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Alliant Energy (NASDAQ:LNT)
Q4 2020 Earnings Call
Feb 19, 2021, 1:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to Alliant Energy conference call for fourth-quarter and year-end 2020 results. This call is being reco -- is being recorded for rebroadcast. [Operator instructions] I would now like to turn the call over to your host, Susan Gille, investor relations manager at Alliant Energy. Please go ahead.

Susan Gille -- Investor Relations Manager

Good afternoon. I would like to thank all of you on the call and on the webcast for joining us today. We appreciate your participation. Joining me on this call are John Larsen, chairman, president, and chief executive officer; and Robert Durian, executive vice president and CFO.

Following prepared remarks by John and Robert, we will take time for questions from the investment community. We issued a news release last night announcing Alliant Energy's fourth-quarter and year-end 2020 financial results and affirmed our 2021 earnings guidance. This release, as well as supplemental slides that will be referenced during today's call, are available on the investor page of our website at alliantenergy.com. Before we begin, I need to remind you, the remarks we make on this call and our answers to your questions include forward-looking statements.

These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters discussed in Alliant Energy's press release issued last night and in our filings with the Securities and Exchange Commission. We disclaim any obligation to update these forward-looking statements. In addition, this presentation contains references to non-GAAP financial measures.

The reconciliation between non-GAAP and GAAP measures are provided in the earnings release and our 10-K, which are available on our website. At this point, I'll turn the call over to John.

John Larsen -- Chairman, President, and Chief Executive Officer

Thank you, Susan. Hello, everyone, and thank you for joining us. 2020 was a year we will all remember. It was also another successful year of growth and solid operations for Alliant Energy.

We continue to consistently deliver on our purpose, to serve customers and build stronger community. I'm proud of what our team accomplished and how we delivered on our purpose in a year with many challenges on the ongoing global pandemic, racial injustice, and a destructive derecho windstorm. In the face of these challenges, we finished near the top of our original earnings guidance range with a 2020 consolidated earnings per share of $2.47. Our non-GAAP temperature normalized earnings grew more than 7% over 2019.

This was the 10th year in a row of achieving our 5% to 7% growth objective. This consistent growth, solid execution, and operational result showcases the resiliency and flexibility of our company. I'll highlight a few of our many strategic and operational achievements from the year. Then I'll turn it over to Robert who will provide more details on our solid financial and regulatory outcomes.

I'd like to start by mentioning a few of our recognitions from 2020. I mentioned earlier the August derecho windstorm. I'm proud that our efforts to restore electricity to our customers was recognized by receiving the Edison Electric Institute's Emergency Response Award. Alliant Energy was also included in Bloomberg's Gender-Equality Index, highlighting just 380 companies from around the world who are committed to supporting gender equality in the workplace.

And we were recently named to Newsweek's Most Responsible Companies list where we ranked 12th overall for our social responsibility efforts. And to top it off, with the fourth year in a row, Aliiant Energy has earned a perfect score in the Corporate Equality Index issued by the Human Rights Campaign Foundation. As I reflect on these achievements, they each showcase how we live our values, as we care for others, do the right thing, and act for tomorrow. I'm proud of our Alliant Energy team and thankful for all they do.

From ESG perspective, we made incredible progress on our goals and objectives. We ended 2020 with 42% less carbon emissions than our 2005 levels, well on our way to our goal of a 50% reduction by 2030. This result is largely driven by the completion of our major wind expansion, making us the third-largest owner-operator of regulated wind in the U.S. It was also achieved by building our highly efficient West Riverside generating station.

To further support our efforts to advance a clean energy future, we joined the Low-Carbon Resource Initiative through the Electric Power Research Institute. This initiative is designed to identify, test, and develop technologies to enable a low carbon future. The results of this important work will help guide our company and our industry as we look toward our aspirational goal of net-zero carbon dioxide emissions in the electricity we generate by 2050. 2020 was another great year in advancing our Clean Energy Blueprints, which serve as our guide to create a cleaner energy future for our customers and communities.

Last fall, we advanced our Iowa Clean Energy Blueprint with our announcement to add approximately 400 megawatts of new solar energy by 2023. This follows our very successful one-gigawatt wind energy expansion in Iowa, all delivered on time and on budget. When the 400 megawatts of planned new solar is combined with our 1,300 megawatts of owned wind, our existing solar farms, and purchase renewable resources, we're on a path to have more than 50% of Alliant Energy's Iowa generation to come from renewables by 2030. We also continue to advance battery storage in the state and plans to add 100 megawatts of distributed energy resources in the next several years.

The additional distributed energy resources, all of the successful completion of battery storage systems near Marshalltown and Wellman, Iowa, and a storage facility in Decorah, Iowa that includes a partnership with the United States Department of Energy and the Iowa Economic Development Authority. Turning to Wisconsin. Our Clean Energy Blueprint helps advance the Badger State to a clean energy future. Our plans to add at least 1,000 megawatts of new solar power is on schedule.

Last spring, we announced our first phase of this effort, identifying six future solar sites, totaling 675 megawatts. That's enough to power 175,000 homes. Later this spring, we plan to announce the second phase of our solar expansion, which will include three projects we purchased in the last five months, as well as our self-developed site. As we carefully planned the closure of our remaining coal-powered units in Wisconsin, our plans will include ways to support our employees and our communities.

Our Clean Energy Blueprints are comprehensive and transparent and designed to follow our proven track record with thoughtful energy transition. In our solar story, Wisconsin doesn't stop there. We recently announced a community solar project in Fond du Lac County where a portion of the energy generated from the one-megawatt site will be donated to Habitat for Humanity to reduce electric bills of residents. We're also partnering with Dane County on a 17-megawatt solar development, which will help bring the county to 100% renewable offset, with the electricity consumed at their own facility.

And we're partnering with the city of Sheboygan to install a one-megawatt solar facility in the Sheboygan business center. As we advance our Clean Energy Blueprints, we'll continue to seek solutions that serve our customers' growing demand for sustainable solutions to help build stronger community. We also remained focused on our continued investments in our connected energy network across Iowa and Wisconsin by advancing the deployment of an advanced distribution management system, a fiber-optic network, and expanding the use of smart energy systems and automated metering. In addition, our customer-focused investments in the energy grid will result in more of our electric lines placed underground.

A major part of our efforts to improve grid resiliency, energy efficiency, and reliability. Speaking of reliability, I'm proud of the efforts by our team during the extended polar vortex that gripped much of the country these past two weeks. Our customer-focused investments are designed to ensure that we continue to provide our customers with safe, reliable, and affordable energy for decades to come. We remain committed to advancing our clean energy vision through this balanced approach.

In summary, 2020 was an excellent year for our company, and we look forward to building on that momentum in 2021 as we focus on continuing our role as a leader in advancing renewable energy, completing customer-focused investments on time and on budget, delivering solid returns for our investors, and living our values. Thank you for your interest in Alliant Energy. I'll now turn the call over to Robert.

Robert Durian -- Executive Vice President and Chief Financial Officer

Thanks, John. Good afternoon, everyone. Yesterday, we announced 2020 GAAP earnings of $2.47 per share, compared to $2.33 per share in 2019. Excluding non-GAAP adjustments and temperature impacts, earnings per share were up more than 7% year over year, driven by higher revenue requirements due to increasing rate base, partially offset by the higher depreciation and financing expenses from these rate base addition.

As John noted earlier, our dedicated employees rose to the challenge in 2020 by reducing O&M expenses to offset the impact of lower sales caused by the pandemic and derecho storm. These efforts allow us to finish the year and the upper half of our earnings guidance range. We provided additional details on the earnings variance drivers on Slides 4 and 5. Our temperature normalized retail electric sales declined 2% in 2020 when compared to 2019, primarily driven by the impacts of the COVID-19 pandemic and more of the August derecho storm in our Iowa service territory.

While the pandemic-related sales impacts were heaviest in the second quarter, sales recovered quickly and were roughly flat to 2019 levels in the second half of the year. The sales recovery we experienced is the direct result of the strength and resiliency of the economies in the state we serve. Wisconsin's unemployment rate is at 4% less than the U.S. unemployment rate, and the state is experiencing population growth as neighboring states residents are moving to this camp.

And in Iowa, the economy has been recovering even faster with an unemployment rate that is second lowest in the country, as well as strengthening grain prices due to increasing demand from foreign country. Turning to our future years earning. We see a solid path for delivering our earnings guidance for 2021. And as we look further into the future, we believe our strong capital investment plan will allow us to continue to deliver solid returns for our shareowners, including the expected 5% to 7% annual EPS growth rate through at least 2024.

The key drivers of this 6% growth in our 2021 EPS guidance over 2020 are related to investments in our core utility business, including our recently completed wind projects for Iowa and Wisconsin customers. These investments were reflected in WPL's approved electric rates for 2021 and IPL's renewable energy rider approved with its test year 2020 rate review. Currently, renewables make up approximately 20% of our total rate base which is one of the highest percentages of the remaining rate base among all U.S. utility.

We expect renewables will make up an even larger portion of our rate base as we invest in solar projects for Iowa and Wisconsin customers over the next three years. A walk from our 2020 non-GAAP temperature-normalized earnings for the midpoint of our 2021 earnings guidance range is provided on Slide 6. The 2021 earnings guidance assume the 1% growth in retail electric sales for the 2020 levels. This forecast assumes continued economic improvement and recovery from the COVID-19 pandemic.

Additionally, our employees have been working to add new customers and load to our system. One recent example of success is our new wholesale customer in Wisconsin, Consolidated Water Power Company. This new customer came online at the beginning of this year and brings up to 60 megawatts of new load to our system. Alliant Energy strategy focus on providing affordable energy to our customers while continuing a decade-long track record of growing earnings 5% to 7%.

As a reminder, we reached settlements in our Wisconsin jurisdiction to hold rates flat in 2021 by using excess deferred taxes and fuel savings to offset a higher revenue requirement with growth in rate base. This settlement enables us to earn a return on our investments we've made on behalf of our Wisconsin customers without increasing their base rate in 2021. In our Iowa jurisdiction, we expect to manage our business to allow us to stay out of rate cases for the next couple of years. This has been made possible through collaboration with our regulators and stakeholders in Iowa on key items such as deferring costs associated with the August retail storm and the addition of the renewable energy writer.

The renewable energy writer will allow IPL to recover costs of the incremental rate base from our recently completed 1-gigawatt of wind while also passing on significant incremental production tax credits and fuel cost savings to our customers. Additionally, our Iowa customers began seeing savings in the fall of 2020 as a result of our decision to terminate the purchase power agreement related to the Duane Arnold Energy Center five years early. IPL is forecasting to give recovery of and the return on the buyout payment associated with this termination EU rider over the next five years while customers benefit from tens of millions of dollars in energy savings each year. Slide 7 has been provided to assist you in modeling the effective tax rate four our two utilities in our consolidated group.

We estimate a consolidated effective tax rate of negative 20% by 2021. The primary drivers of the lower tax rates are the additional production tax credits from the new wind project that were placed in service throughout 2020 and the return of excess deferred taxes from federal tax reform to our customers. The production tax credits and excess deferred tax benefit will fall back to customers resulting in lower electric margin. Thus, the decreases in the effective tax rate is largely earnings-neutral.

Turning to our financing plan. In November 2020, we accelerated a $200 million debt offering at our Alliant Energy financing to date, originally planned for 2021 to capture historically low interest rate. As a result, our 2021 financing plan is currently limited to one long-term debt issuance of up to $300 million in our Wisconsin Utility. And the only common equity activity we're expecting in 2021 is approximately $25 million issued ratably during the year, where we're sharing a growth plan.

And lastly, some key regulatory developments in two states. In Iowa, current Chair [Inaudible] was recently appointed for additional six-year term and Josh Byrnes was recently appointed as a new member to the Iowa Utilities Board. We welcome Board Member Byrnes and congratulate [Inaudible] additional term. And in Wisconsin, the PSC that we recently issued its final written order approving WPL's rate stabilization plan in December.

PNC.W also issued a procedural schedule for a first initiative IL-40 filing in late 2020 as shown on Slide 8. The docket for our Solar CA filing is proceeding as expected including a constructive public hearing held yesterday. We anticipate a decision on this first 275 megawatts of solar from PNC.W in April. Our 2021 key regulatory initiatives are listed on Slide 9.

In the first half of this year, we expect to make an advance remaking principles filing in Iowa for our planned 400 megawatts of solar generation for IPO. As a reminder, a key benefit to the advance remaking principles process in Iowa in which certainly it provides for the authorized translate all around these assets. In our three most recent advance remake in filing, we were authorized an 11% ROE from new generation assets. The ROE decided with each filing are fixed for the life of the asset.

In Wisconsin, we expect to file our second Certificate of Authority request in the first half of this year for the remainder of our announced forward generation at WPL. In addition, we expect to file a retail electric and gas rate review in Wisconsin in the second quarter for either one, two, or three years beginning in 2022. We are thankful for the privilege to work in two states that are well-known for constructive regulatory outcome and plan to continue our long-standing practice to working collaboratively with stakeholders toward constructive regulatory outcomes on these two regulatory initiatives in 2021. As we conclude another successful year, I'm excited about our flexible and thoughtful strategy in Alliant Energy.

As John described earlier, we are a leading utility in renewable energy and environmental stewardship and we look forward to maintaining that leadership status into the future. We will continue to deliver on a clean energy vision that will best serve our customers and shareholders as well as our environment. We very much appreciate your continued support of our company and look forward to meeting with many of you virtually in the coming months. As always, we will make Investor Relation materials available on our website.

At this time, I'll turn the call back over to the operator to facilitate the question-and-answer session.

Questions & Answers:

Operator

Thank you, Mr. Durian. [Operator instructions] We'll take our first question from Andrew Weisel with Scotiabank. Please go ahead.

Andrew Weisel -- Scotiabank -- Analyst

Thank you. Good afternoon, everyone.

John Larsen -- Chairman, President, and Chief Executive Officer

Hey. Good afternoon, Andrew.

Andrew Weisel -- Scotiabank -- Analyst

My first question is can you repeat that -- that -- I think I heard you say that Iowa will reach 50% of generation from a new -- renewables by 2030. I know you have the overall target of 53% from renewables. So, does that include both Iowa and Wisconsin and does that include owned and PPAs?

John Larsen -- Chairman, President, and Chief Executive Officer

I think you get all that right on there, Andrew. So, the -- the first one 150 was Iowa and I think you've got all the rest. So, spot on.

Andrew Weisel -- Scotiabank -- Analyst

OK, great. Are you able to break out how much of that is owned or set definitely, what percent of your own capacity will be renewables?

John Larsen -- Chairman, President, and Chief Executive Officer

You know, I -- I -- I'll give you a -- a -- I think rough numbers were around 70% is owned and 30% purchased. Of course, that's going to change a bit as we're -- we're bringing units online and we renew. But that's -- that's a -- a high-level spot for you, Andrew.

Andrew Weisel -- Scotiabank -- Analyst

OK, great. Thank you. Next. O&Ms, impressive year after several other previously impressive years.

Am I right? What -- what's your outlook for 2021 and beyond and how much of the savings you identified in 2020 would you consider to be sustainable versus one time?

Robert Durian -- Executive Vice President and Chief Financial Officer

Yeah. It's a great question. This is Robert. I think first off, a -- a key component to providing affordable energy for our customers, so we're very focused on that and we're currently targeting sustainable reductions of approximately 3% to 5% on an annual basis also the 2019 baseline with the support that gives more affordability.

Our employees did an excellent job in 2020 and they captured some additional savings largely to offset the COVID and regional impacts. And I think it's -- it's a pretty even mix between sustainable savings and temporary savings that we saw in 2020. Some of the temporary items with things like travel, healthcare, and insurance. But we also saw some great progress with sustainable savings.

Note that I put it probably in the three main areas. One is technology, we continue to advance technology including things like the AMI that we've put in the service in early 2020 that really helped reduce some of the meter-reading costs. Saw a great improvements with automation and self-service that helped us reduce some of our call center costs. And then we also, obviously, got some enhanced productivity through the pandemic here that we think will be able to leverage into the future.

And so, that's one category. Second is probably on the generation side that includes some pretty strong efficiency gains at some of our existing coal plants that allows us to operate with fewer employees. And then lastly on the distribution side, as we've talked about with our strategy, we continue to focus on trying to move from overhead to underground, and that's really in a position us well to the few overhead costs in the future. So, but back to your specific question, I'd say it's probably a pretty even mix between the two.

But think of on a longer-term basis, we're really trying to achieve maybe a 3% to 5% reduction in sustainable savings over the long term.

Andrew Weisel -- Scotiabank -- Analyst

Great color there. That's very helpful and a very impressive target. Last question is you've had a very good track record in Wisconsin of keeping rates stable and you mentioned you're planning to file again in the second quarter. Is there any potential to further delay that or find creative ways to keep rates stable? And then you mentioned that the key could cover one, two, or three years.

What would determine that, what would that depend on?

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah, Thank you, Andrew, you know, great question. You know, we -- we entered last year as we -- you recall, you know, well-positioned for a rate filing which we have some, you know, capex and other things that we have to put forward and found a path for stabilization and executed quite well under that work. We're -- we're well-positioned again but we have a -- a very clear opportunity to put filing in front of the commission. The -- the -- I guess, I'd say that we'll cover one, two, or three years.

That's still an area that we're continuing to evaluate. We- we'll share more as we get closer to the second-quarter call. So, appreciate that. Robert, anything you'd like to add?

Robert Durian -- Executive Vice President and Chief Financial Officer

Yeah. Maybe one thing to note, Andrew. One of the components to this case will be the expiration of some of the larger amounts of excess to protect us as we're getting back to customers currently. I mean those are pretty well set in stone, so we don't have a lot of flexibility with it.

And fairly straightforward, I don't think it'll be anything that will be controversial with the case itself. And then as John indicated, the other key component is the solo projects that we'll be advancing. So, we'll have more insight to that when we get the decision back from PNC.W in that April timeframe for inclusion. And that almost likely, like we've talked about a second-quarter filing time.

So, the third and probably the last piece of that wave filing is really to address the anticipated recovery for the Edgewater coal facility that will return by the end of 2023. So, I would think this is the appropriate time for us to commence or -- or read filing and would love -- we'll give you some more indication of the one, two, or three years most likely when we get to the next earnings call in May.

Andrew Weisel -- Scotiabank -- Analyst

OK. Certainly, a lot of issues to discuss there. Thank you very much. Appreciate it.

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah. Thanks, Andrew.

Operator

OK. And we'll take our next question from Julien Dumoulin -- I'm sorry -- Smith with Bank of America.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

OK. Thank you. You know, OK. It's all good.

Thank you, Phoebe. I -- I appreciate it. So, perhaps if I -- if I can't I've been here. You know, on -- on the Columbia announcement, obviously, a fairly large unit here.

Can you talk about the recovery of unappreciative plants year to date in prospect and -- and whether or not you see the legislation as being part of that conversation? It's not obvious -- I mean, some of your peers aren't necessarily proceeding that at route but I'm curious on how you think about that and specifically. And then also the timing and resource planning as part of the replacement, you know, whatever that may eventually be around it.

John Larsen -- Chairman, President, and Chief Executive Officer

Sure. Great -- great -- great to hear from you, Julien. Good afternoon. So, you know, that's clearly with the announced retirement, you know, we look at the flexibility that we have in our capex plan.

So, we -- we do have some opportunity as we think about between distribution and generation. But there's no question there'll be some additional need. We don't have the -- the details of the -- of the size and timing of that quite yet. That's probably a -- an area for later in the year.

But we do have an opportunity for additional renewables likely to be coupled with storage. We've been working on our development plans, anticipating that we'll need additional renewables. So, as you know, we've got lot of development efforts in place for what we did on wind in Iowa and then our solar efforts of storage in Wisconsin. So, we're going to -- we're going to lean heavily on a lot of the great work we've done over the last few years on that.

As it relates to securitization, you know, there is, you know, provision that currently exists and I'm sure there's going to be discussion about, you know, the securitization and the potential for that to be, you know, another tool if you will in the process. But, you know, as we think about, Julien, it's -- it's really about having the right balance between, you know, investor outcomes and customer cost and affordability. Our -- our path forward with our tax equity, we see our solar projects to be perhaps the lowest if not among the very lowest cost projects that you're going to see on -- on solar and -- and renewables. So, we feel very good about having that right balance with our tax equity.

Certainly, the process going forward I'm sure all of that will be in discussion relative to what's the best path for -- for that balance between customers and shareholders. So, you know, we expect reasonable outcomes, we have for -- for many many years. We're very confident in the filings we've put forward but certainly more work to come on that. Robert, anything you'd like to -- to add onto those two items?

Robert Durian -- Executive Vice President and Chief Financial Officer

You know, maybe just one -- one brief item to help with the clarification of the timing. So, we have obviously announced the timing for the Edgewater facility retirement by the end of 2022 and now the Colombia by the end of 2024. The other piece of the puzzle, the West Riverside option and we're still working through the exact timing on those. So, once we have that -- that chance that we like have better clarity by the end of the year.

And so, I guess that you'll get some more update on the -- the capex implication and the timings of the -- the resources from time over time after 2021 here.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Got it. OK. So, maybe clarify that. Would -- would the stars align effectively to get that for the next 4Q '21 call.

If you -- you -- if you have all these elections to the course to back up this year. And then secondly, if you can clarify sort of related to the long-term outlook. As 5% to 7% is off, what base here to put the baseline for that again? Sorry for the difference -- for the new ones there?

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah. The first one you got that -- that spot on with the timing and -- and second question was -- yeah, on the --

Robert Durian -- Executive Vice President and Chief Financial Officer

Yeah, I'll take that one, Julian. For the -- the base year after 2020, right -- right, simplify, normalize with $2.42 for the 5% to 7% of anything.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Awesome. Thank you, guys, for time. I really do appreciate it. Best of luck to you.

Thank you.

John Larsen -- Chairman, President, and Chief Executive Officer

Yup. Thanks.

Operator

OK. And we'll take our next question from Michael Sullivan with Wolfe Research.

Michael Sullivan -- Wolfe Research -- Analyst

Hey, everyone. Hope you're all doing well. Just -- first question just following on -- on the Wisconsin refiling there. I think you alluded to one of the potential rate offsets that you may have in -- in taxes which -- which has been consistent with the past.

Is -- is there anything else in -- in the form of regulatory liabilities? And can you help quantify those at all in terms to rate offsets?

Robert Durian -- Executive Vice President and Chief Financial Officer

Yeah, Michael, good to hear from you. So, yeah, we do still have some regulatory liabilities remaining for the excess deferred taxes but just not at the same level that we're experiencing here in refunds for 2021. We do have some other regulatory liabilities that were actually approved as part of the rate stabilization, timely received approval from -- from the WPL jurisdiction in December. One more notable on -- was some liquidated damages that we received as part of the West Riverside facility.

I think that is roughly $35 million to $40 million. So, there were some various other benefits that we've been accumulating over time. There was some excess earnings above our alternate returns and that we have a sharing mechanism for. But think of it, it's probably in the neighborhood of another I think, probably $60 million and $80 million of total regulatory liabilities that are available to us to be able to use over the next several years to help offset some of the overt implications.

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Got it. OK, that's helpful. And then switching over to Iowa. I just wanted to check in.

I -- I thought in your last deck, you had on the calendar there a filing related to the 2020 test period that -- that was going to be made in Q2 of this year. And I -- I didn't see that in the updated decks. So, just wondering where that kind of stands.

Robert Durian -- Executive Vice President and Chief Financial Officer

Yeah. I think what you're referring to is there is a subsequent proceeding process. So, as part of the 2020 rate filing, there are rules that are still being drafted, so they're not completely final yet. But the idea is and we decided that we would be coming in for what they call a subsequent proceeding.

And really what that's intended to do is to make sure that the rates that they put into effect into 2020 are reasonable and just. And we believe they were. We don't expect any refunds or any potential changes in the future and that's largely going to be based on where our earned are always came out for the end of 2020. We are actually underearned in 2020 below the 10% authorized levels.

We don't expect any impacts for that but we'll still be working through the process with the Iowa Utilities Board over the next several months.And then there's also been some processes to finalize those rules and exactly what needs to be filed over the next several months.

Michael Sullivan -- Wolfe Research -- Analyst

OK. Great. And my last one was just you did the data point of I think 20% renewables in rate base right now. Any parameter you can help give on where that could potentially go over the next four to five years, given the plan that -- that you've laid out?

Robert Durian -- Executive Vice President and Chief Financial Officer

Well, I'll give you a directional area of -- of north, Michael, but probably no additional specifics for right now but it's certainly growing.

Michael Sullivan -- Wolfe Research -- Analyst

OK. Great. Thanks -- thanks a lot.

Robert Durian -- Executive Vice President and Chief Financial Officer

You bet. Thanks, Michael.

Operator

OK. And we have one last question on the phone line and we'll take it from Andy Levi with HITE Hedge. Please go ahead.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

Hey, guys, how are you doing out there?

Robert Durian -- Executive Vice President and Chief Financial Officer

Great.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

Everything's running well, I hope. And I've got just a couple of questions. So, first is, in those Iowa and Wisconsin, maybe going to -- to the Detroit [Inaudible] there. What's the opportunity and -- and timing if there's actually -- there is on -- on potential settlement in business?

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah, maybe think -- think of Iowa as where -- where probably a couple of years away from a -- a rate filing -- a form of rate filing if you will in Iowa. So, that's -- that's a little bit out there. You know, in Wisconsin we've had a good track record of -- if working very collaboratively and we'll put a very solid case together so there's always that potential I don't I -- I don't want to handicap it beyond that but we've had some very recent success in achieving that type of -- of settlement outcome but other than that, I'd say it's -- as we have been in -- in the past years, I think that opportunity exists.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

OK. And then -- and then, just focusing on the Clean Energy Blueprint. You know, the focus always, you know, on an investor call, you know, in -- in the sense that we thought it would be an easy transition that would be great opportunities. But then I talked to, you know, some of my peers and, you know, we're like, well, what happens after that? And I guess the conversations I've had with you guys in the past, there seems to be a lot of runway beyond that needs to be done to help the transition but also to the question, why convert to, you know, clean energy growth but we -- can you try to talk about the runaway opportunities there? And what -- what is the capex already and what is not in the longer-term opportunities there?

John Larsen -- Chairman, President, and Chief Executive Officer

Sure. You know, I'm happy to. I'll -- I'll probably have -- if Robert wants at any of the other of -- of numbers there. But if you think about the clean energy future, it's -- it's really got to make sure that we think about how that it's transition generation.

And it really doesn't happen unless the distribution grid is also moving that way. So, we've got, as I noted, opportunities for resiliency to put our systems for more overhead underground. We're starting that out and there's an opportunity to grow that area as well as having a stronger distribution grid at a voltage that allows for more distributed energy resources to connect. So, that's also an opportunity for us.

It's in our current but there's certainly an opportunity as we get more efficient for that. Those two areas to grow. So, we do see those distribution areas having plenty of growth potential for us but as we do and in many cases, we start kind of walk before we run and make sure that we get very efficient as we deploy capital. Maybe if there's anything on categories and growth numbers, Robert, I'll ask you to weigh in?

Robert Durian -- Executive Vice President and Chief Financial Officer

Hi, Andy. Good to hear from you. Yeah, I can tell you some rates base growth is much in line with their earnings growth. We're not expecting any new common equity for the foreseeable future.

So, we think we can manage the business appropriately to achieve our 5% to 7% EPSt targets without having much of an impact on customer bills over the long run and maybe just to add a couple more categories to the information John shared. We still have repowering opportunities and so that I'd say is probably more in the second half of this decade. And we really don't have much of any storage built into our capex at this point. We do have some smaller, or say, pilot programs that we're using but there are also some further opportunities there.

And then lastly, we could get a series of coal plants to install in Iowa that we have the timing of any potential retirements. So, if we think of that over the next 10 or 15 years, it likely creates some capacity needs for us that could provide -- provide some additional growth rate.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

Can I -- I add two more questions. Actually the storage, and I'm glad that you actually brought up. I didn't see if I was discussing about it a few weeks ago. Actually debating it as far as timing.

I guess -- what is your thinking on storage? Because obviously based on what you're installing, why not solar and wind storage would be a good incremental addition to those assets that you like to kind of look at what NextEra is already doing with storage. It is, you know, a great opportunity mostly software for storage above has evolved, it's really expensive to your customers don't. So, why not -- why have you guys not kind of rolled out a storage plan yet? Maybe you did but --

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah. Great question on that, Andy. And -- and certainly, as I had shared we do have storage facilities, I'll call them small. Again, we -- we kind of prove those technologies out and then scale them up.

We've done some grid deferrals storage work up to this point and tied it in with some of our community efforts and community solar size. So, think of that as a little bit smaller size. We do have development work going on right now to side that up. And you know, so that -- think of that as grid deferral, but as we're putting larger-scale wind and solar out there, we also have development plans to look at adding larger-scale storage to help, you know, with the front and back end of how those units introduce into the market.

So, I completely agree we're making sure that, you know, it's always going to make sense to our customers. So, we're -- we're eager to -- to add those when it makes sense for our customers and we're in heavy development work right now.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

So what -- I guess maybe with the third quarter when you roll out there will be capex plan and we could make the numbers again toward that outlook?

John Larsen -- Chairman, President, and Chief Executive Officer

Yep. You know as well, Andy.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

OK. And then -- and then the other thing just down on the, you know, approach that draws the line, in my opinion. Is there a large opportunity and maybe if you could talk about it? Can you give voltage on your line if we could begin to increase like to contribute to a much higher, maybe. Can you maybe talk about that and kind of where you are? I think there is --- you're going to profit on that and maybe some numbers around.

But I mean, I don't know if you want to do miles but how much of your system needs to be converted and if there's any type of measurement that you can give us as far as, you know, capex or conversely whether it's miles or whatever?

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah, certainly. As we think about that, Andy, I think you're referring to our efforts to put a 25 Kd backbone system out there. And that's what I had referred to earlier that allows us to put more distributed energy resources or customer-connected resources to our grid. We're, you know, we're in the beginning stages of that.

I think we're roughly out I'll use numbers around 5% of our system. But think of it, as you know, that's something you want to have condensed to certain areas where you convert, you know, smartly in -- in certain areas as you're doing other work it makes sense. And as we look for areas that have higher growth, for some of those DER penetrations, you know, the cost per -- per unit and in capex, I don't have those readily available but that would refer back to our opportunities for additional distribution we spend as we think about getting more and more efficient in that space. So, think about it as the tail end of our current capex and I think you'll see more of that as we free -- refresh our capex going forward.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

Well, let me ask it this way, maybe Robert would know it's better like you said you are, you know, right now just, you know, 5% of your system that you're kind of doing the work on the upgrade. Robert, do you have any clue how much you're spending on that? There's not one, you know, that is the project that I know one big project that you put 5% there but can you give like a kind of number around that?

Robert Durian -- Executive Vice President and Chief Financial Officer

I mean, right now, we're probably replacing our system at the normal replacement rate of maybe 2% of the total system on an annual basis. We have roughly about 43,000 miles of line of whatever it is underground. And about three-fourths of the overhead at this point. And the chance of only about 5% of it is 25 Kd level at this point in time.

So, when you think about costs for each sample underground, you're probably talking about a couple $100,000 a mile at least, depending on whether it's in town or in the country itself. So, a lot of opportunity for us. We don't have a specific quantification or the exact dollars that you'll see in the future. But it's only part of the functional plan that we have that because we have all of these generation opportunities in the near term.

We've pushed some of that out but we see a great opportunity maybe in the second half of this decade into the following decade for those types of expenditures and a good long runway to the growth that we're targeting.

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

Great. Thank you guys very much. I'll -- I'll stop asking questions. Let me look forward to a new strategy and we just only want to go to.

John Larsen -- Chairman, President, and Chief Executive Officer

Thanks, Andy. Good to hear from you.

Operator

And it does look like they have an additional question on the phone line. From Andrew Weisel with Scotiabank. Please go ahead.

Andrew Weisel -- Scotiabank -- Analyst

Thanks for the follow-up after, Andy. Just tried to send them both to happy hour, I feel kind of guilty for having one more question here. But if I may, still you've gotten in this slide that your carbon emissions were down 42% in 2020 versus 2005. Do you have any way to quantify how much of that was due to the impact of the pandemic? You know, volumes obviously dispatch was a bit abnormal last year to say the least.

Are you expecting that number to go up a little bit before it resumes the downward trend?

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah. You know, Andrew, when you think about it -- it's one of those numbers that will cycle up and down a bit. You know, we look at the overall trajectory of that getting to our -- our stated goal, you know, when we -- when we reach 2030. So, we -- we like the path that we're on.

I'm sure there's -- there is a contributor from a number of those factors but we also look at the transitions we're making with some of our planned retirements of coal facilities in the high efficient West Riverside. So, I don't have the specifics, that number will bounce around a bit but we look at kind of the overall trend line. And -- and it's -- it's really on track with what our stated objectives are.

Andrew Weisel -- Scotiabank -- Analyst

OK. So, on -- on targets for the 50% reduction by 2030, as in net Euro by 2050, right? On -- on target not necessarily better?

John Larsen -- Chairman, President, and Chief Executive Officer

Yeah. I'd say on target for right now. But I appreciate the question.

Andrew Weisel -- Scotiabank -- Analyst

OK, great. Thank you.

John Larsen -- Chairman, President, and Chief Executive Officer

Thanks, Andrew.

Operator

And it does appear that there are no further questions at this time. Ms. Gille, about to turn the conference back to you for any additional or closing remarks.

Susan Gille -- Investor Relations Manager

This concludes Alliant Energy's fourth-quarter and year-end earnings call. A replay will be available to February 26, 2021, at (888) 203-1112 for U.S. and Canada or (719) 457-0820 for international. Callers should reference conference ID 4175543 and PIN of 9578.

In addition, an archive of the conference call and a script of the prepared remarks made on the call will be available on the investor section the company's website later today. We thank you for your continued support of Alliant Energy, and feel free to contact me with any follow-up questions.

Duration: 51 minutes

Call participants:

Susan Gille -- Investor Relations Manager

John Larsen -- Chairman, President, and Chief Executive Officer

Robert Durian -- Executive Vice President and Chief Financial Officer

Andrew Weisel -- Scotiabank -- Analyst

Julien Dumoulin-Smith -- Bank of America Merrill Lynch -- Analyst

Michael Sullivan -- Wolfe Research -- Analyst

Andy Levi -- HITE Hedge Asset Management LLC -- Analyst

All earnings call transcripts

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