FAIR VALUE MEASUREMENTS
Valuation Hierarchy - Fair value measurement accounting establishes three levels of fair value hierarchy that prioritize the inputs to valuation techniques used to measure fair value. Level 1 pricing inputs are quoted prices available in active markets for identical assets or liabilities as of the reporting date. Level 2 pricing inputs are quoted prices for similar assets or liabilities in active markets or quoted prices for identical or similar assets or liabilities in markets that are not active as of the reporting date. Level 3 pricing inputs are unobservable inputs for assets or liabilities for which little or no market data exist and require significant management judgment or estimation.
The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.
Valuation Techniques -
Derivative assets and derivative liabilities - Swap, option and physical forward commodity contracts were non-exchange-based derivative instruments and were valued using indicative price quotations from a pricing vendor that provides daily exchange forward price settlements, from broker or dealer quotations, from market publications or from on-line exchanges. The indicative price quotations reflected the average of the bid-ask mid-point prices and were obtained from sources believed to provide the most liquid market for the commodity. A portion of these indicative price quotations were corroborated using quoted prices for similar assets or liabilities in active markets and categorized derivative instruments based on such indicative price quotations as Level 2. Commodity contracts that were valued using indicative price quotations based on significant assumptions such as seasonal or monthly shaping and indicative price quotations that could not be readily corroborated were categorized as Level 3. Swap, option and physical forward commodity contracts were predominately at liquid trading points. FTRs were valued using auction prices and were categorized as Level 3. Refer to Note 14 for additional details of derivative assets and derivative liabilities.
Deferred proceeds (sales of receivables) - The fair value of IPL’s deferred proceeds related to its sales of accounts receivable program was calculated each reporting date using the cost approach valuation technique. The fair value represents the carrying amount of receivables sold less the allowance for expected credit losses associated with the receivables sold and cash amounts received from the receivables sold due to the short-term nature of the collection period. These inputs were considered unobservable and deferred proceeds were categorized as Level 3. Deferred proceeds represent IPL’s maximum exposure to loss related to the receivables sold. Refer to Note 5(b) for additional information regarding deferred proceeds.
Long-term debt (including current maturities) - The fair value of long-term debt instruments was based on a discounted cash flow methodology using observable data from comparably traded securities with similar credit profiles, and was classified as Level 2. Refer to Note 8(b) for additional information regarding long-term debt. Fair Value of Financial Instruments - The carrying amounts of current assets and current liabilities approximate fair value because of the short maturity of such financial instruments. Carrying amounts and related estimated fair values of other financial instruments at December 31 were as follows (in millions):
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| Alliant Energy | 2025 | | 2024 |
| | | Fair Value | | | | Fair Value |
| Carrying | | Level | | Level | | Level | | | | Carrying | | Level | | Level | | Level | | |
| Amount | | 1 | | 2 | | 3 | | Total | | Amount | | 1 | | 2 | | 3 | | Total |
| Assets: | | | | | | | | | | | | | | | | | | | |
| Money market fund investments | $411 | | | $411 | | | $— | | | $— | | | $411 | | | $52 | | | $52 | | | $— | | | $— | | | $52 | |
| | | | | | | | | | | | | | | | | | | |
| Commodity derivatives | 69 | | | — | | | 36 | | | 33 | | | 69 | | | 75 | | | — | | | 48 | | | 27 | | | 75 | |
| Interest rate derivatives | 1 | | | — | | | 1 | | | — | | | 1 | | | 1 | | | — | | | 1 | | | — | | | 1 | |
| Deferred proceeds | 126 | | | — | | | — | | | 126 | | | 126 | | | 163 | | | — | | | — | | | 163 | | | 163 | |
| Liabilities: | | | | | | | | | | | | | | | | | | | |
| Commodity derivatives | 51 | | | — | | | 50 | | | 1 | | | 51 | | | 58 | | | — | | | 56 | | | 2 | | | 58 | |
| | | | | | | | | | | | | | | | | | | |
| Long-term debt (incl. current maturities) | 12,028 | | | — | | | 11,748 | | | — | | | 11,748 | | | 9,848 | | | — | | | 9,577 | | | — | | | 9,577 | |
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| IPL | 2025 | | 2024 |
| | | Fair Value | | | | Fair Value |
| Carrying | | Level | | Level | | Level | | | | Carrying | | Level | | Level | | Level | | |
| Amount | | 1 | | 2 | | 3 | | Total | | Amount | | 1 | | 2 | | 3 | | Total |
| Assets: | | | | | | | | | | | | | | | | | | | |
| Money market fund investments | $— | | | $— | | | $— | | | $— | | | $— | | | $9 | | | $9 | | | $— | | | $— | | | $9 | |
| Commodity derivatives | 44 | | | — | | | 18 | | | 26 | | | 44 | | | 48 | | | — | | | 26 | | | 22 | | | 48 | |
| Deferred proceeds | 126 | | | — | | | — | | | 126 | | | 126 | | | 163 | | | — | | | — | | | 163 | | | 163 | |
| Liabilities: | | | | | | | | | | | | | | | | | | | |
| Commodity derivatives | 11 | | | — | | | 10 | | | 1 | | | 11 | | | 13 | | | — | | | 11 | | | 2 | | | 13 | |
| Long-term debt (incl. current maturities) | 4,680 | | | — | | | 4,445 | | | — | | | 4,445 | | | 4,090 | | | — | | | 3,736 | | | — | | | 3,736 | |
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| WPL | 2025 | | 2024 |
| | | Fair Value | | | | Fair Value |
| Carrying | | Level | | Level | | Level | | | | Carrying | | Level | | Level | | Level | | |
| Amount | | 1 | | 2 | | 3 | | Total | | Amount | | 1 | | 2 | | 3 | | Total |
| Assets: | | | | | | | | | | | | | | | | | | | |
| Money market fund investments | $25 | | | $25 | | | $— | | | $— | | | $25 | | | $43 | | | $43 | | | $— | | | $— | | | $43 | |
| Commodity derivatives | 25 | | | — | | | 18 | | | 7 | | | 25 | | | 27 | | | — | | | 22 | | | 5 | | | 27 | |
| Liabilities: | | | | | | | | | | | | | | | | | | | |
| Commodity derivatives | 40 | | | — | | | 40 | | | — | | | 40 | | | 45 | | | — | | | 45 | | | — | | | 45 | |
| Long-term debt | 3,669 | | | — | | | 3,575 | | | — | | | 3,575 | | | 3,370 | | | — | | | 3,170 | | | — | | | 3,170 | |
Information for fair value measurements using significant unobservable inputs (Level 3 inputs) was as follows (in millions):
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| Alliant Energy | Commodity Contract Derivative | | |
| Assets and (Liabilities), net | | Deferred Proceeds |
| 2025 | | 2024 | | 2025 | | 2024 |
| Beginning balance, January 1 | $25 | | $24 | | $163 | | $216 |
| Total net gains (losses) included in changes in net assets (realized/unrealized) | 11 | | (3) | | — | | — |
| | | | | | | |
| | | | | | | |
| Purchases | 50 | | 59 | | — | | — |
| Sales | (3) | | (3) | | — | | — |
| Settlements (a) | (51) | | (52) | | (37) | | (53) |
| Ending balance, December 31 | $32 | | $25 | | $126 | | $163 |
| The amount of total net gains (losses) for the period included in changes in net assets attributable to the change in unrealized gains (losses) relating to assets and liabilities held at December 31 | $11 | | ($3) | | $— | | $— |
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| IPL | Commodity Contract Derivative | | |
| Assets and (Liabilities), net | | Deferred Proceeds |
| 2025 | | 2024 | | 2025 | | 2024 |
| Beginning balance, January 1 | $20 | | $19 | | $163 | | $216 |
| Total net gains (losses) included in changes in net assets (realized/unrealized) | 5 | | (4) | | — | | — |
| | | | | | | |
| | | | | | | |
| Purchases | 40 | | 45 | | — | | — |
| Sales | (2) | | (2) | | — | | — |
| Settlements (a) | (38) | | (38) | | (37) | | (53) |
| Ending balance, December 31 | $25 | | $20 | | $126 | | $163 |
| The amount of total net gains (losses) for the period included in changes in net assets attributable to the change in unrealized gains (losses) relating to assets and liabilities held at December 31 | $5 | | ($4) | | $— | | $— |
| | | | | | | | | | | |
| WPL | Commodity Contract Derivative |
| Assets and (Liabilities), net |
| 2025 | | 2024 |
| Beginning balance, January 1 | $5 | | $5 |
| Total net gains included in changes in net assets (realized/unrealized) | 6 | | 1 |
| | | |
| | | |
| Purchases | 10 | | 14 |
| Sales | (1) | | (1) |
| Settlements | (13) | | (14) |
| Ending balance, December 31 | $7 | | $5 |
| The amount of total net gains for the period included in changes in net assets attributable to the change in unrealized gains relating to assets and liabilities held at December 31 | $6 | | $1 |
(a)Settlements related to deferred proceeds are due to the change in the carrying amount of receivables sold less the allowance for expected credit losses associated with the receivables sold and cash amounts received from the receivables sold.
Commodity Contracts - The fair value of FTRs and natural gas commodity contracts categorized as Level 3 was recognized as net derivative assets at December 31 as follows (in millions):
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| Alliant Energy | | IPL | | WPL |
| Excluding FTRs | | FTRs | | Excluding FTRs | | FTRs | | Excluding FTRs | | FTRs |
| 2025 | $3 | | $29 | | $3 | | $22 | | $— | | $7 |
| 2024 | — | | 25 | | — | | 20 | | — | | 5 |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.