Alliant’s 11th-hour deal to sell $783 million in transmission wires faces ex-post legal challenge
Michael T. Burr is Fortnightly’s editor-in-chief. Email him at burr@pur.com.
Shareholders of Alliant Energy got an early Christmas present on December 20.
Alliant subsidiary Interstate Power & Light (IP&L) completed a $783 million deal to sell 6,800 miles of electric transmission assets to an affiliate of ITC Holdings Corp. The same day, Alliant issued guidance saying its 2008 earnings likely would increase by between 3 and 13 cents a share, driven partly by proceeds from the IP&L asset sale.
But on Christmas Eve, the Grinch arrived to take back Alliant’s present. Minnesota Attorney General Lori Swanson filed a petition for rehearing and reconsideration, and asked the Minnesota PUC to stay its December 18 order approving the IP&L transaction. It could result in the Alliant deal coming unwound.
Christmas Rush
The IP&L deal represents one of the largest transmission asset sales in recent memory. In addition to nearly doubling the size of the ITC’s grid, the deal was a sweet one for the sellers. It allowed IP&L to pay off its commercial paper debt and transfer a $400 million dividend to Alliant. And by closing before the end of 2007, the transaction qualified for $43.6 million in tax benefits under a 2004 tax bill, which gave sellers eight years to recognize gains on the sale of qualifying transmission assets.