LNT — Q2 2026 Financial Report Analysis

Utility earnings fell $42 million; a venture-fund gain and tax credits covered the gap

Alliant Energy's second quarter of 2026 looks nearly flat at the bottom line — diluted earnings per share of $0.65 against $0.68 a year ago — but the composition changed sharply. The regulated utility business, which is essentially all of what Alliant is, earned $42 million less than in Q2 2025. What kept consolidated net income within $4 million of last year was a $33 million swing in equity earnings from corporate venture-capital fund investments and a larger tax benefit, neither of which comes from selling electricity or gas.

Operating income fell to $185 million from $223 million, a 17% decline, on revenue that rose only 1%. Operating margin — the share of revenue left after the costs of running the business, before interest and tax — compressed to 19.1% from 23.2%.

The numbers

Source: Alliant Energy Corporation Form 10-Q for the quarter ended June 30, 2026 (filed July 31, 2026) and the accompanying earnings release (Form 8-K Exhibit 99.1, July 30, 2026). "Utilities & Corporate Services" and the per-segment EPS figures are non-GAAP measures the company discloses to explain where earnings came from.

What actually moved at the utility

A regulated utility earns money in a specific way: a state commission sets the prices it may charge so that the company can recover its operating costs plus an authorized return on its rate base — the depreciated value of the poles, wires, power plants and pipes the regulator has approved as used and useful. Grow the rate base, and allowed revenue grows with it, but only after a rate case (a formal proceeding in which the commission sets new prices). Between rate cases, cost increases hit earnings directly; that delay is called regulatory lag.

Both sides of that mechanism showed up this quarter.

Rate base additions were the main positive. The Public Service Commission of Wisconsin's December 2025 order gave Wisconsin Power and Light a $69 million annual increase in retail electric base rates and $7 million in gas, covering a 2026 forward-looking test period — the order explicitly reflects "increasing electric rate base, including wind refurbishment projects, energy storage, existing natural gas-fired EGU improvements and electric distribution investments." That flowed through as $26 million of higher electric revenue requirements in the quarter. The company attributes $0.09 per share each to IPL and WPL from higher revenue requirements on a growing rate base. Underlying demand also helped: temperature-normalized retail sales (what customers would have used in average weather) added $24 million of electric revenue, with WPL commercial and industrial customers cited as the driver.

Costs more than absorbed that. Other operation and maintenance expense jumped $41 million, or 24%, to $209 million — the single largest negative in the quarter. The 10-Q breaks it into $16 million of higher incentive compensation, $5 million of higher energy efficiency spending at IPL (mostly recovered through a rider, so largely earnings-neutral), $2 million of generation and energy delivery costs, and $18 million of other. The earnings release ties the increase to "labor and increased electric distribution and generation costs from planned maintenance activities and the addition of new energy resources." Depreciation rose $12 million, driven by energy storage placed in service during 2025, and interest expense rose $19 million "primarily due to financings completed in 2025." Those last two are the cost side of the same capital program that generated the rate-base revenue — they land immediately, while the revenue arrives only as each rate case takes effect.

Weather was a real, quantified drag. Alliant estimates temperatures reduced operating income by $9 million on electric and $2 million on gas this quarter, versus a $7 million electric benefit and $1 million gas drag a year ago — a $17 million year-over-year swing, or roughly $0.05 per share by the company's own per-share framing ($0.03 of harm in 2026 against $0.02 of help in 2025). Retail gas volumes fell 5% on temperatures alone. This is noise, not deterioration: it says nothing about customer growth or cost control, and it reverses in any quarter with normal weather.

One item that looks like growth but isn't. Electric revenue includes $16 million of benefit simply because IPL was crediting customers' bills through a tax benefit rider in 2025 and is not doing so in 2026 — the credits are offset in income taxes and wholesale revenue, so the earnings effect is close to nil. Working the other way, wholesale revenue fell $14 million because IPL's power supply agreement with Southern Minnesota Energy Cooperative expired in 2025, and bulk power sales to the MISO wholesale market fell $12 million on lower volumes and prices at WPL. The 10-Q notes bulk power swings are "largely offset by changes in fuel-related costs" and therefore do not move operating income much.

The non-utility rescue, and why it is not repeatable

Consolidated net income fell only $4 million against a $38 million drop in operating income. The bridge is entirely below the operating line:

• Equity income from unconsolidated investments: +$33 million. Corporate venture fund investments swung from a $7 million loss to $22 million of income. Note 4 attributes this to "increased valuations of certain underlying investments within the venture funds, including an investment in a company that provides onsite power solutions." These are portfolio revaluations, not cash earnings from operations.
• Allowance for funds used during construction: +$8 million. AFUDC is a non-cash accounting credit a utility books on construction in progress, representing the financing cost of projects not yet in rates. It rose on higher construction work in progress for energy storage and gas generation — real, but it is an accrual that converts to cash only once those plants enter rate base.
• Income tax benefit: $52 million, up from $43 million. Alliant's effective tax rate was −44% versus −33%, meaning it booked a tax benefit rather than tax expense. Note 8 credits production tax credits, investment tax credits, amortization of excess deferred taxes and "additional tax credits during 2026 from renewable generation and energy storage projects previously placed in service." The company itself flags "timing of income taxes" as a quarter-shaping factor, which is a way of saying some of this is phasing within the year rather than a permanent lift.
• Interest expense: −$19 million. The one large negative below the line, on 2025 financings. Debt was 62% of total capitalization at June 30 (60% on the adjusted basis rating agencies use, which treats half the junior subordinated notes as equity).

There is more of the venture gain still to come, and the filing says so explicitly: Alliant reports these funds on a one-quarter lag, the onsite-power company completed an IPO in June 2026, and "the financial effects of the initial public offering are expected to be recognized in Alliant Energy's equity earnings in the third quarter of 2026." Investors should treat that Q3 contribution as a known one-off, not as evidence of an improving earnings run-rate.

Takeaway: Strip out venture-fund revaluations, AFUDC and tax timing and the regulated business — the part that is actually valued as a utility — earned 22% less than a year ago, because O&M, depreciation and interest from the capital build are landing ahead of the rate relief that pays for them. Management's confidence in the upper half of guidance therefore rests on second-half rate recovery and normal weather, not on what this quarter's headline EPS showed.

Six-month view

The GAAP/ongoing divergence matters. Year-to-date GAAP EPS is up 1.3%, but that includes a $0.05 per share benefit from remeasuring deferred tax assets after a change in estimated state income tax apportionment — an accounting adjustment, not operating performance. On the company's own ongoing basis, first-half EPS is down 2% year over year. Operating cash flow slipped despite higher revenue, held back by $54 million of higher interest payments and $45 million from the timing of WPL's fuel-cost recoveries, partly offset by $56 million of higher collections from WPL's new base rates.

Load growth is the actual story underneath

The quarter's most consequential developments were regulatory and commercial rather than financial:

• IPL signed an electric service agreement in April 2026 with a customer expecting to build a data center in its territory, with contracted peak demand of about 370 MW. The 10-Q is careful that timing and actual load depend on interconnection and customer demand and that agreements "are not expected to result in immediate increases in load."
• The PSCW approved an individual customer rate for a data center in WPL's territory in June 2026 — a bespoke tariff for one large customer — and simultaneously directed WPL to file a large load tariff applying to any customer with demand of 100 MW or more, specifying rates, terms and the protections WPL will apply. Large-load customers must also be treated as a separate class in future cost-of-service studies. This is the regulatory machinery that decides whether data-center load is accretive to existing customers and shareholders or simply shifts cost around; getting a standard framework in place ahead of further contracts reduces the risk of one-off litigated outcomes.
• Management stated in the earnings release that it expects 60% load growth by 2031, with three data centers already in construction and large-customer load "expected to materialize as forecasted in 2026."

The supply side is being built to match. In March 2026 the Iowa Utilities Commission approved advance rate-making principles for up to 1,000 MW of new IPL wind generation at a fixed cost cap of $3,020 per kilowatt (which pre-agrees the cost recovery treatment before construction, removing a major source of regulatory risk). IPL has filed for a ~720 MW simple-cycle gas plant in Linn County (decision expected Q1 2027), a ~1,200 MW gas plant near the Emery station called Riverhawk (decision expected Q2 2027), and an increase in storage at Whispering Willow–North from 75 MW to 200 MW (decision expected Q4 2026). The PSCW approved WPL's ~153 MW Bent Tree North wind farm in July 2026, and the Neenah Unit 2 and Sheboygan Falls Unit 2 advanced gas path upgrades were completed in June. Net property, plant and equipment reached $21.1 billion, up $714 million in six months.

That build has to be funded. Alliant exhausted its $1.3 billion 2025 at-the-market equity program in March and launched a $1 billion 2026 program running through 2029. During Q2 it sold 6.55 million shares forward for $482 million gross at a weighted-average net forward price of $72.89, and separately settled 0.93 million shares from the 2025 program at $63.24 for $59 million of proceeds. Roughly 18.7 million shares of 2025-program forwards remain unsettled, worth about $1.23 billion. Forward sales lock in a price now and deliver the shares (and cash) later, which delays dilution but does not avoid it — the share count is headed materially higher, and per-share growth has to clear that.

Forward view

Guidance: management reaffirmed 2026 ongoing EPS guidance of $3.36–$3.46 per diluted share and said results are "currently trending in the upper half of the range." The guidance assumes IPL and WPL earn their authorized returns, normal temperatures, execution of the capital and financing plans, and a consolidated effective tax rate of −35%.

Our read. Reaching the upper half requires a second half that does more work than the first did. Ongoing first-half EPS of $1.47 is 43% of the $3.41 midpoint; Alliant's earnings are seasonally back-half weighted, so that is not alarming on its own, but it leaves little cushion. Three things determine the outcome:

1. Whether O&M normalizes. A $41 million quarterly increase, $16 million of it incentive compensation, cannot repeat at that pace without pressuring the range. Incentive accruals can be trued down; planned maintenance costs, once incurred, cannot.
2. Weather. Guidance assumes normal temperatures, and the first half delivered an $18 million electric and $8 million gas operating-income drag from temperatures. A normal second half is itself a year-over-year tailwind relative to what has happened so far.
3. Non-utility items. The Q3 recognition of the onsite-power IPO gain is disclosed and near-certain to help GAAP results, which raises the odds of a comfortable GAAP outcome while telling you nothing about utility quality. Watch whether the company classifies it as ongoing or excludes it.

Rate cases to watch. WPL is operating under the December 2025 PSCW order covering a 2026 forward-looking test period, so its rates are current; the PSCW has already signalled that large-load customers will be a separate class at WPL's next retail electric review. IPL, by contrast, is not benefiting from a new base rate increase this year — its revenue gains came from riders, the tax benefit rider comparison and AFUDC, and its net income fell $33 million in the quarter and $50 million year to date. With IPL simultaneously carrying the heaviest construction load (two large gas plants and up to 1,000 MW of wind in the queue), the timing of IPL's next Iowa rate proceeding is the single most important unresolved regulatory variable for 2027 earnings.

Balance sheet. Debt at 62% of capitalization (60% adjusted), $25 million of cash, $542 million of undrawn revolver capacity and $1.1 billion of short-term debt leave a structure that depends on continued equity issuance and steady capital-markets access. The $278 million of minimum committed capital expenditure on approved projects is modest next to the $913 million spent in six months, so the company retains flexibility to slow discretionary spending if financing conditions tighten — but the load-growth commitments point the other way.