer to Note 9(b) for discussion of IPL’s and WPL’s issuances of long-term debt in 2017. Significant issuances of long-term debt in 2016 and 2015 were as follows (dollars in millions):

Company		Principal Amount				Type		Interest Rate		Maturity Date		Use of Proceeds
2016:
AEF			$500			Variable-rate term loan credit agreement		2% at December 31, 2017		Oct-2018		Retire borrowings under Alliant Energy’s and Franklin County Holdings LLC’s variable-rate term loan credit agreements that matured in 2016, reduce outstanding commercial paper and for general corporate purposes
IPL		300				Senior debentures		3.7%		Sep-2046		Reduce cash amounts received from its sales of accounts receivable program, reduce commercial paper classified as long-term debt and for general corporate purposes
2015:
IPL		250				Senior debentures		3.4%		Aug-2025		Reduce commercial paper classified as long-term debt, reduce cash amounts received from its sales of accounts receivable program and for general corporate purposes

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AEF’s $500 million term loan credit agreement (with Alliant Energy as guarantor) includes substantially the same covenants and events of default included in the revolving credit facility financial covenants discussed above and in Note 9(a). At December 31, 2017, Alliant Energy was in compliance with financial covenants of the term loan credit agreement.

There were no significant retirements of long-term debt in 2017. Significant retirements of long-term debt in 2016 and 2015 were as follows (dollars in millions):

Company		Principal Amount				Type		Interest Rate		Retirement Date
2016:
Alliant Energy			$250			Variable-rate term loan credit agreement		1% at December 31, 2015		Oct-2016
Franklin County Holdings LLC		60				Variable-rate term loan credit agreement		1% at December 31, 2015		Oct-2016
2015:
IPL		150				Senior debentures		3.3%		Jun-2015
WPL		16				Pollution control revenue bonds		5%		Sep-2015
WPL		15				Pollution control revenue bonds		5.375%		Aug-2015

Refer to Note 9(b) for further discussion of long-term debt and “Executive Overview” for discussion of expected issuances of long-term debt in 2018.

Impact of Credit Ratings on Liquidity and Collateral Obligations -

Ratings Triggers - The long-term debt of Alliant Energy and its subsidiaries is not subject to any repayment requirements as a result of explicit credit rating downgrades or so-called “ratings triggers.” However, Alliant Energy and its subsidiaries are parties to various agreements that contain provisions dependent on credit ratings. In the event of a significant downgrade, Alliant Energy or its subsidiaries may need to provide credit support, such as letters of credit or cash collateral equal to the amount of the exposure, or may need to unwind the contract or pay the underlying obligation. In the event of a significant downgrade, management believes Alliant Energy, IPL and WPL have sufficient liquidity to cover counterparty credit support or collateral requirements under these various agreements. In addition, a downgrade in the credit ratings of Alliant Energy, IPL or WPL, including those that may result from the impacts of Tax Reform, could also result in them paying higher interest rates in future financings, reduce flexibility with future financing plans, reduce their pool of potential lenders, increase their borrowing costs under existing credit facilities or limit their access to the commercial paper market. Credit ratings and outlooks as of the date of this report are as follows:

		Standard & Poor’s Ratings Services		Moody’s Investors Service
Alliant Energy:	Corporate/issuer	A-		Baa1
	Commercial paper	A-2		P-2
	Senior unsecured long-term debt	N/A		N/A
	Outlook	Stable		Stable
IPL:	Corporate/issuer	A-		Baa1
	Commercial paper	A-2		P-2
	Senior unsecured long-term debt	A-		Baa1
	Preferred stock	BBB		Baa3
	Outlook	Stable		Stable
WPL:	Corporate/issuer	A		A2
	Commercial paper	A-1		P-1
	Senior unsecured long-term debt	A		A2
	Outlook	Stable		Stable

Credit ratings are not recommendations to buy or sell securities and are subject to change, and each rating should be evaluated independently of any other rating. Each of Alliant Energy, IPL or WPL assumes no obligation to update their respective credit ratings. Refer to Note 15 for additional information on ratings triggers for commodity contracts accounted for as derivatives.

Off-Balance Sheet Arrangements -

Special Purpose Entities - IPL maintains a Receivables Agreement whereby it may sell its customer accounts receivables, unbilled revenues and certain other accounts receivables to a third party through wholly-owned and consolidated special purpose entities. The purchase commitment from the third party to which IPL sells its receivables expires in March 2018. IPL currently expects to amend and extend the purchase commitment. In 2017, 2016 and 2015, IPL evaluated the third party that purchases IPL’s receivable assets under the Receivables Agreement and believes that the third party is a VIE. However, IPL concluded consolidation of the third party was not required.

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In addition, IPL’s sales of accounts receivable program agreement contains a cross-default provision that is triggered if IPL or Alliant Energy incurs an event of default on debt totaling $50 million or more. If an event of default under IPL’s sales of accounts receivable program agreement occurs, then the counterparty could terminate such agreement. Refer to Note 5(b) for additional information regarding IPL’s sales of accounts receivable program.

Guarantees and Indemnifications - At December 31, 2017, various guarantees and indemnifications are outstanding related to Alliant Energy’s cash equity ownership interest in a non-utility wind farm and Alliant Energy’s and IPL’s prior divestiture activities. Refer to Note 16(d) for additional information.

Certain Financial Commitments -

Contractual Obligations - Consolidated long-term contractual obligations as of December 31, 2017 were as follows (in millions):

Alliant Energy	2018				2019				2020				2021				2022				Thereafter				Total
Other purchase obligations (Note 16(b))		$545				$364				$292				$267				$226				$716				$2,410
Long-term debt maturities (Note 9(b))	856				256				357				8				333				3,093				4,903
Interest - long-term debt obligations	217				184				168				157				157				1,998				2,881
Capital purchase obligations (Note 16(a))	82				—				—				—				—				—				82
Operating leases (Note 10(a))	6				5				2				2				1				13				29
Capital leases	2				1				1				1				—				—				5
		$1,708				$810				$820				$435				$717				$5,820				$10,310

IPL	2018				2019				2020				2021				2022				Thereafter				Total
Other purchase obligations (Note 16(b))		$322				$236				$193				$189				$164				$565				$1,669
Long-term debt maturities (Note 9(b))	350				—				200				—				—				1,875				2,425
Interest - long-term debt obligations	115				91				91				83				83				1,060				1,523
Capital purchase obligations (Note 16(a))	15				—				—				—				—				—				15
Operating leases (Note 10(a))	3				2				1				1				1				13				21
Capital leases	1				—				—				—				—				—				1
		$806				$329				$485				$273				$248				$3,513				$5,654

WPL	2018				2019				2020				2021				2022				Thereafter				Total
Other purchase obligations (Note 16(b))		$222				$126				$96				$78				$62				$151				$735
Long-term debt maturities (Note 9(b))	—				250				150				—				250				1,200				1,850
Interest - long-term debt obligations	89				89				73				69				69				938				1,327
Capital purchase obligations (Note 16(a))	67				—				—				—				—				—				67
Operating leases (Note 10(a))	3				3				1				—				—				—				7
Capital lease - Sheboygan Falls Energy Facility (Note 10(b))	15				15				15				15				15				35				110
Capital leases - other	1				1				1				1				—				—				4
		$397				$484				$336				$163				$396				$2,324				$4,100

At December 31, 2017, Alliant Energy, IPL and WPL had no uncertain tax positions recorded as liabilities. Refer to Note 12(a) for anticipated pension and OPEB funding amounts, which are not included in the above tables. Refer to “Construction and Acquisition Expenditures” above for additional information on construction and acquisition programs. In addition, at December 31, 2017, there were various other liabilities included on the balance sheets that, due to the nature of the liabilities, the timing of payments cannot be estimated and are therefore excluded from the above tables.

OTHER MATTERS

Market Risk Sensitive Instruments and Positions - Primary market risk exposures are associated with commodity prices, investment prices and interest rates. Risk management policies are used to monitor and assist in mitigating these market risks and derivative instruments are used to manage some of the exposures related to commodity prices. Refer to Notes 1(h) and 15 for further discussion of derivative instruments.

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Commodity Price - Alliant Energy, IPL and WPL are exposed to the impact of market fluctuations in the price and transportation costs of commodities they procure and market. Established policies and procedures mitigate risks associated with these market fluctuations, including the use of various commodity derivatives and contracts of various durations for the forward sale and purchase of these commodities. Exposure to commodity price risks in the utility businesses is also significantly mitigated by current rate-making structures in place for recovery of fuel-related costs as well as the cost of natural gas purchased for resale. IPL’s electric and gas tariffs and WPL’s wholesale electric and gas tariffs provide for subsequent monthly adjustments to their tariff rates for material changes in prudently incurred commodity costs. IPL’s and WPL’s rate mechanisms, combined with commodity derivatives, significantly reduce commodity risk associated with their electric and gas margins.

WPL’s retail electric margins have modest exposure to the impact of changes in commodity prices due largely to the current retail recovery mechanism in place in Wisconsin for fuel-related costs. In December 2017, the PSCW approved annual forecasted fuel-related costs per MWh of $26.75 based on $356 million of variable fuel-related costs applicable for retail and wholesale customers for WPL’s 2018 Test Period. The retail portion of the 2018 fuel-related costs will be monitored using an annual bandwidth of plus or minus 2%. Based on the cost recovery mechanism in Wisconsin, the annual forecasted fuel-related costs approved by the PSCW in December 2017 and an annual bandwidth of plus or minus 2%, Alliant Energy and WPL currently estimate the commodity risk exposure to their retail electric margins in 2018 is approximately $6 million. However, the commodity risk exposure to WPL’s electric margins in 2018 could increase if WPL’s return on common equity in 2018 exceeds the most recently authorized return on common equity.

Refer to Note 2 for discussion of WPL’s retail fuel-related rate filings for Test Years 2016 through 2018, and Note 1(g) for additional details of utility cost recovery mechanisms that significantly reduce commodity risk.

Investment Price - Alliant Energy, IPL and WPL are exposed to investment price risk as a result of their investments in securities, largely related to securities held by their pension and OPEB plans. Refer to Note 12(a) for details of the securities held by their pension and OPEB plans. Refer to “Critical Accounting Policies and Estimates” for the impact on retirement plan costs of changes in the rate of returns earned by plan assets.

Interest Rate - Alliant Energy, IPL and WPL are exposed to risk resulting from changes in interest rates associated with variable-rate borrowings. In addition, Alliant Energy and IPL are exposed to risk resulting from changes in interest rates on cash amounts outstanding under IPL’s sales of accounts receivable program. Assuming the impact of a hypothetical 100 basis point increase in interest rates on variable-rate borrowings and cash proceeds outstanding under IPL’s sales of accounts receivable program at December 31, 2017, Alliant Energy’s, IPL’s and WPL’s annual pre-tax expense would increase by approximately $9 million, $0 and $0, respectively. Refer to Notes 5(b) and 9 for additional information on cash proceeds outstanding under IPL’s sales of accounts receivable program, and short- and long-term variable-rate borrowings, respectively. Refer to “Critical Accounting Policies and Estimates” for the impacts of changes in discount rates on retirement plan obligations and costs.

New Accounting Standards - Refer to Note 1(n) for discussion of new accounting standards impacting Alliant Energy, IPL and WPL.

Critical Accounting Policies and Estimates - The preparation of financial statements in conformity with GAAP requires management to apply accounting policies and make estimates that affect results of operations and the amounts of assets and liabilities reported in the financial statements. The following accounting policies and estimates are critical to the business and the understanding of financial results as they require critical assumptions and judgments by management. The results of these assumptions and judgments form the basis for making estimates regarding the results of operations and the amounts of assets and liabilities that are not readily apparent from other sources. Actual financial results may differ materially from these estimates. Management has discussed these critical accounting policies and estimates with the Audit Committee of the Board of Directors. Refer to Note 1 for additional discussion of accounting policies and the estimates used in the preparation of the financial statements.

Contingencies - Assumptions and judgments are made each reporting period regarding the future outcome of contingent events. Loss contingency amounts are recorded for any contingent events for which the likelihood of loss is probable and able to be reasonably estimated based upon current available information. The amounts recorded may differ from actuals when the uncertainty is resolved. The estimates made in accounting for contingencies, and the gains and losses that are recorded upon the ultimate resolution of these uncertainties, could have a significant effect on results of operations and the amount of assets and liabilities in the financial statements. Note 16 provides further discussion of contingencies assessed at

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December 31, 2017, including various pending legal proceedings, guarantees and indemnifications that may have a material impact on financial condition and results of operations.

Regulatory Assets and Regulatory Liabilities - IPL and WPL are regulated by various federal and state regulatory agencies. As a result, they are subject to GAAP for regulated operations, which recognizes that the actions of a regulator can provide reasonable assurance of the existence of an asset or liability. Regulatory assets or regulatory liabilities arise as a result of a difference between GAAP and actions imposed by the regulatory agencies in the rate-making process. Regulatory assets generally represent incurred costs that have been deferred as such costs are probable of recovery in future customer rates. Regulatory liabilities generally represent obligations to make refunds to customers or amounts collected in rates for which the related costs have not yet been incurred. Regulatory assets and regulatory liabilities are recognized in accordance with the rulings of applicable federal and state regulators, and future regulatory rulings may impact the carrying value and accounting treatment of regulatory assets and regulatory liabilities.

Assumptions and judgments are made each reporting period regarding whether regulatory assets are probable of future recovery and regulatory liabilities are probable future obligations by considering factors such as regulatory environment changes, rate orders issued by the applicable regulatory agencies, historical decisions by such regulatory agencies regarding similar regulatory assets and regulatory liabilities, and subsequent events of such regulatory agencies. The decisions made by regulatory authorities have an impact on the recovery of costs, the rate of return on invested capital and the timing and amount of assets to be recovered by rates. A change in these decisions may result in a material impact on results of operations and the amount of assets and liabilities in the financial statements. Note 2 provides details of the nature and amounts of regulatory assets and regulatory liabilities assessed at December 31, 2017, as well as discussion of a write-down of regulatory assets in 2017 related to the recovery of Sutherland Units 1 and 3, and AROs deemed no longer probable of recovery in future rates, due to the IPL retail electric rate review settlement, which was approved by the IUB in February 2018.

Long-Lived Assets - Periodic assessments regarding the recoverability of certain long-lived assets are completed when factors indicate the carrying value of such assets may be impaired or such assets are planned to be sold. These assessments require significant assumptions and judgments by management. The long-lived assets assessed for impairment generally include certain assets within regulated operations that may not be fully recovered from IPL’s and WPL’s customers as a result of regulatory decisions in the future, and assets within non-utility operations that are proposed to be sold or are currently generating operating losses.

Regulated Operations - Certain long-lived assets within regulated operations are reviewed for possible impairment whenever events or changes in circumstances indicate all or a portion of the carrying value of the assets may be disallowed for rate-making purposes. If IPL or WPL is disallowed recovery of any portion of the carrying value of its regulated property, plant and equipment that is under construction, has been recently completed or is probable of being retired early, an impairment charge is recognized equal to the amount of the carrying value that was disallowed recovery. If IPL or WPL is disallowed a full or partial return on the carrying value of its regulated property, plant and equipment that is under construction, has been recently completed or is probable of being retired early, an impairment charge is recognized equal to the difference between the carrying amount of the asset and the present value of the future revenues expected from its regulated property, plant and equipment. Alliant Energy’s, IPL’s and WPL’s long-lived assets within their regulated operations that were assessed for impairment and plant abandonment in 2017 included IPL’s and WPL’s generating units subject to early retirement.

Generating Units Subject to Early Retirement - Alliant Energy, IPL and WPL evaluate future plans for their electric generation fleet and have announced the early retirement of certain older and less-efficient EGUs. When it becomes probable that an EGU will be retired before the end of its useful life, Alliant Energy, IPL and WPL must assess whether the EGU meets the criteria to be considered probable of abandonment. EGUs that are considered probable of abandonment generally have material remaining net book values and are expected to cease operations in the near term significantly before the end of their original estimated useful lives. If an EGU meets such criteria to be considered probable of abandonment, Alliant Energy, IPL and WPL must assess the probability of full recovery of the remaining carrying value of such EGU. If it is probable that regulators will not allow full recovery of and a full return on the remaining net book value of the abandoned EGU, an impairment charge is recognized equal to the difference between the remaining carrying value and the present value of the future revenues expected from the abandoned EGU.

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Alliant Energy and WPL concluded that Edgewater Unit 4 met the criteria to be considered probable of abandonment in 2017. WPL is currently allowed a full recovery of and a full return on this EGU from both its retail and wholesale customers, and as a result, Alliant Energy and WPL concluded that no impairment was required as of December 31, 2017. Alliant Energy, IPL and WPL evaluated their other EGUs that are subject to early retirement and determined that no other EGUs met the criteria to be considered probable of abandonment as of December 31, 2017. Refer to “Strategic Overview” for discussion of additional EGUs that may be retired early and could be considered probable of abandonment in future periods, along with the net book value of such EGUs.

Unbilled Revenues - Unbilled revenues are primarily associated with utility operations. Energy sales to individual customers are based on the reading of customers’ meters, which occurs on a systematic basis throughout the month. Amounts of energy delivered to customers since the date of the last meter reading are estimated at the end of each reporting period and the corresponding estimated unbilled revenue is recorded. The unbilled revenue estimate is based on daily system demand volumes, estimated customer usage by class, temperature impacts, line losses and the most recent customer rates. Such process involves the use of various judgments and assumptions and significant changes in these judgments and assumptions could have a material impact on results of operations. As of December 31, 2017, unbilled revenues related to Alliant Energy’s utility operations were $198 million ($113 million at IPL and $85 million at WPL). Note 5(b) provides discussion of IPL’s unbilled revenues as of December 31, 2017 sold to a third party related to its sales of accounts receivable program.

Pensions and Other Postretirement Benefits - Alliant Energy, IPL and WPL sponsor various defined benefit pension and OPEB plans that provide benefits to a significant portion of their employees and retirees. Assumptions and judgments are made periodically to estimate the obligations and costs related to their retirement plans. There are many judgments and assumptions involved in determining an entity’s pension and other postretirement liabilities and costs each period including employee demographics (including life expectancies and compensation levels), discount rates, assumed rates of return and funding. Changes made to plan provisions may also impact current and future benefits costs. Judgments and assumptions are supported by historical data and reasonable projections and are reviewed at least annually. The following table shows the impacts of changing certain key actuarial assumptions discussed above (in millions):

		Defined Benefit Pension Plans								OPEB Plans
Change in Actuarial Assumption		Impact on Projected Benefit Obligation at December 31, 2017				Impact on 2018 Net Periodic Benefit Costs				Impact on Projected Benefit Obligation at December 31, 2017				Impact on 2018 Net Periodic Benefit Costs
Alliant Energy
1% change in discount rate			$173				$11				$22				$2
1% change in expected rate of return		N/A				9				N/A				1
IPL
1% change in discount rate		80				5				8				1
1% change in expected rate of return		N/A				4				N/A				1
WPL
1% change in discount rate		76				6				8				1
1% change in expected rate of return		N/A				4				N/A				—

Note 12(a) provides additional details of pension and OPEB plans.

Income Taxes - Alliant Energy, IPL and WPL are subject to income taxes in various jurisdictions. Assumptions and judgments are made each reporting period to estimate income tax assets, liabilities, benefits and expenses. Judgments and assumptions are supported by historical data and reasonable projections. Significant changes in these judgments and assumptions could have a material impact on financial condition and results of operations. Alliant Energy’s and IPL’s critical assumptions and judgments for 2017 include estimates of qualifying deductions for repairs expenditures and allocation of mixed service costs due to the impact of Iowa rate-making principles on such property-related differences. Critical assumptions and judgments also include projections of future taxable income used to determine the ability to utilize net operating losses and credit carryforwards prior to their expiration, and accounting for the impacts of Tax Reform.

Effect of Rate-making on Property-related Differences - Alliant Energy’s and IPL’s effective income tax rates are normally impacted by certain property-related differences at IPL for which deferred tax is not recorded in the income statement pursuant to Iowa rate-making principles. Changes in methods or assumptions regarding the amount of IPL’s qualifying repairs expenditures, allocation of mixed service costs, and costs related to retirement or removal of depreciable property could result in a material impact on Alliant Energy’s and IPL’s financial condition and results of operations. Refer to Note 1(c) for further discussion of regulatory accounting for taxes. Refer to Note 11 for details of how the effect of rate-making on property-related differences impacted Alliant Energy’s and IPL’s effective income tax rates for 2017, 2016 and 2015.

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Carryforward Utilization - Significant federal tax credit carryforwards and federal and state net operating loss carryforwards exist for Alliant Energy, IPL and WPL as of December 31, 2017. Based on projections of current and future taxable income, Alliant Energy, IPL and WPL plan to utilize substantially all of these carryforwards prior to their expiration. Due to the anticipated future reductions in revenues from utility customers due to Tax Reform, Alliant Energy expects a reduction in its future consolidated taxable income, which will extend the period to which prior unutilized operating losses will be utilized. Taxable income must be reduced by net operating losses carryforwards prior to utilizing federal tax credit carryforwards. Alliant Energy expects to utilize its net operating losses carryforwards by 2024 and therefore, currently does not expect to utilize 2002 and 2003 vintage federal credit carryforwards prior to their expiration in 2022 and 2023, respectively. This has resulted in valuation allowance charges recorded to “Income tax expense (benefit)” on the income statements. Federal credit carryforwards generated from 2004 through 2008, which amount to $7 million for Alliant Energy, are expected to be utilized within five years of expiration. All other federal credit carryforwards and federal net operating loss carryforwards are expected to be utilized more than five years before expiration. Changes in tax regulations or assumptions regarding current and future taxable income could require additional valuation allowances in the future resulting in a material impact on financial condition and results of operations. Refer to Note 11 for further discussion of Tax Reform, federal tax credit carryforwards, and federal and state net operating loss carryforwards.

Other Future Considerations - In addition to items discussed earlier in MDA, the Notes in Item 8 and “Risk Factors” in Item 1A, the following items could impact future financial condition or results of operations:

Electric Transmission Service Expense - IPL and WPL currently receive substantially all their transmission services from ITC and ATC, respectively. Due to the use of formula rates that allow ITC and ATC to change the amount they charge to their customers based upon changes to the costs they incur, there is uncertainty regarding the long-term trends of IPL’s and WPL’s future electric transmission service expense. In 2018, IPL and WPL expect amounts billed by ITC and ATC, respectively, to decrease as a result of anticipated impacts from Tax Reform and MISO transmission owner return on equity complaints. However, based on IPL’s and WPL’s electric transmission cost recovery mechanisms discussed in Note 1(g), IPL and WPL currently do not expect that any changes to electric transmission service costs billed by ITC and ATC will have a material impact on their financial condition and results of operations. Refer to Note 2 for further discussion of the MISO transmission owner return on equity complaints.

Sales Trends -

Jo-Carroll Energy, Inc. - In 2014, Jo-Carroll Energy, Inc. provided notice of termination of its wholesale power supply agreement with IPL effective April 1, 2018. Sales to Jo-Carroll Energy, Inc. represented 3% of IPL’s total electric sales in 2017.

Great Lakes Utilities - In 2014, Great Lakes Utilities provided notice of termination of its wholesale power supply agreement with WPL effective December 31, 2017. Sales to Great Lakes Utilities represented approximately 2% of WPL’s total electric sales in 2017.