Alliant Energy - IP&L Announces Agreement to Sell Transmission Assets to ITC Holdings Corp.; Introduces Energy for a New Generation Plan

CEDAR RAPIDS, Iowa, Jan. 19 /PRNewswire-FirstCall/ -- Interstate Power and Light Company (IP&L), a subsidiary of Alliant Energy Corporation , announced today that the company has signed a definitive agreement to sell its transmission assets located in Iowa, Minnesota and Illinois to ITC Midwest LLC, a newly-formed subsidiary of ITC Holdings Corp. .

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Pursuant to the purchase agreement, subject to customary closing conditions, ITC Midwest will acquire all of IP&L's transmission assets at 34.5 kilovolts and higher for approximately $750 million in cash, subject to regulatory approvals. The purchase price is subject to various adjustments at closing, including an adjustment based on the value of the ratebase assets delivered as of closing. The transferred rate base to ITC Midwest is expected to be in the range of $400 million to $425 million by the end of 2007. Net proceeds from the sale, after taxes, transaction related costs and regulatory outcomes are estimated to be in the range of $475 million to $525 million.

The transmission rates that ITC Holdings' subsidiaries charge their utility customers for transmission service are fully regulated by the Federal Energy Regulatory Commission (FERC). After the transaction closes, IP&L will pay the regulated rates to ITC Midwest for transmission needed to serve its customers.

Pending all appropriate state and federal regulatory approvals and satisfaction of other closing conditions, the transaction is expected to be concluded in late fourth quarter 2007. The transaction is subject to approvals by various regulatory agencies -- including the Iowa Utilities Board (IUB), the Minnesota Public Utilities Commission (MPUC), the Illinois Commerce Commission (ICC) and FERC -- as well as antitrust review under the Hart-Scott-Rodino Act. At this time, IP&L anticipates that the proceeds from the sale will be used to help fund IP&L's infrastructure development plan, Energy for a New Generation.

This infrastructure development plan includes investments in a coal baseload power plant and additional wind power resources to be built in Iowa. "Combined with the sale of IP&L's transmission assets, the Energy for a New Generation plan will help provide customers with reliable, affordable and environmentally-friendly energy into the future," said Bill Harvey, chairman, president and CEO of Alliant Energy.

Tom Aller, president of IP&L, re-affirmed the utility's commitment and role in providing reliable energy to support the economic growth of our service territories. "We believe our plans announced today -- a new power plant, expanded wind power and sale of our transmission system to a committed transmission system builder -- exhibit our dedication to providing energy for the next generation and fulfilling our responsibility to the economic health of the communities we serve," said Aller.

"The acquisition of IP&L's transmission assets supports ITC Holdings' continued mission to rebuild and invest in the electric transmission infrastructure for the benefit of customers through improved reliability and enhanced access to the competitive energy marketplace," said Joseph L. Welch, president and CEO of ITC Holdings. "End-use consumers will be the true beneficiaries of this acquisition as we remain steadfast in our commitment to enhance electric reliability and further enable the development and growth of renewable energy resources."

In connection with the transaction, J.P. Morgan Securities Inc. acted as exclusive financial advisor to Alliant Energy and Foley & Lardner LLP served as its legal counsel.

The company's Energy for a New Generation plan includes the sale of its transmission assets and new generation infrastructure including:

Baseload Coal Plant

In mid-2007, IP&L plans to request approval from the Iowa Utilities Board to build a new 600 MW baseload coal-fired generation plant. Pending regulatory approval and further due diligence, IP&L plans to build the new plant next to the existing, 140-megawatt Sutherland Generating Station in Marshalltown, Iowa. IP&L expects to utilize at least 40 percent of the plant's capacity. It is anticipated that other utilities will utilize the remaining capacity through co-ownership or purchased power agreements. Partners are expected to be announced later this year.

The power plant is anticipated to cost IP&L and its partners approximately $1 billion and is expected to be operational in 2013. This cost estimate is in current year dollars and excludes allowance for funds used during construction (AFUDC).

Wind Energy Facilities

IP&L is actively pursuing sites for the development of at least 100 megawatts of renewable wind energy in Iowa. IP&L is currently reviewing sites in Emmett, Dickinson and Franklin counties. In addition, Wisconsin Power and Light, another Alliant Energy subsidiary, is pursuing sites in Iowa and Minnesota for the development of at least 200 MW of renewable wind energy. Both companies are evaluating site locations and plans to select a site or sites early in 2007 with commercial operation expected in 2009, subject to regulatory approvals.

Alliant Energy Corporation is an energy-services provider with subsidiaries serving approximately 1.5 million customers. Providing its customers in the Midwest with regulated electricity and natural gas service is the company's primary focus. Interstate Power and Light, the company's Iowa utility subsidiary, serves 535,000 electric and 238,000 natural gas customers. Alliant Energy, headquartered in Madison, Wis., is a Fortune 1000 company traded on the New York Stock Exchange under the symbol LNT. For more information, visit the company's Web site at http://www.alliantenergy.com/ .

This press release includes forward-looking statements. These forward-looking statements can be identified as such because the statements include words such as "expect" or "expects" or "expected," "anticipated," "plans," "believe" or other words of similar import. Similarly, statements that describe future plans or strategies are also forward-looking statements. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those currently anticipated. Actual results could be affected by such factors as: state or federal regulatory actions or local government actions which delay or prevent the transmission sale or new generation construction, including inability to obtain all necessary approvals and permits; the ability to complete the sale of the transmission assets on a timely basis and for anticipated proceeds; the ability of the purchaser of the transmission assets to finance purchase price; unanticipated construction issues, delays or expenditures; changes to IP&L's access to capital markets; political conditions in IP&L's service territories; current or future litigation, regulatory investigations, proceedings or inquiries that could impede the implementation of the IP&L's plans; inability to find utility partners for co-ownership or purchased power arrangements; failure of equipment and technology to perform as expected; and economic conditions in IP&L's service territory. These factors should be considered when evaluating the forward-looking statements and undue reliance should not be placed on such statements. The forward-looking statements included herein are made as of the date hereof and Alliant Energy, IP&L and WP&L undertake no obligation to update publicly such statements to reflect subsequent events or circumstances.