UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (Fee Required)
For the fiscal year ended December 31, 1993
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from __________ to __________
Commission file number 0-337
WISCONSIN POWER AND LIGHT COMPANY
(Exact name of registrant as specified in its charter)
Wisconsin 39-0714890
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (608) 252-3311
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Securities registered pursuant to Section 12(g) of the Act:
Preferred Stock (Cumulative, Without Par Value)
(Title of class)
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. /X/
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of January 31, 1994, was:
Preferred Stock $50,184,487
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at January 31, 1994
Common Stock, $5 par value 13,236,601 shares
Documents incorporated by reference:
Portions of the Company's 1994 Proxy Statement relating to its 1994
Annual Meeting of Shareowners (to be filed with the Commission under
Regulation 14A within 120 days after the end of the registrant's fiscal
year) are incorporated by reference into Part III hereof.
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY
FORM 10-K
December 31, 1993
TABLE OF CONTENTS
Part I. Business . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings . . . . . . . . . . . . . . . . . . . .
Executive Officers . . . . . . . . . . . . . . . . . . .
Part II. Financial Information . . . . . . . . . . . . . . . . . . . . .
Part III. Directors and Executive Officers
Information . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Report of Independent Public Accountants on Schedules . . . . . . . . . .
<PAGE>
PART I
ITEM 1. BUSINESS
THE COMPANY
On March 1, 1988, after obtaining shareowner and all the necessary
regulatory approvals, Wisconsin Power and Light Company (the "Company" or
"WP&L") effected a corporate restructuring which included the formation of
a holding company, WPL Holdings, Inc. WPL Holdings, Inc. is the parent
company of WP&L and its utility subsidiaries and of Heartland Development
Corporation, the parent corporation for nonregulated businesses.
The Company, incorporated in Wisconsin on February 21, 1917, as the
Eastern Wisconsin Electric Company, is a public utility predominately
engaged in the transmission and distribution of electric energy and the
generation and bulk purchase of electric energy for sale. The Company
also transports, distributes and sells natural gas purchased from gas
suppliers. Nearly all of the Company's customers are located in south and
central Wisconsin. The Company operates in municipalities pursuant to
permits of indefinite duration which are regulated by Wisconsin law. The
Company does not derive a material portion of its revenues from any one
customer.
The Company owns all of the outstanding capital stock of South Beloit
Water, Gas and Electric Company ("South Beloit"), a public utility
supplying electric, gas and water service, principally in Winnebago
County, Illinois, which was incorporated on July 23, 1908.
The Company also owns varying interests in several other subsidiaries
and investments which are not material to the Company's operations.
REGULATION
The Company is subject to regulation by the PSCW as to retail utility
rates and service, accounts, issuance and use of proceeds of securities,
certain additions and extensions to facilities, and in other respects.
South Beloit is subject to regulation by the Illinois Commerce Commission
("ICC") for similar items. The Federal Energy Regulatory Commission
("FERC") has jurisdiction under the Federal Power Act over certain of the
electric utility facilities and operations, wholesale rates and accounting
practices of the Company and in certain other respects. Certain of the
Company's natural gas facilities and operations are subject to the
jurisdiction of the FERC under the Natural Gas Act. The Company is
presently exempt from all provisions of the Public Utility Holding Company
Act of 1935, except provisions relating to the acquisition of securities
of other public utility companies.
An anticipated change in the regulatory environment is the movement
towards the deregulation of certain aspects of utility operations. The
Company is in the process of evaluating the impacts of such deregulation.
With respect to environmental matters, the United States Environmental
Protection Agency administers certain federal statutes; others are
delegated to the Wisconsin Department of Natural Resources ("DNR"). In
addition, the DNR has jurisdiction over air and water quality standards
associated with fossil fuel fired electric generation and the level and
flow of water, safety and other matters pertaining to hydroelectric
generation.
The Company is subject to the jurisdiction of the Nuclear Regulatory
Commission ("NRC") with respect to the Kewaunee nuclear plant and to the
jurisdiction of the United States Department of Energy ("DOE") with
respect to the disposal of nuclear fuel and other radioactive wastes from
the Kewaunee Nuclear Power Plant ("Kewaunee").
EMPLOYEES
At year-end 1993, the Company employed 2,673 persons, of whom 2,136
were considered electric utility employees, 387 were considered gas
utility employees and 150 were considered other utility employees. The
Company has a three-year contract with members of the International
Brotherhood of Electrical Workers, Local 965, that is in effect until
June 1, 1996. The contract covers 1,742 of the Company's employees.
ELECTRIC OPERATIONS
General
The Company provides electricity in a service territory of
approximately 16,000 square miles in 35 counties in southern and central
Wisconsin and four counties in northern Illinois. As of December 31,
1993, the Company provided retail electric service to approximately
360,000 customers in 609 cities, villages and towns, and wholesale service
to 25 municipal utilities, 1 privately owned utility, three rural electric
cooperatives and to Wisconsin Public Power, Inc. System, which provides
retail service to nine communities.
The Company owns 21,579 miles of electric transmission and
distribution lines and 351 substations located adjacent to the communities
served.
The Company's electric sales are seasonal to some extent with the
yearly peak normally occurring in July or August. The Company also
experiences a smaller winter peak in December or January.
Fuel
In 1993, approximately 80 percent of the Company's net kilowatthour
generation of electricity was fueled by coal and 17 percent by nuclear
fuel (provided by the Company's 41 percent ownership interest in
Kewaunee). The remaining electricity generated was produced by
hydroelectric, oil-fired and natural gas generation.
Coal
The Company anticipates that its average fuel costs will increase in
the future, due to cost escalation provisions in existing coal and
transportation contracts and increases in the costs of new coal contracts
due to emission requirements under federal and state laws.
The estimated coal requirements of the Company's generating units
(including jointly-owned facilities) for the years 1994 through 2013 total
about 166 million tons. Present coal supply contracts and transportation
contracts (excluding extension options) cover approximately 25 percent and
24 percent, respectively, of this estimated requirement. The Company will
seek renewals of existing contracts or additional sources of supply and
negotiate new or additional transportation contracts to satisfy the
requirements of approved environmental regulations.
Nuclear
Kewaunee is jointly owned by the Company (41%), Wisconsin Public
Service Corporation (41.2%) and Madison Gas & Electric Company (17.8%).
Wisconsin Public Service Corporation is the operating partner. The plant
began commercial operation in 1974.
The supply of fuel for Kewaunee involves the mining and milling of
uranium ore to uranium concentrates, the conversion of uranium
concentrates to uranium hexafluoride, enrichment of the uranium
hexafluoride and fabrication of the enriched uranium into usable fuel
assemblies. The following narrative discusses the nuclear fuel supplies
for Kewaunee which requires approximately 250,000 pounds of uranium
concentrates per year. Additionally, the Company and the other Kewaunee
co-owners formed a limited partnership of subsidiaries in the mid-1970's
to secure uranium reserves and maintain a long-term uranium concentrates
supply capability.
(a) Requirements for uranium are met through spot market purchases
of uranium. In general a four-year supply of uranium is
maintained.
(b) Uranium hexafluoride, from inventory and from spot market
purchases, was used to satisfy converted material requirements
in 1993. Such conversion services will be purchased on the spot
market in the future.
(c) In 1993, enriched uranium was procured from COGEMA, Inc.
pursuant to a contract executed in 1983 and last amended in
1991. The partnership is obligated to take delivery of
additional enriched uranium contracted from COGEMA in 1993 and
1994. The partnership also purchased enriched uranium on the
spot market in 1993. Enrichment services were purchased from
the DOE under the terms of the utility services contract. This
contract is in effect for the life of Kewaunee. The partnership
is committed to take 70 percent of its annual requirements in
1994 and 1995, and in alternate years thereafter from the DOE.
(d) Fuel fabrication requirements through 1995 are covered by
contract. This contract contains an option to allow the
partnership to extend the contract through 1998.
(e) Beyond the stated periods for Kewaunee, additional contracts for
uranium concentrates, conversion to uranium hexafluoride,
fabrication and spent fuel storage will have to be procured.
The prices for the foregoing are expected to increase.
The National Energy Policy Act of 1992 provides that both the Federal
government and the nuclear utilities fund the decontamination and
decommissioning of the three federal gaseous diffusion plants in the
United States. This will require the owners of the Kewaunee to pay
approximately $15 million, in current dollars over a period of 15 years.
The Company's share amounts to an annual payment of approximately
$410,000.
The steam generator tubes at Kewaunee are susceptible to corrosion
characteristics seen throughout the nuclear industry. Annual inspections
are performed to identify degraded tubes. Degraded tubes are either
repaired by sleeving or are plugged with approximately 15 percent heat
transfer margin, meaning that full power should be sustainable with the
equivalent of 15 percent of the steam generator tubes plugged. Currently,
the equivalent of 10 percent of the tubes in the steam generators are
plugged. The Company and the other joint owners continue to evaluate
appropriate strategies, including replacement, as well as continued
operation of the steam generators without replacement. The Company and
the joint owners intend to operate Kewaunee until at least 2013, the
expiration of the present operating license. The Company and the joint
owners are also evaluating initiatives to improve the performance of
Kewaunee. These initiatives include funding of the development of welded
repair technology for steam generator tubes and numerous cost reduction
measures such as the conversion from a 12-month to an 18-month fuel cycle.
If the steam generators are not replaced, and excluding the possible
affect of the aforementioned repair strategies, a gradual power reduction
of approximately 1 percent per year may begin as soon as 1995.
Physical decommissioning is expected to occur during the period 2014
to 2021 with additional expenditures being incurred during the period 2022
to 2050 related to the storage of spent nuclear fuel at the site. The
Company's share of the decommissioning costs of this plant is estimated to
be $149 million (in 1993 dollars) based on a site specific study,
performed in 1992, using immediate dismantlement as the method of
decommissioning. Wisconsin utilities operating nuclear generating plants
are required by the PSCW to establish external trust funds to provide for
the decommissioning of such plants. The market value of the investments
in the funds established by the Company at December 31, 1993 totaled $45.1
million.
Pursuant to the Nuclear Waste Policy Act of 1982, the DOE has entered
into a contract with the Company to accept, transport and dispose of spent
nuclear fuel beginning not later than January 31, 1998. It is likely that
the DOE will delay the acceptance of spent nuclear fuel beyond 1998. A
fee to offset the costs of the DOE's disposal for all spent fuel used
since April 7, 1983 has been assessed by the DOE at one mill per net
kilowatthour of electricity generated and sold by the Kewaunee nuclear
power plant. An additional one-time fee was paid for the disposal of
spent nuclear fuel used to generate electricity prior to April 7, 1983.
Spent fuel is currently stored at Kewaunee. The existing capacity of
the spent fuel storage facility will enable storage of the projected
quantities of spent fuel through April 2001. The Company is currently
evaluating options for the storage of additional quantities beyond 2001.
Several technologies are available. It is expected that the larger
capacity requirements for spent nuclear fuel storage will require a
capital investment in the late 2000's.
The Low-Level Radioactive Waste Policy Act of 1980 as amended in 1985
provides that states may enter into compacts to provide for regional
low-level waste disposal facilities. The amended Act provides that after
January 1, 1993, compact members may restrict the use of regional disposal
facilities to waste generated within the region. Wisconsin is a member of
the Midwest Interstate Low-Level Radioactive Waste Compact which includes
six Midwestern states and was ratified by Congress. A Midwest disposal
facility is not expected to be operational until the late 1990's.
Presently, the state of Ohio has been selected as the host state for the
Midwest Compact and is proceeding with the preliminary phases of site
selection. In the meantime, the Company has access to an existing low
level waste storage space to temporarily store low level waste generated.
Recovery of Electric Fuel Costs
The Company does not automatically pass changes in electric fuel cost
through to its Wisconsin retail electric customers. Instead, rates are
based on estimated per unit fuel costs established during rate proceedings
and are not subject to change by fuel cost fluctuations unless actual
costs are outside specified limits. If actual fuel costs vary from the
estimated costs by more than +10 percent in a month or by more than
+3 percent for the test year to date, projected annual variances are then
estimated. If the projected annual variance is more than +3 percent,
rates are subject to hearings and increase or decrease by the PSCW.
The Company's wholesale rates and South Beloit's retail rates contain
fuel adjustment clauses pursuant to which rates are adjusted monthly to
reflect changes in the costs of fuel.
Environmental Matters
The Company cannot precisely forecast the effect of future
environmental regulations by federal, state and local authorities upon its
generating, transmission and other facilities, or its operations, but has
taken steps to anticipate the future while meeting the requirements of
approved environmental regulations of today. The Clean Air Act Amendments
of 1977 and subsequent amendments to the Clean Air Act, as well as the new
laws affecting the handling and disposal of solid and hazardous wastes
along with clean air legislation passed in 1990 by Congress, could affect
the siting, construction and operating costs of both present and future
generating units (see "Item 3. Legal Proceedings").
Under the Federal Clean Water Act, National Pollutant Discharge
Elimination System permits for generating station discharge into water
ways are required to be obtained from the DNR, to which the permit program
has been delegated. These permits must be periodically renewed. The
Company has obtained such permits for all of its generating stations or
has filed timely applications for renewals of such permits.
Air quality regulations promulgated by the DNR in accordance with
Federal standards impose statewide restrictions on the emission of
particulates, sulfur dioxide, nitrogen oxides and other air pollutants and
require permits from the DNR for the operation of emission sources. The
Company currently has the necessary permits to operate its fossil-fueled
generating facilities.
Pursuant to Wisconsin statutes 144.386(2), the Company has submitted
data and plans for 1993 sulfur dioxide emissions compliance. The Company
will make any necessary operational changes in fuel types and power plant
dispatch to comply with the Plan.
The Company's compliance strategy for Wisconsin's 1993 sulfur dioxide
law and the Federal Clean Air Act Amendments required plant upgrades at
its generating facilities. The majority of these projects were completed
in 1992. The Company will be installing continuous emissions monitoring
systems at all of its coal fired boilers 1994. Coal handling equipment
upgrades will also be made at the Edgewater facility in 1994. Total
expenditures for these projects are expected to be $3.5 million. No
additional costs for compliance with these acid rain requirements are
anticipated at this time.
The Company maintains licenses for all its ash disposal facilities and
regularly reports to the DNR groundwater data and quantities of ash
landfilled or reused. The landfills are operated according to a Plan of
Operation approved by the DNR.
The Company's accumulated pollution abatement expenditures through
December 31, 1993, totaled approximately $122 million. The major
expenditures consist of about $60 million for the installation of
electrostatic precipitators for the purpose of reducing particulate
emissions from the Company's coal-fired generating stations and
approximately $62 million for other pollution abatement equipment at the
Columbia, Edgewater, Kewaunee, Nelson Dewey, Rock River and Blackhawk
plants. Expenditures during 1993 totaled approximately $6 million.
Estimated pollution abatement expenditures total $.7 million through 1995.
The Company's estimated pollution abatement expenditures are subject to
continuing review and are revised from time to time due to escalation of
construction costs, changes in construction plans and changes in
environmental regulations.
See "Electric Operations - Fuel" for information concerning the
disposal of spent nuclear fuel and high level nuclear waste.
<TABLE>
CONSOLIDATED ELECTRIC STATISTICS
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Area served (end of period):
Population--retail (estimated)(a)......... 818,000 807,000 799,000 777,000 772,000
Cities, villages and towns served --retail 609 611 611 604 603
Customers served (end of period):
Residential and farm...................... 316,870 310,702 304,825 302,942 295,163
Industrial................................ 714 727 679 635 649
Commercial................................ 42,884 42,287 41,190 40,358 39,487
Wholesale................................. 32 30 31 31 32
Class A................................... 7 9 10 10 6
Other..................................... 1,236 950 1,173 1,147 922
---------- --------- --------- --------- ---------
Total................................... 361,743 354,705 347,908 345,123 336,259
========== ========= ========= ========= =========
Sales--kilowatt-hours (in thousands):
Residential and farm...................... 2,751,363 2,614,439 2,729,917 2,566,093 2,532,832
Industrial................................ 3,540,082 3,377,132 3,185,101 3,173,932 3,119,504
Commercial................................ 1,629,911 1,551,823 1,558,297 1,492,255 1,451,715
Wholesale................................. 2,105,905 1,994,722 1,979,832 1,885,424 1,822,746
Class A................................... 282,226 213,697 461,357 352,129 619,265
Other..................................... 51,073 55,230 54,376 55,101 54,267
---------- --------- --------- --------- ---------
Total................................... 10,360,560 9,807,043 9,968,880 9,524,934 9,600,329
========== ========= ========= ========= =========
Electric operating revenues (in thousands):
Residential and farm...................... $ 184,176 $ 171,887 $ 179,751 $ 170,875 $ 168,787
Industrial................................ 132,903 128,467 124,212 124,972 123,861
Commercial................................ 95,977 91,707 92,628 89,618 87,165
Wholesale................................. 69,757 67,326 68,154 65,983 64,091
Class A................................... 9,198 10,159 14,677 9,784 12,632
Other..................................... 11,176 8,189 9,130 9,587 6,539
--------- --------- --------- --------- ---------
Total................................... $ 503,187 $ 477,735 $ 488,552 $ 470,819 $ 463,075
========= ========= ========= ========= =========
Percent of generation by fuel type:
Coal...................................... 80.3% 79.8% 81.1% 79.6% 79.2%
Nuclear................................... 16.5 17.4 15.7 17.6 18.5
Hydroelectric............................. 2.9 2.6 2.6 2.5 1.9
Natural gas............................... .2 .1 .5 .2 .3
Oil....................................... .1 .1 .1 .1 .1
--------- --------- --------- --------- ---------
Total................................... 100.0% 100.0% 100.0% 100.0% 100.0%
========= ========= ========= ========= =========
System capacity--at time of system peak:
(kWh's)
Company plants (including jointly owned)
jointly owned).......................... 2,019,000 1,934,000 1,932,000 1,936,000 1,915,000
Firm purchased (sold) power............... 83,000 110,000 70,000 (55,000) 83,000
--------- --------- --------- --------- ---------
Total................................... 2,102,000 2,044,000 2,002,000 1,881,000 1,998,000
System peak demand........................ 1,971,000 1,782,000 1,863,000 1,798,000 1,777,000
---------- --------- --------- --------- ---------
Reserve margin at time of peak............ 131,000 262,000 139,000 83,000 221,000
========= ========= ========= ========= =========
Fuel cost per kilowatt-hour (cents)......... 1.349 1.365 1.392 1.419 1.562
Cost per million BTU (all fuels) (cents).... 128.69 130.80 132.70 134.86 148.71
BTU per kilowatthour generated (heat rate).. 10,483 10,438 10,493 10,519 10,506
Average annual electric bill per
residential and farm customer............. $ 587 $ 558 $ 594 $ 573 $ 577
Average annual kilowatt-hour use per
residential and farm customer............. 8,772 8,492 9,015 8,603 8,655
<FN>
(a) The estimated population for towns served jointly with other electric utilities has been based upon a ratio of 2.5
population per retail electric customer.
</TABLE>
GAS OPERATIONS
General
As of December 31, 1993, the Company provided retail natural gas
service to approximately 136,000 customers in 217 cities, villages and
towns in 22 counties in southern and central Wisconsin and one county in
northern Illinois.
The Company's gas sales follow a seasonal pattern. There is an annual
base load of gas used for heating, cooking, water heating and other
purposes, with a large peak occurring during the heating season.
In 1993, the Company purchased significant volumes of lower cost gas
directly from producers and marketers and transported those volumes over
its two major pipeline supplier's systems. This replaced higher cost gas
historically purchased directly from the major pipeline systems. The
Company transported gas for 85 end users at year-end 1993.
Gas Supplies
In 1992 the FERC issued Order No. 636 and 636-A which requires
interstate pipelines to restructure their services. Under these orders,
existing pipeline sales service would be "unbundled" such that gas
supplies would be sold separately from interstate transportation services.
Both of the interstate pipelines which serve the Company, ANR Pipeline and
Northern Natural Pipeline, completed their transition to unbundled
services as mandated by the FERC in its Order 636 during 1993. As a
result, the Company now contracts with these two parties for various
unbundled services such as firm and interruptible transportation, firm and
interruptible storage service and "no-notice" service. The Company has
benefited from enhanced access to competitively priced gas supplies, and
from more flexible transportation services. Pipelines are, however,
seeking to recover from their customers certain transition costs
associated with restructuring. Any such recovery is subject to prudence
hearings at the FERC and state regulatory commissions.
With the pipelines exiting their historic role of selling gas to the
Company, the utility has increased its contracting activity with producers
and marketers of natural gas correspondingly. The Company's portfolio of
gas supply contracts are designed to meet the needs of gas customers and
extend from one month to 10 years in term.
The most significant change in the Company's mix of gas contracts for
1993 are: 1) a significant increase in the volume of Canadian gas
contracted for, and 2) a large increase in firm storage service from the
pipelines.
The new Canadian contract commitments represent the Company's
successful negotiations to minimize the "transition costs" of moving to
the unbundled, post-Order 636 environment. In mid 1993, the Company was
faced with the decision of whether to negotiate with the Canadians to
reform the terms of long-term contracts which were in place with the two
pipelines and assume the contracts on the renegotiated terms, or pay the
pipelines to buy out of these contract commitments with the Canadians.
The Company opted for the latter approach at an estimated savings of over
$16 million to the Company's customers. In 1993, the Company increased
its peak-day entitlements on ANR pipeline by 16,000 dekatherms per day
reflecting the need for additional firm capacity in order to meet the load
growth of firm customers.
The Company maintains gas storage agreements with ANR Pipeline and a
third party storage service provider. The storage agreements allow the
Company to purchase a portion of its gas supply between April and October,
when natural gas costs usually are lower. The less expensive gas is
stored in the storage fields and is withdrawn between November and March
when gas costs typically are higher. The agreements have terms extending
through March 31, 1995 and March 31, 1997.
The Company's current portfolio of contracts is as follows:
ANR Pipeline
Contract year 1989-90 1990-91 1991-92 1992-93 1993-94
Maximum daily
entitlement:
(000 Dt per day)
Contract demand 120.0 81.5 81.5 81.5 0
Firm transportation 25.5 25.9 25.9 25.9 80.0
Firm storage - 40.1 40.1 40.1 83.5
------ ------ ------ ------ ------
Total 145.5 147.5 147.5 147.5 163.5
====== ====== ====== ====== ======
Maximum annual
entitlement (000 Dt) 11,400 11,680 11,680 N/A N/A
Northern Natural Pipeline
Contract year 1989-90 1990-91 1991-92 1992-93 1993-94
(a) (a)
Maximum daily
entitlement: (000 Dt
per day)
Contract demand 19.9 19.9 16.9 -- --
Firm transportation 13.7 13.7 26.5 53.6 53.6
Firm storage - - 2.2 1.5 8.5
"Unbundled" sales - - - 16.9 1.4
------ ------ ------ ------ ------
Total 33.6 33.6 45.6 53.6 53.6
====== ====== ====== ====== ======
Maximum annual
entitlement (000 Dt) 5,815 5,815 N/A N/A N/A
(a) Total no longer equals sum of components. Currently, Northern
Natural requires that the Company hold firm transportation equal to
its total peak-day requirements. Firm storage, "unbundled" sales
from Northern Natural, and third party gas supply (not shown) are
all eligible gas sources to be moved to the Company's city gates via
this firm transportation. Contract demand services from Northern
Natural in its previous form, has been eliminated.
The future cost of natural gas is expected to be market sensitive. The
Company's rate schedules applicable to all retail gas customers provide
for adjustments of its rates, upon notice by the Company to the PSCW, to
reflect all increases or decreases in the cost of gas purchased for
resale. Increases or decreases in such costs are reflected automatically
by adjustments to customers' bills commencing with meters read following
the effective date of any changes in such costs.
One of the biggest changes which the Company faces in the post-Order
636 environment is dealing with the heightened emphasis placed upon daily
balancing of the economic utilization of the Company's two pipelines.
As the natural gas market continues to evolve, The Company continuously
evaluates products and services provided by pipelines and gas suppliers to
meet the changing needs of its firm and interruptible gas customers.
Environmental Matters
Manufactured Gas Plant Sites. Historically, the Company has owned 11
properties that have been associated with the production of manufactured
gas. Currently, the Company owns five of these sites, three are owned by
municipalities, and the remaining three are owned by private companies.
In 1989, the Company initiated investigation of these manufactured gas
plant sites. The Wisconsin Department of Natural Resources ("DNR") has
been involved in reviewing preliminary investigation plans and has
received reports regarding these investigations. Based on the results of
the Company's preliminary investigations, the Company recorded an
estimated liability and corresponding deferred charge of approximately $15
million as of December 31, 1991.
In 1992, and into the beginning of 1993, the Company continued its
investigations and studies. The Company confirmed that there was no
contamination at two of the sites and received a close out letter from the
DNR related to one of those sites and requested a close out letter for the
other site. Additionally, the investigation of historical records at a
third site indicated a minimal likelihood of any significant environmental
impacts. In February 1993, the Company completed more current cost
estimates for the environmental remediation of the eight remaining sites.
The results of this more current analysis indicated that during the next
35 years, the Company will expend approximately $81 million for
feasibility studies, data collection, soil remediation activities,
groundwater research and groundwater remediation activities, including
construction of slurry containment walls and the installation of
groundwater pump and treatment facilities. This estimate was based on
various assumptions, and is subject to continuous review and revision by
management.
Based on the cost estimate set forth above, which assumes a 4 percent
average inflation over the 35 year period, the Company will spend
approximately $4.2 million, $1.5 million, $2.1 million, $4.4 million and
$4.2 million in 1994 through 1998, respectively. The cost estimate also
contemplates that primarily groundwater pump and treatment activities will
take place after 1998 through and including 2027. During this time, the
Company estimates that it will incur average annual costs of $2.0 million
to complete the planned groundwater remediation activities.
With respect to rate recovery of these costs, the PSCW has approved a
five year amortization of the unamortized balance of incurred
environmental costs deferred to date.
Based on the present regulatory record at the PSCW, management believes
that future costs of remediating these manufactured gas plant sites will
be recovered in rates.
<TABLE>
CONSOLIDATED GAS STATISTICS
<CAPTION>
Year Ended December 31,
1993 1992 1991 1990 1989
Area served (end of period):
<S> <C> <C> <C> <C> <C>
Population--retail (estimated)(a). 391,000 377,000 375,000 363,000 363,000
Cities, villages and towns served
--retail........................ 217 194 199 195 197
Customers served (end of period):
Residential....................... 120,829 116,642 113,475 110,606 107,496
Commercial firm................... 14,644 14,209 13,848 13,384 13,015
Industrial firm................... 444 447 443 438 429
Interruptible..................... 261 262 215 211 114
Transportation.................... 85 109 46 59 57
------- ------- ------- ------- -------
Total........................... 136,263 131,669 128,027 124,698 121,111
======= ======= ======= ======= =======
Sales-therms (in thousands) (b):
Residential....................... 120,005 114,131 114,772 102,048 116,232
Commercial firm................... 69,389 66,272 67,015 59,123 66,806
Industrial firm................... 17,649 15,815 16,436 15,202 17,429
Interruptible..................... 27,872 25,497 26,025 35,434 33,297
Interdepartmental sales........... 3,346 1,923 5,530 2,537 2,828
Transported gas................... 84,877 69,244 61,001 56,493 57,628
------- ------- ------- ------- -------
Total........................... 323,138 292,882 290,779 270,837 294,220
======= ======= ======= ======= =======
Gas operating revenues (in thousands):
Residential....................... $ 71,632 $ 63,699 $ 63,521 $ 59,793 $ 61,158
Commercial firm................... 33,456 30,486 29,640 27,509 27,136
Industrial firm................... 7,292 6,668 6,767 6,542 6,371
Interruptible..................... 10,685 14,589 12,051 11,563 8,399
Interdepartmental sales and other. 400 281 1,469 883 774
Transported gas................... 14,919 3,639 4,327 4,133 3,945
------- ------- ------- ------- -------
Total........................... $138,384 $119,362 $117,775 $110,423 $107,783
======== ======== ======== ======== ========
Average annual residential heating
use--therms....................... 1,052 1,029 1,069 978 1,147
Average annual gas bill per
residential heating customer...... $ 631 $ 573 $ 590 $ 572 $ 603
<FN>
(a) The estimated population for towns served jointly with other gas utilities has been based upon a ratio of 2.5
population per retail gas customer.
(b) One therm equals 100,000 British Thermal Units and is a measure of the heat content of natural gas.
</TABLE>
ITEM 2. PROPERTIES
GENERAL
The following table gives information with respect to electric
generating facilities of the Company (including the Company's portion of
those facilities jointly owned).
<TABLE>
<CAPTION>
1993 Summer
Capability
WP&L Portion Ownership
Type/ in kilowatts Interest
Location Name Fuel (kwh's) in Facility
<S> <C> <C> <C> <C>
Steam
Beloit, WI Blackhawk Natural Gas 54,500 100%
Janesville, WI Rock River Coal 147,600 100%
Cassville, WI Nelson Dewey Coal 218,800 100%
Sheboygan, WI Edgewater #3 Coal 70,000 100%
Sheboygan, WI Edgewater #4 Coal 217,400 68.2%
Sheboygan, WI Edgewater #5 Coal 294,000 75%
Kewaunee, WI Kewaunee Nuclear 214,000 41%
Portage, WI Columbia Energy Coal 472,400 46.2%
Center
Hydro
Wisconsin Dells, WI Kilbourn Hydro 5,900 100%
Prairie du Sac, WI Prairie du Sac Hydro 14,300 100%
Wisconsin River Petenwell/ Hydro 6,200 33%
Power Co. Castle Rock
4 small units at
various locations Hydro 1,500 100%
Combustion Turbine
Janesville, WI Rock River Natural Gas
or Oil 130,300 100%
Edgerton, WI Sheepskin Natural Gas
or Oil 37,500 100%
-------
Total 1,884,400
=========
</TABLE>
The maximum net hourly peak load on the Company's electric system was
1,971,000 kwh's and occurred on August 26, 1993. At the time of such peak
load, 2,310,000 kwh's were produced by generating facilities operated by
the Company (including other Company shared jointly owned facilities) and
the Company delivered 812,000 kwh's of power and received 473,000 kwh's of
power from external sources. During the year ended December 31, 1993,
about 86.4 percent of the Company's total kilowatthour requirements was
generated by Company-owned and jointly-owned facilities and the remaining
13.6 percent was purchased. Substantially all of the Company's facilities
are subject to the lien of its first mortgage bond indenture.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings, other than ordinary
routine litigation incidental to the business, to which the Company or any
of its subsidiaries is a party or to which any of their property is
subject.
ENVIRONMENTAL MATTERS
The information required by Item 3 is included in this Form 10-K as Item
8 - Notes to Consolidated Financial Statements, Note 10c, incorporated
herein by reference.
RATE MATTERS
The information required by Item 3 is included in Item 7 of this Form
10-K within the Management's Discussion and Analysis of Financial
Condition and Results of Operations narrative under the caption "Rates and
Regulatory Matters."
<TABLE>
RECENT RATE CASE PROCEEDINGS
<CAPTION>
Increase Ordered or
Increase (Decrease) Requested Negotiated Date
(Decrease) Ordered or % Return on % Return on Increase
Rate Case Type of Application Test Requested Negotiated Common Common (Decrease)
Designation(a) Service(b) Date Year ($ Millions) ($ Millions) Equity Equity Effective
<S> <C> <C> <C> <C> <C> <C> <C> <C>
WP&L Retail
(PSC)
6680-UR-103 e,g,w 02-29-88 1988-89 14.7 5.5 13.25 13.10 10-18-88
6680-UR-104 e,g,w 12-30-88 1989-90 17.4 5.3 13.10 13.00 11-12-89
6680-UR-105 e,g,w 12-29-89 1990-91 9.0 (10.8) 13.10 12.90 08-01-90
6680-UR-106 e,g,w 12-28-90 1991-92 18.7 (0.1) 13.25 12.90 08-01-91
6680-UR-107 e,g,w 12-30-91 1992-93 17.8 (0.9) 13.10 12.40 01-01-93
6680-UR-108 e,g,w 01-04-93 1993-94 24.5 17.7 12.60 11.60 10-01-93
WP&L Wholesale
(FERC)
ER87-554 e 07-31-87 1987-88 (1.2) (.9) 13.00 (c) 01-01-88
ER93 e 05-28-93 1993-94 2.0 2.0 10-01-93
South Beloit
(ICC)
85-0505 e,w 11-08-85 1985-86 1.4(d) .9 15.00 13.80 09-27-86
<FN>
(a) See "Item 3. Legal Proceedings" for additional information concerning rate matters.
(b) e-electric, g-gas, w-water.
(c) Return on equity was not specified in the negotiated settlement agreement.
(d) On 05-07-86, South Beloit Water, Gas and Electric Co. adjusted the increase requested downward to $1.1 million.
</TABLE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Erroll B. Davis, Jr, 49, was elected President and Chief Executive
Officer, effective August 1, 1988 and has been a board member since
April 1984. He had been Executive Vice President since May 1984, Vice
President - Finance and Public Affairs since November 1982 and Vice
President - Finance since August 1978. Mr. Davis was elected President of
WPL Holdings, Inc. on January 17, 1990 and Chief Executive Officer of WPL
Holdings, Inc. effective July 1, 1990. He has served as a director of WPL
Holdings, Inc. since March 1988.
A. J. (Nino) Amato, 42, was appointed Senior Vice President effective
October 3, 1993. He previously served as Vice President - Marketing and
Strategic Planning since December 1992, Vice President - Marketing and
Communications since January 1989 and Director of Electric Marketing and
Customer Service since October 1988. He had been President of Forward
Wisconsin, Inc. from 1987 to 1988.
Norman E. Boys, 49, was elected Vice President of Power Production
effective January 1, 1989. He previously served as the Director of Power
Production since October 1987 and Generating Station Manager at the
Edgewater Generating Station since August 1984.
Thomas L. Consigny, 59, has been Assistant Vice President - Public
Affairs since October 1976.
Daniel A. Doyle, 35, was appointed controller and treasurer effective
October 3, 1993. He previously served as controller since July 1992.
Prior to joining the Company, he was Controller of Central Vermont Public
Service Corporation since December 1988. During the period 1981 to 1988,
he was employed by Arthur Andersen & Co. as an Audit Staff Assistant,
Audit Senior and Audit Manager with primary responsibilities of auditing
and providing financial consulting services to large publicly held
corporations.
David E. Ellestad, 53 was appointed Vice President-Electrical
Engineering and Operations on August 1, 1992. He previously served as
Vice President-Engineering and Operations since 1988; Vice President of
Electrical Engineering and Procurement since January 1, 1986; Director of
Electrical Engineering & Procurement since May 1985 and Director of
Electrical Engineering since November 1979.
Thomas L. Hanson, 40, was elected Assistant Treasurer on May 17, 1989.
He had been Financial Relations Supervisor in the Treasury Department
since October 1987.
Thomas J. Handziak, 30, was elected Assistant Controller on September
20, 1993. Prior to joining the Company, he was employed by Arthur
Andersen & Co. as an Audit Staff Assistant, Audit Senior and Audit Manager
with primary responsibilities of auditing and providing financial
consulting services to large publicly held corporations.
William D. Harvey, 44, was appointed Senior Vice President effective
October 3, 1993. He previously served as Vice President-Natural Gas and
General Counsel since August 1992, Vice President-General Counsel since
October 1, 1990 and Vice President-Associate General Counsel since July
1986. Prior to joining the Company, he was a member of the law firm of
Wheeler, Van Sickle, Anderson, Norman and Harvey.
Steve F. Price, 41, was appointed Assistant Corporate Secretary on
April 15, 1992. He had been Cash Management Supervisor since December
1987. He was also appointed Assistant Corporate Secretary and Assistant
Treasurer of WPL Holdings, Inc. on April 15, 1992.
Eliot G. Protsch, 40, was appointed Senior Vice President effective
October 3, 1993. He previously served as Vice President-Customer Services
and Sales since August 1992, Vice President and General Manager-Energy
Services since January 1989 and District Manager, Dane County, since
October 1986.
Pamela J. Wegner, 46 was elected Vice President-Information Services
and Administration on October 13, 1994. Prior to joining the Company, she
was the Administrator of the Division of Finance and Program Management in
the Wisconsin Department of Administration since 1987. She served as
administrator of the Division of Administrative Services in the Wisconsin
Department of Revenue from 1983 to 1987.
Kim K. Zuhlke, 40 was elected Vice President - Customer Services and
Sales effective October 3, 1993. He previously served as Director of
Marketing and Sales Services since 1991, Director of Market Research,
Planning and Development since February 1990, Director of Customer
Services since 1988 and District Manager at Beaver Dam since April 1984.
NOTE: All ages are as of December 31, 1993. None of the executive
officers listed above is related to any director of the Board or
nominee for director of the Company.
Executive officers of the Company have no definite terms of office
and serve at the pleasure of the Board of Directors.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Effective with the formation of the holding company, all $5 par value
common stock of the Company was owned and converted by WPL Holdings, Inc.
to $.01 par value common stock of WPL Holdings, Inc. WPL Holdings is now
the sole common shareowner of the Company.
The Company's dividend payments for administrative allowance and other
costs throughout 1993 and 1992 totaled $1,000,000. Regular cash dividends
paid per share of common stock during 1993 and 1992 to WPL Holdings, Inc.
were 95 cents and 94 cents, respectively for each quarter.
ITEMS 6 and 7. SELECTED FINANCIAL DATA AND MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
WISCONSIN POWER AND LIGHT COMPANY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
1993 1992 1991 1990 1989
---- ---- ---- ---- ----
(In Millions)
<S> <C> <C> <C> <C> <C>
Operating revenues $ 645 $ 601 $ 610 $ 585 $ 575
Net income $ 60 $ 55 $ 64 $ 61 $ 54
Total assets (at December 31) $1,551 $1,414 $1,250 $1,213 $1,162
Long-term debt, net (at December 31) $ 336 $ 336 $ 291 $ 328 $ 289
</TABLE>
1993 COMPARED WITH 1992
OVERVIEW
Wisconsin Power and Light Company's (the "Company") 1993 net income
increased 9 percent to $60.2 million compared with $55.4 million in 1992.
The principle factors leading to increased earnings include warmer summer
weather and lower electric fuel costs per kilowatthour ("kWh") which
yielded higher electric gross margins for the Company. These increases
were somewhat offset by increased depreciation expense resulting from
additional investment in utility plant, a change in the mix of gas sales
from higher margin sales to lower margin sales, the increase in the
Federal corporate tax rate from 34% to 35% and a one-time 4-cent-per-
share charge associated with a voluntary separation program for the
executive management group.
<TABLE>
Electric Operations
<CAPTION>
Revenues $
Costs Per
kWh's Sold, kWh Sold
Revenues % Generated % Generated Customers at
and Costs Change and Purchased Change & Purch. End of Year
--------------- ------ ---------------- ------ ------------ --------------
1993 1992 1993 1992 1993 1992 1993 1992
---- ---- ---- ---- ---- ---- ---- ----
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and farm $184,176 $171,887 7% 2,751,363 2,614,439 5% $.067 $.066 316,870 310,702
Industrial 132,903 128,467 3 3,540,082 3,377,132 5 .038 .038 714 727
Commercial 95,977 91,707 5 1,629,911 1,551,823 5 .059 .059 42,884 42,287
Wholesale and Class A 78,955 77,485 2 2,388,131 2,208,419 8 .033 .035 39 39
Other 11,176 8,189 36 51,073 55,230 (8) .219 .148 1,236 950
-------- -------- ---------- --------- ------- -------
Total 503,187 477,735 5 10,360,560 9,807,043 6 .049 .049 361,743 354,705
========== ========= ======= =======
Elec. production fuels 123,919 123,440 .4 9,186,134 9,041,317 2 .0135 .0137
Purchased power 28,574 24,427 17 1,481,592 1,124,667 32% .0193 .0217
--------- ---------
Margin $350,694 $329,868 6%
======== ========
</TABLE>
The Company's electric margin, in dollars, increased during 1993 compared
with 1992 due to increased demand for electricity brought on by warmer
summer weather. Residential customers, being the most weather sensitive,
experienced the most significant increases. Wisconsin's strong economy
kept the Commercial and Industrial classes growing steadily. These
increases were coupled with declining electric production fuel costs per
kWh. The decrease in electric production fuels is due to the Company's
aggressive pursuit of additional spot coal purchase opportunities as its
longer term contracts begin to expire. Additionally, a highly competitive
rail transportation environment has significantly reduced the cost of
transporting the coal. Also, lower cost purchased power became available
due to excess capacity in the bulk power market.
<TABLE>
Gas Operations
<CAPTION>
Revenues &
Revenues % Therms Sold % Costs Per Therm Customers at
and Costs Change & Purchased Change Sold, & Purch. End of Year
--------------- ------ ------------------ ------ -------------- ---------------
1993 1992 1993 1992 1993 1992 1993 1992
---- ---- ---- ---- ---- ---- ---- ----
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 71,632 $ 63,699 12% 120,005 114,131 5% $.60 $.56 120,829 116,642
Firm 40,748 37,154 10 87,038 82,087 6 .47 .45 15,088 14,656
Interruptible 10,685 9,554 12 27,872 25,497 9 .38 .37 261 262
Transportation 14,919 8,674 72 84,877 69,244 23 .18 .13 85 109
Other 400 281 42 3,346 1,923 74 .12 .15 - -
-------- -------- ------- ------- ------- -------
Total 138,384 119,362 16 323,138 292,882 10 .43 .41 136,263 131,669
======= ======= ======= =======
Purchased gas 91,619 77,112 19 288,877 260,354 11% $.32 $.30
-------- --------
Margin $ 46,765 $ 42,250 11%
======== ========
</TABLE>
The Company's gas revenues for 1992 were affected by the recognition of a
$4.9 million, before-tax refund to its natural gas customers resulting
from an adjustment in the calculation of the purchased gas adjustment
clause. Without the impact of this revenue adjustment, comparative gas
margins would have declined for 1993 compared with 1992.
The overall increases in gas revenues and purchased gas expense
between years resulted primarily from increased volumes procured on behalf
of transportation customers. This had the impact of decreasing margins as
a percentage of total revenues. A change in the mix of gas sales from
higher margin residential sales to lower margin sales also moved margins
downward. Offsetting this decline, Wisconsin's strong economy enabled
growth in the Commercial and Industrial classes, and there was also some
overall increase in the demand for natural gas due to colder weather.
Other Operation Expense
Other operation expense increased as a result of higher employee benefit
expenses (See Notes to Consolidated Financial Statements, Note 8). These
increases were offset somewhat by decreases in the Company's conservation
program expenditures and decreases in fees associated with the sale of the
Company's accounts receivable due to a decline in interest rates.
Additionally, the Company's cost management efforts have helped control
annual inflationary pressures on general and administrative costs.
Maintenance and Depreciation and Amortization
Maintenance expense increased for 1993 compared with 1992, primarily due
to service restoration expenses related to a severe storm in the summer of
1993. Depreciation and amortization expense increased, principally
reflecting increased property additions and the commencement of deferred
charge amortizations approved in the Company's last two rate orders
received in December 1992 and October 1993. The most significant
amortizations include the amortization related to an acquisition
adjustment which resulted from the purchase of transmission facilities and
the amortization of costs incurred related to the remediation of former
manufactured gas plant sites (See Notes to the Consolidated Financial
Statements, Note 10).
Allowance for Funds Used During Construction ("AFUDC")
Total AFUDC increased in 1993 compared with 1992, reflecting the greater
amounts of construction work in progress including the costs associated
with the Company's construction of two 86-megawatt combustion-turbine
generators.
1992 COMPARED WITH 1991
Company Overview
The Company's 1992 net income decreased 13 percent to $59.2 million
compared with $67.9 million in 1991. A combination of an electric rate
decrease in March 1992 and significantly cooler summer weather led to
lower electric revenues, gross margins and earnings at the Company. The
Company's earnings were also affected by the recognition of a $4.9
million, before-tax refund to natural gas customers noted previously.
<TABLE>
Electric Operations
<CAPTION>
Revenues $
Costs Per
kWh's Sold, kWh Sold
Revenues % Generated % Generated Customers at
and Costs Change and Purchased Change & Purch. End of Year
--------------- ------ ---------------- ------ ------------ --------------
1993 1992 1993 1992 1993 1992 1993 1992
---- ---- ---- ---- ---- ---- ---- ----
(In thousands) (In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential and farm $171,887 $179,751 (4)% 2,614,439 2,729,917 (4)% $.066 $.066 310,702 304,825
Industrial 128,467 124,212 3 3,377,132 3,185,101 6 .038 .039 727 679
Commercial 91,707 92,628 (1) 1,551,823 1,558,297 - .059 .059 42,287 41,190
Wholesale and Class A 77,485 82,831 (6) 2,208,419 2,441,189 (10) .035 .034 39 41
Other 8,189 9,130 (10) 55,230 54,376 (2) .148 .168 950 1,173
-------- -------- --------- --------- ------- -------
Total 477,735 488,552 (2) 9,807,043 9,968,880 (2) .049 .049 354,705 347,908
========= ========= ======= =======
Elec. production
fuels 123,440 130,406 (5) 9,041,317 9,366,646 (3) .0137 .0139
Purchased power 24,427 20,390 20 1,124,667 960,693 17 % .0217 .0212
-------- --------
Margin $329,868 $337,756 (2)%
======== ========
</TABLE>
The Company's electric margin decreased during 1992 compared with 1991 due
to decreased demand for electricity brought on by cooler summer weather.
Residential customers, being the most weather sensitive, experienced the
most significant decreases. However, improved economic conditions in 1992
kept the Industrial customer class growing steadily. Sales to commercial
customers remained flat despite the negative weather impact due to
increased customer growth in this sector and the improving economy. As a
result of significantly lower weather-related peak demands, sales and
revenues to other Class A utilities decreased. Electric production fuels
expense decreased in response to reduced kWh sales, lower fuel costs and a
greater reliance on purchased power. Purchased power expense increased in
1992 due to the greater availability of purchased power at competitive
prices.
<TABLE>
Gas Operations
<CAPTION>
Revenues &
Revenues % Therms Sold % Costs Per Therm Customers at
and Costs Change & Purchased Change Sold, & Purch. End of Year
--------------- ------ ------------------ ------ -------------- ---------------
1993 1992 1993 1992 1993 1992 1993 1992
---- ---- ---- ---- ---- ---- ---- ----
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential $ 63,699 $ 63,521 - % 114,131 114,772 (1)% $.56 $.55 116,642 113,475
Firm 37,154 36,407 2 82,087 83,451 (2) .45 .44 14,656 14,291
Interruptible 9,554 12,051 (21) 25,497 26,025 (2) .37 .46 262 215
Transportation 8,674 4,327 101 69,244 61,001 14 .13 .07 109 46
Other 281 1,469 (81) 1,923 5,530 (65) .15 .27 - -
-------- -------- ------- ------- ------- -------
Total 119,362 117,775 1 292,882 290,779 1 .41 .41 131,669 128,027
======= ======= ======= =======
Purchased gas 77,112 70,834 9 260,354 250,051 4% $.30 $.28
-------- --------
Margin $ 42,250 $ 46,941 (10)%
======== ========
</TABLE>
After adjusting 1992 gas revenues for the customer refund noted
previously, both gas revenues and gas margins increased during 1992
compared with 1991. Overall increases in gas revenues between years
resulted primarily from the recovery of increased purchased gas costs
through the purchased gas adjustment clause. Gas margins benefited from
an increase in gas customers. The impacts of weather were comparable
between years.
Other Operation Expense
Contributing to the decrease in other operation expense at the Company was
a decrease in the Company's conservation program expenditures, a decrease
in fees associated with the sale of the Company's accounts receivable due
to a decline in interest rates, and reduced employee benefit expenses.
Additionally, the Company's cost management efforts have helped control
annual inflationary pressures on general and administrative costs.
Maintenance and Depreciation and Amortization Expense
Maintenance expense increased for 1992 compared with 1991, primarily due
to an increased tree trimming program, increased costs associated with
scheduled overhauls at generating units and major service restoration
expenses related to three tornados which caused extensive damage to the
Company's service territory during the summer of 1992. Depreciation
expense increased, principally reflecting increased property additions.
Allowance for Funds Used During Construction ("AFUDC") and Other, net
Total AFUDC increased in 1992 compared with 1991, reflecting the greater
amounts of construction work in progress which includes the costs
associated with the Company's construction of two 86-megawatt combustion-
turbine generators.
Interest Expense
Interest expense on bonds decreased between years, primarily due to
increased debt outstanding to fund construction activity. This increase
was somewhat offset by the Company's refinancing activities during 1992.
To take advantage of recent low interest rates, the Company issued $279
million principal amount of first mortgage bonds, of which $235 million
was used to refinance the aggregate principal amount of existing series.
The bonds, which had coupon payments ranging from 8 to 10 percent, were
replaced with issues having coupons of 6.125 percent to 8.6 percent.
Income Taxes
Income taxes decreased between years, primarily due to lower taxable
income and an increase in tax credits associated with affordable housing
investments in 1992 compared with 1991.
LIQUIDITY AND CAPITAL RESOURCES
Rates and Regulatory Matters
On September 30, 1993, the Company received final decisions from the PSCW
on its retail rate application filed in early 1993. The final order
authorized an annual retail electric rate increase of $15.6 million, or
3.8 percent; a natural gas rate increase of $1.8 million, or 1.4 percent;
and a nominal water rate increase. The new rates became effective October
1, 1993 and will remain effective until January 1, 1995. The regulatory
return on common equity for the Company was reduced from 12.4 percent to
11.6 percent. The allowed rates of return authorized by the Company's
regulators have decreased due to declines in debt capital costs and equity
investor rate of return expectations.
On August 6, 1993 the Federal Energy Regulatory Commission ("FERC")
approved the Company's request for a $2.1 million, or 2.9 percent increase
in wholesale rates. The rates became effective October 1, 1993.
Electric and Gas Sales Outlook
To deal with competitive pressures arising from regulatory changes, the
Company is forecasting to hold retail rates flat through 1996. The
National Energy Policy Act contains a provision calling for "open
transmission access". The Company anticipates that retail wheeling will
become a reality within a few years. In order to meet these new
competitive challenges and maintain a low cost pricing advantage, the
Company's objective is to manage costs to maintain profitability while
limiting any rate changes until 1997. These forecasts are subject to a
number of assumptions, including the economy and weather. The Company
anticipates that its customer base will remain strong in the electric
sectors and that favorable gas prices over alternative fuels prices should
result in sales growth in gas sectors. Growth in customers' demand for
electric service will require capacity additions. Capacity requirements
will be met through increased generating capacity (two combustion-turbines
in mid-1994), continuation of existing long-term contracts for purchase of
capacity, increased efficiency at existing power plants from capital
improvements and continued emphasis on cost effective demand-side
management programs such as direct load control rate options including
interruptible rates and conservation programs.
Financing and Capital Structure
The level of short-term borrowings fluctuates based on seasonal corporate
needs, the timing of long-term financing and capital market conditions.
To maintain flexibility in its capital structure and to take advantage of
favorable short-term rates, the Company also uses proceeds from the sales
of accounts receivable and unbilled revenues to finance a portion of its
long-term cash needs. The Company also anticipates that short-term debt
funds will continue to be available at reasonable costs due to strong
ratings by independent utility analysts and rating services. Commercial
paper has been rated A-1+ by Standard & Poor's Corp. (S&P) and P-1 by
Moody's Investors Service (Moody's). Bank lines of credit of $70 million
at December 31, 1993 are available to support these borrowings (see "Notes
to Consolidated Financial Statements," Note 11).
The Company's capitalization at December 31, 1993, including the
current maturities of long-term debt, variable rate demand bonds and
short-term debt, consisted of 50.5 percent common equity, 5.8 percent
preferred stock and 43.7 percent long-term debt. The common equity to
total capitalization ratio at December 31, 1993 increased to 50.5 percent
from 44.2 percent at December 31, 1992 due to the receipt of $61 million
of capital contributions from WPL Holdings, Inc. during 1993.
A retail rate order effective October 1, 1993, requires the Company to
maintain a utility common equity level of 50.31 percent of total utility
capitalization during the test year August 1, 1993 to July 31, 1994. In
addition, the PSCW ordered that it must approve the payment of dividends
by the Company to WPL Holdings, Inc. that are in excess of the level
forecasted in the projected test year ($56.8 million), if such dividends
would reduce the Company's average common equity ratio below 50.31
percent.
Capital Requirements
The Company is capital-intensive and requires large investments in
long-lived assets. Therefore, the Company's most significant capital
requirements relate to construction expenditures. Estimated capital
requirements of the Company for the next five years are as follows:
<TABLE>
<CAPTION>
Capital Requirements
-------------------------------------------
1994 1995 1996 1997 1998
------ ------ ----- ------ ------
(In Millions)
<S> <C> <C> <C> <C> <C>
Construction expenditures $142.6 $118.7 $132.3 $144.9 $159.5
Changes in working capital
and other 8.0 9.6 (25.8) 56.1 5.4
------ ------ ------ ------ ------
Construction and operating
capital 150.6 128.3 106.5 201.0 164.9
Manufactured gas plant site
remediation expenditures 4.2 1.5 2.1 4.4 4.2
------ ------ ------ ------ ------
Total capital requirements $154.8 $129.8 $108.6 $205.4 $169.1
====== ====== ====== ====== ======
</TABLE>
Included in the construction expenditure estimates, in addition to the
recurring additions and improvements to the distribution and transmission
systems, are the following: expenditures for managing and controlling
electric line losses and for the electric delivery system which will save
electric line losses and enhance the Company's interconnection capability
with other utilities; expenditures related to environmental compliance
issues including the installation of additional emissions monitoring
equipment and coal handling equipment; and expenditures associated with
the construction of two 86-megawatt combustion-turbine generators expected
to become operational in 1994 through 1996.
In addition, the steam generator tubes at the Kewaunee Nuclear Power
Plant ("Kewaunee") are susceptible to corrosion characteristics seen
throughout the nuclear industry. Annual inspections are performed to
identify degraded tubes. Degraded tubes are either repaired by sleeving
or are removed with approximately 15 percent heat transfer margin, meaning
that full power should be sustainable with the equivalent of 15 percent of
the steam generator tubes plugged. Currently, the equivalent of 10
percent of the tubes in the steam generators are plugged. The Company and
the other joint owners continue to evaluate appropriate strategies,
including replacement, as well as continued operation of the steam
generators without replacement. The Company and the joint owners intend
to operate Kewaunee until at least 2013, the expiration of the present
operating license. The Company and the joint owners are also evaluating
initiatives to improve the performance of Kewaunee. These initiatives
include funding of the development of welded repair technology for steam
generator tubes and numerous cost reduction measures such as the
conversion from a 12-month to an 18-month fuel cycle. If the steam
generators are not replaced, and excluding the possible affect of the
aforementioned repair strategies, a gradual power reduction of
approximately 1 percent per year may begin as soon as 1995.
Capital Resources
One of the Company's objectives is to finance construction expenditures
through internally generated funds supplemented, when required, by outside
financing. With this objective in place, the Company has financed an
average of 71 percent of its construction expenditures during the last
five years from internal sources. However, during the next five years,
the Company expects this percentage to be reduced primarily due to the
continuation of major construction expenditures and due to the maturity of
$64 million of first mortgage bonds. External financing sources such as
the issuance of long-term debt and short-term borrowings and equity
investments from its parent company, WPL Holdings, Inc., will considered
by the Company to finance the remaining construction expenditure
requirements for this period. Current forecasts are that $71 million of
additional equity and $60 million of long-term debt will be issued over
the next three years.
The Company's financial condition has enabled it to pay interest
charges, preferred stock dividends and common stock dividends out of
current earnings. Return on equity for 1993 was 12.4 percent and has
averaged 13.6 percent over the last five years.
INFLATION
Under current ratemaking methodologies prescribed by the various
commissions that regulate the Company, projected or forecasted operating
costs, including the impacts of inflation, are incorporated into the
Company's revenue requirements. Accordingly, the impacts of inflation on
the Company are currently mitigated.
FINANCIAL ACCOUNTING STANDARDS BOARD (the "FASB") ACCOUNTING STANDARDS
ISSUED BUT NOT YET EFFECTIVE
In November 1992, the FASB issued Statement of Financial Accounting
Standards No.112, "Employers' Accounting for Postemployment Benefits"
("SFAS 112"). SFAS 112 requires adoption of the new accounting and
disclosure rules effective January 1, 1994. The impact on earnings will
not be material.
OTHER EVENTS
In November 1989, the PSCW concluded that the Company did not properly
administer a coal contract, resulting in an assessment to compensate
ratepayers for excess fuel costs having been incurred. As a result, the
Company recorded a reserve in 1989 which had an after-tax affect of
reducing 1989 net income by $4.9 million. The PSCW decision was found to
represent unlawful retroactive ratemaking by both the Dane County Circuit
Court and the Wisconsin Court of Appeals. The case was then appealed to
the Wisconsin Supreme Court.
Subsequent to December 31, 1993, the Wisconsin Supreme Court affirmed
the decisions of the Dane County Circuit Court and Wisconsin Court of
Appeals. Given the continued uncertainty related to the ultimate method
of collection of the assessment from ratepayers to be approved by the
PSCW, it is management's opinion that the financial impact of the
Wisconsin Supreme Court's decision on the Company cannot currently be
determined and will require further evaluation. As a result the Company
will not adjust the reserve.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Wisconsin Power and Light Company:
We have audited the accompanying consolidated balance sheets and
statements of capitalization of WISCONSIN POWER AND LIGHT COMPANY (a
Wisconsin corporation and a wholly owned subsidiary of WPL Holdings, Inc.)
and subsidiaries as of December 31, 1993 and 1992, and the related
consolidated statements of income, common shareowner's investment and cash
flows for each of the three years in the period ended December 31, 1993.
These financial statements are the responsibility of the company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Wisconsin
Power and Light Company and subsidiaries as of December 31, 1993 and 1992,
and the results of their operations and their cash flows for each of the
three years in the period ended December 31, 1993, in conformity with
generally accepted accounting principles.
Milwaukee, Wisconsin, ARTHUR ANDERSEN & CO.
January 28, 1994.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
1993 1992
(In Thousands)
ASSETS
<S> <C> <C>
Utility plant:
Plant in service-
Electric............................................. $1,518,701 $1,443,344
Gas.................................................. 194,283 179,733
Water................................................ 20,437 19,542
Common............................................... 106,803 93,973
---------- ----------
1,840,224 1,736,592
Dedicated decommissioning funds, at cost............... 49,803 40,377
---------- ----------
1,890,027 1,776,969
Less-Accumulated provision for depreciation............ 763,027 719,987
---------- ----------
1,127,000 1,056,982
Construction work in progress.......................... 75,732 58,973
Nuclear fuel, net...................................... 18,000 16,923
---------- ----------
Total utility plant.................................. 1,220,732 1,132,878
---------- ----------
Other property and equipment, net....................... 652 729
--------- ---------
Investments, at cost which approximates market.......... 12,537 13,532
--------- ---------
Current assets:
Cash and equivalents................................... 5,930 381
Net accounts receivable and unbilled revenue, less
allowance for doubtful accounts of $259,000
and $226,000, respectively........................... 30,572 31,919
Accounts receivable from parent for income taxes....... 2,117 4,894
Coal, at average cost.................................. 16,042 18,985
Materials and supplies, at average cost................ 21,679 21,673
Gas in storage, at average cost........................ 8,754 4,291
Prepayments and other.................................. 21,677 21,294
--------- ---------
Total current assets................................. 106,771 103,437
--------- ---------
Deferred charges and other.............................. 127,585 80,376
--------- --------
Environmental remediation costs ........................ 82,380 82,698
--------- --------
TOTAL ASSETS........................................ $1,550,657 $1,413,650
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31,
1993 1992
(In Thousands)
CAPITALIZATION AND LIABILITIES
<S> <C> <C>
Capitalization:
Common shareowner's investment......................... $ 522,703 $ 456,537
Preferred stock not mandatorily redeemable............. 59,963 59,963
First mortgage bonds, net.............................. 336,477 336,417
-------- --------
Total capitalization................................. 919,143 852,917
--------- ---------
Current liabilities:
Variable rate demand bonds............................. 56,975 57,075
Short-term debt........................................ 59,000 51,000
Accounts payable and accruals.......................... 72,430 71,790
Accrued payroll and vacation........................... 12,092 10,252
Accrued taxes.......................................... 804 1,342
Accrued interest....................................... 7,695 7,665
Other.................................................. 16,431 14,156
--------- ---------
Total current liabilities............................ 225,427 213,280
--------- ---------
Other credits:
Accumulated deferred income taxes...................... 210,762 176,589
Accumulated deferred investment tax credits............ 42,684 44,662
Accrued environmental remediation costs................ 80,973 81,425
Other.................................................. 71,668 44,777
--------- ---------
406,087 347,453
--------- ---------
Commitments and contingencies (Notes 3, 4 and 10)
TOTAL CAPITALIZATION AND LIABILITIES.......... $1,550,657 $1,413,650
========== ==========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Year Ended December 31,
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Operating revenues:
Electric..................................... $503,187 $477,735 $488,552
Gas.......................................... 138,384 119,362 117,775
Water........................................ 3,927 3,722 3,707
-------- -------- --------
645,498 600,819 610,034
-------- -------- --------
Operating expenses:
Electric production fuels.................... 123,919 123,440 130,406
Purchased power.............................. 28,574 24,427 20,390
Purchased gas................................ 91,619 77,112 70,834
Other operation.............................. 139,075 128,992 136,882
Maintenance.................................. 44,763 45,081 42,883
Depreciation................................. 61,197 56,416 51,692
Taxes -
Current Federal income.................... 25,063 21,641 25,525
Deferred income........................... 5,053 6,270 4,944
Investment tax credit (restored).......... (1,967) (2,125) (2,141)
Current state income...................... 6,580 5,160 5,687
Other..................................... 26,145 26,170 24,381
-------- -------- --------
550,021 512,584 511,483
-------- -------- --------
Net operating income........................... 95,477 88,235 98,551
-------- -------- --------
Other income and (deductions):
Allowance for equity funds used during
construction............................... 2,977 2,351 1,073
Other, net................................... (2,188) 299 (1,013)
Current federal income tax................... (519) 274 (201)
Deferred income tax.......................... (419) 131 1,105
-------- -------- --------
(149) 3,055 964
-------- -------- --------
Income before interest expense................. 95,328 91,290 99,515
------- -------- --------
Interest expense:
Interest on bonds............................ 28,422 29,254 30,107
Allowance for borrowed funds used during
construction.............................. (1,053) (1,329) (886)
Other........................................ 3,854 4,146 2,381
-------- -------- --------
31,223 32,071 31,602
-------- -------- --------
Income before preferred dividends.............. 64,105 59,219 67,913
Preferred stock dividends...................... 3,928 3,811 3,811
-------- -------- --------
Net income..................................... $ 60,177 $ 55,408 $ 64,102
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Year Ended December 31,
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Cash flows generated from (used for) operating
activities:
Net income.................................... $ 60,177 $ 55,408 $ 64,102
Adjustments to reconcile net income to net
cash generated from operating activities:
Depreciation............................... 61,197 56,416 51,692
Deferred income taxes and other............ 5,053 6,139 3,840
Investment tax credit restored............. (1,967) (2,125) (2,141)
Amortization of nuclear fuel............... 7,049 7,961 8,310
Allowance for equity funds used during
construction............................. (2,977) (2,351) (1,073)
Other...................................... 7,201 252 2,419
Changes in assets and liabilities:
Net accounts receivable and unbilled
revenue.................................. 4,124 (9,162) (503)
Coal....................................... 2,943 2,666 (1,474)
Materials and supplies..................... (6) 1,769 (175)
Gas in storage............................. (4,463) 1,403 497
Prepayments and other...................... (383) (1,895) 588
Accounts payable and accruals.............. 640 6,901 (7,704)
Accrued taxes.............................. (538) (1,680) (4,157)
Other...................................... 11,222 (9,029) 3,153
-------- -------- ---------
Net cash generated from operating
activities........................... 149,272 112,673 117,374
-------- -------- ---------
Cash flows generated from (used for) financing
activities:
Common stock cash dividends................... (54,327) (51,166) (49,599)
Issuance of first mortgage bonds.............. - 279,000 -
Issuance of variable rate demand bonds........ - - 33,875
Issuance of preferred stock................... 29,986 - -
Redemption of preferred stock................. (29,986) - -
Preferred stock issuance expense.............. (1,083) - -
Net change in short-term debt................. 8,000 14,000 19,000
Current bond maturities and sinking
fund retirements........................... (100) (239,031) (43,375)
Equity contribution from parent............... 61,399 10,002 5,000
-------- -------- --------
Net cash generated from (used for)
financing activities................. 13,889 12,805 (35,099)
-------- -------- --------
Cash flows generated from (used for) investing
activities:
Additions to utility plant, excluding AFUDC... (149,333) (123,321) (90,972)
Allowance for borrowed funds used during
construction............................... (1,053) (1,329) (886)
Dedicated decommissioning funds............... (9,426) (3,737) (3,840)
Other......................................... 2,200 1,974 (944)
-------- -------- ---------
Net cash (used for) investing
activities........................... (157,612) (126,413) (96,642)
-------- -------- ---------
Net increase (decrease) in cash and equivalents. 5,549 (935) (14,367)
Cash and equivalents at beginning of year....... 381 1,316 15,683
-------- -------- ---------
Cash and equivalents at end of year............. $ 5,930 $ 381 $ 1,316
========= ======== =========
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest on debt............................ $ 32,246 $ 32,254 $ 33,890
Income taxes................................ $ 32,465 $ 31,766 $ 35,400
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF CAPITALIZATION
<CAPTION>
December 31,
1993 1992
(In Thousands)
<S> <C> <C>
Common shareowner's investment:
Common stock, $5 par value, authorized - 18,000,000
shares; issued and outstanding - 13,236,601 shares.. $ 66,183 $ 66,183
Premium on capital stock............................... 187,773 126,374
Capital surplus........................................ 1,747 1,747
Reinvested earnings.................................... 267,000 262,233
-------- --------
Total common shareowner's investment............. 522,703 456,537
-------- --------
Preferred stock not mandatorily redeemable:
Cumulative, without par value, $100 stated value,
authorized 3,750,000 shares, maximum aggregate
stated value $150,000,000
4.50% series, 99,970 shares outstanding............. 9,997 9,997
4.80% series, 74,912 shares outstanding............. 7,491 7,491
4.96% series, 64,979 shares outstanding............. 6,498 6,498
4.40% series, 29,957 shares outstanding............. 2,996 2,996
4.76% series, 29,947 shares outstanding............. 2,995 2,995
8.48% series, 0 shares and 149,865 shares,
respectively, outstanding.......................... - 14,986
7.56% series, 0 shares and 150,000 shares,
respectively, outstanding.......................... - 15,000
6.20% series, 150,000 shares and 0 shares,
respectively, outstanding.......................... 15,000 -
Cumulative, without par value, $25 stated value,
6.50% series, 599,460 shares and 0 shares,
respectively, outstanding.......................... 14,986 -
------- -------
Total preferred stock............................ 59,963 59,963
------- -------
First mortgage bonds:
Series L, 6.25%, due 1998.............................. 8,899 8,899
1984 Series A, variable rate, due 2014 (3.10% at
December 31, 1993).................................. 8,500 8,500
1988 Series A, variable rate, due 2015 (3.50% at
December 31, 1993).................................. 14,600 14,700
1990 Series V, 9.3%, due 2025.......................... 50,000 50,000
1991 Series A, variable rate, due 2015 (4.45% at
December 31, 1993).................................. 16,000 16,000
1991 Series B, variable rate, due 2005 (4.45% at
December 31, 1993).................................. 16,000 16,000
1991 Series C, variable rate, due 2000 (4.45% at
December 31, 1993).................................. 1,000 1,000
1991 Series D, variable rate, due 2000 (4.45% at
December 31, 1993).................................. 875 875
Series W, 8.6%, due 2027............................... 90,000 90,000
Series X, 7.75%, due 2004.............................. 62,000 62,000
Series Y, 7.6%, due 2005............................... 72,000 72,000
Series Z, 6.125% due 1997.............................. 55,000 55,000
------- --------
394,874 394,974
Less--
Variable rate demand bonds.......................... (56,975) (57,075)
Unamortized discount................................ (1,422) (1,482)
-------- --------
Total first mortgage bonds, net.................. 336,477 336,417
-------- --------
TOTAL CAPITALIZATION..................................... $919,143 $852,917
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY
CONSOLIDATED STATEMENTS OF COMMON SHAREOWNER'S INVESTMENT
<CAPTION>
Year Ended December 31,
1993 1992 1991
(In Thousands)
<S> <C> <C> <C>
Common stock:
Balance at beginning and end of year.......... $ 66,183 $ 66,183 $ 66,183
-------- -------- ---------
Premium on capital stock:
Balance at beginning of year.................. 126,374 116,372 111,372
Equity contribution from parent............ 61,399 10,002 5,000
-------- -------- --------
Balance at end of year........................ 187,773 126,374 116,372
-------- -------- --------
Capital surplus:
Balance at beginning and end of year.......... 1,747 1,747 1,747
-------- -------- --------
Reinvested earnings:
Balance at beginning of year.................. 262,233 257,991 243,488
Add - Net income.............................. 64,105 59,219 67,913
Deduct -
Cash dividends on preferred stock.......... (3,928) (3,811) (3,811)
Cash dividends to parent on common stock... (54,327) (51,166) (49,599)
Preferred stock issuance expense........... (1,083) - -
--------- --------- ---------
Balance at end of year........................ 267,000 262,233 257,991
--------- --------- ---------
TOTAL COMMON SHAREOWNER'S INVESTMENT ........... $522,703 $456,537 $442,293
======== ======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES:
a. Business and Consolidation:
The consolidated financial statements include Wisconsin Power and
Light Company (the "Company") and its wholly owned consolidated
subsidiaries, the principal of which is South Beloit Water, Gas and
Electric Company. All significant intercompany transactions have been
eliminated in consolidation. Certain amounts from prior years have
been reclassified to conform with the current year presentation.
The Company is a public utility predominantly engaged in the
transmission and distribution of electric energy and the generation
and bulk purchase of electric energy for sale. The Company also
transports, distributes and sells natural gas purchased from gas
suppliers. Nearly all of the Company's customers are located in south
and central Wisconsin.
b. Regulation:
The Company's financial records are maintained in accordance with the
uniform system of accounts prescribed by its regulators. The Public
Service Commission of Wisconsin ("PSCW") and the Illinois Commerce
Commission have jurisdiction over retail rates, which represent
approximately 86 percent of electric revenues plus all gas revenues.
The Federal Energy Regulatory Commission ("FERC") has jurisdiction
over wholesale electric rates representing the balance of electric
revenues. Statement of Financial Accounting Standards No. 71,
"Accounting for the Effects of Certain Types of Regulation" provides
that rate-regulated public utilities such as the Company record
certain costs and credits allowed in the ratemaking process in
different periods than for the unregulated entities. These are
deferred as regulatory assets or regulatory liabilities and are
recognized in the Consolidated Statements of Income at the time they
are reflected in rates.
c. Utility Plant:
Utility plant is recorded at original cost. Utility plant costs
include financing costs which are capitalized through the PSCW-
approved allowance for funds used during construction ("AFUDC"). The
AFUDC capitalization rates approximate the Company's cost of capital.
These capitalized costs are recovered in rates as the cost of the
utility plant is depreciated.
Normal repairs and maintenance and minor items of utility plant and
other property and equipment are expensed. Ordinary utility plant
retirements, including removal costs less salvage value, are charged
to accumulated depreciation upon removal from utility plant accounts,
and no gain or loss is recognized. Upon retirement or sale of other
property and equipment, the cost and related accumulated depreciation
are removed from the accounts and any gain or loss is included in
other income and deductions.
d. Nuclear Fuel:
Nuclear fuel is recorded at its original cost and is amortized to
expense based upon the quantity of heat produced for the generation of
electricity. This accumulated amortization assumes spent nuclear fuel
will have no residual value. Estimated future disposal costs of such
fuel are expensed based on kilowatthours ("Kwh") generated.
e. Revenue:
The Company accrues utility revenues for services provided but not yet
billed.
f. Fuel and Purchased Gas:
An automatic fuel adjustment clause for the FERC wholesale portion of
the Company's electric business operates to increase or decrease
monthly rates based on changes in fuel costs. The PSCW retail
electric rates provide a range from which actual fuel costs may vary
in relation to costs forecasted and used in rates. If actual fuel
costs fall outside this range, a hearing may be held to determine if a
rate change is necessary, and a rate increase or decrease can result.
The Company's base gas cost recovery rates permit the recovery of
or refund to all customers for any increases or decreases in the cost
of gas purchased from the Company's suppliers through a monthly
purchased gas adjustment clause.
g. Cash and Equivalents:
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents. The
carrying amount approximates fair value because of the short maturity
of these items.
h. Income Taxes:
The Company is included in the consolidated federal income tax return
of its parent, WPL Holdings, Inc. ("WPLH"), and calculates its federal
tax provision and makes tax payments to WPLH as if the Company were a
separate taxable entity. Beginning in 1993, the Company fully
provides deferred income taxes in accordance with Statement of
Financial Accounting Standards No.109, "Accounting for Income Taxes"
("SFAS 109"), to reflect tax effects of reporting book and tax items
in different periods.
NOTE 2. DEPRECIATION:
The Company uses the straight-line method of depreciation. For utility
plant, straight-line depreciation is computed on the average balance of
depreciable property at individual straight-line PSCW approved rates as
follows:
Electric Gas Water Common
-------- --- ----- ------
1993 3.6% 3.7% 2.5% 7.3%
1992 3.4 3.7 2.6 7.1
1991 3.4 3.7 2.6 6.9
NOTE 3. NUCLEAR OPERATIONS:
Depreciation expense related to the jointly-owned Kewaunee Nuclear Power
Plant includes a provision for the decommissioning of the plant which
totaled $6.1 million, $3.9 million and $4.1 million in 1993, 1992 and
1991, respectively. Wisconsin utilities with ownership of nuclear
generating plants are required by the PSCW to establish external trust
funds to provide for plant decommissioning. The market value of the
investments in the funds established by the Company at December 31, 1993
and 1992, totaled $45.1 million and $42.8 million, respectively. The
Company's share of the decommissioning costs is estimated to be $149
million (in 1993 dollars, assuming the plant is operating through 2013)
based on a 1992 study, using the immediate dismantlement method of
decommissioning.
Under the Nuclear Waste Policy Act of 1982, the U.S. Department
of Energy ("DOE") is responsible for the ultimate storage and disposal of
spent nuclear fuel removed from nuclear reactors. Interim storage space
for spent nuclear fuel is currently provided at the Kewaunee Nuclear Power
Plant. Currently there is on-site storage capacity for spent fuel through
the year 1999. Nuclear fuel, net, at December 31, 1993 and 1992 consists
of (In Thousands of Dollars):
1993 1992
---- ----
Original cost of nuclear fuel $147,325 $140,652
Less--Accumulated amortization 129,325 123,729
-------- --------
Nuclear fuel, net $ 18,000 $ 16,923
======== ========
The Price Anderson Act provides for the payment of funds for
public liability claims arising from a nuclear incident. Accordingly, in
the event of a nuclear incident, the Company, as a 41 percent owner of the
Kewaunee Nuclear Power Plant, is subject to an overall assessment of
approximately $32.5 million per incident for its ownership share of this
reactor, not to exceed $4.1 million payable in any given year.
Through its membership in Nuclear Electric Insurance Limited,
the Company has obtained property damage and decontamination insurance
totaling $1.4 billion for loss from damage at the Kewaunee Nuclear Power
Plant. In addition, the Company maintains outage and replacement power
insurance coverage totalling $99 million in the event an outage exceeds 21
weeks.
NOTE 4. PROPERTY:
a. Jointly Owned Utility Plants:
The Company participates with other Wisconsin utilities in the
construction and operation of several jointly owned utility
generating plants. The chart below represents the Company's
proportionate share of such plants as reflected in the Consolidated
Balance Sheets at December 31, 1993 and 1992 (In Thousands of
Dollars):
<TABLE>
<CAPTION>
1993 1992
------------------------------- --------------------------------
Plant Accumulated Plant Accumulated
Ownership Inservice Plant MW in Provision for in Provision for
Interest-% Date Capacity Service Depreciation CWIP Service Depreciation CWIP
---------- ---- -------- ------- ------------ ---- ------- ------------ ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Coal:
Columbia Energy
Center 46.2 1975 & 1978 1,023 $159,818 $ 76,602 $1,986 $158,315 $ 72,262 $2,280
Edgewater Unit 4 68.2 1969 330 49,631 24,160 83 47,226 24,587 178
Edgewater Unit 5 75.0 1985 380 224,902 58,338 21 230,656 53,215 208
Nuclear:
Kewaunee Nuclear
Power Plant 41.0 1974 535 127,651 68,258 848 127,651 64,219 1,703
------- ------- ----- ------- ------- -----
Total $562,002 $227,358 $2,938 $563,848 $214,283 $4,369
======= ======= ===== ======= ======= =====
</TABLE>
Each of the respective joint owners finances its portion of
construction costs. The Company's share of operations and
maintenance expenses is included in the Consolidated Statements of
Income.
b. Capital Expenditures:
The Company's capital expenditures for 1994 are estimated to total
$142.6 million. Substantial commitments have been incurred for such
expenditures.
NOTE 5. NET ACCOUNTS RECEIVABLE:
The Company has a contract with a financial organization to sell, with
limited recourse, certain accounts receivable. These receivables include
customer receivables resulting from sales to other public utilities as
well as from billings to the co-owners of the jointly owned electric
generating plants that the Company operates. The contract allows the
Company to sell up to $100 million of receivables at any time.
Consideration paid to the financial organization under this contract
includes, along with various other fees, a monthly discount charge on the
outstanding balance of receivables sold that approximated a 4.14 percent
annual rate during 1993. These costs are recovered in retail utility
rates as an operating expense. All billing and collection functions
remain the responsibility of the Company. The contract expires August 19,
1995, unless extended by mutual agreement.
As of December 31, 1993 and 1992, proceeds from the sale of accounts
receivable totaled $74 million and $69 million, respectively. During
1993, the Company sold an average of $75.9 million of accounts receivable
per month, compared with $68.8 million in 1992.
As a result of its diversified customer base and the Company's sale
of receivables, the Company does not have any significant concentrations
of credit risk in the December 31, 1993 net accounts receivable balance.
NOTE 6. DEFERRED CHARGES AND OTHER:
Certain costs are deferred and amortized in accordance with authorized or
expected rate-making treatment. As of December 31, 1993 and 1992,
deferred charges and other include regulatory created assets and other
noncurrent items representing the following (In Thousands of Dollars):
1993 1992
---- ----
Unamortized debt redemption expense $13,178 $15,384
Decontamination and decommissioning
costs of Federal enrichment
facilities 6,181 6,150
Prepaid pension costs 26,128 21,226
Conservation loans to the Companys'
customers (at cost which
approximates market) 12,236 12,257
Tax related (see Note 7) 28,608 -
Emission allowance credits receivable 5,335 5,335
Other 35,919 20,024
-------- -------
$127,585 $80,376
======== =======
NOTE 7. INCOME TAXES:
The following table reconciles the statutory Federal income tax rate to
the effective income tax rate:
1993 1992 1991
---- ---- ----
Statutory Federal income tax rate 35.0% 34.0% 34.0%
State income taxes, net of federal benefit 6.1 6.0 4.7
Investment tax credits restored (2.0) (2.4) (2.1)
Amortization of excess deferred taxes (1.5) (1.6) (1.5)
Other differences, net (1.9) (2.0) (2.3)
---- ---- ----
Effective income tax rate 35.7% 34.0% 32.8%
==== ==== ====
Items which resulted in deferred income tax expense are as follows (In
Thousands of Dollars):
1991 1992
---- ----
Utility plant timing differences $4,104 $4,317
Qualified nuclear decommissioning trust
contribution 709 709
Employee benefits 2,081 2,105
Other, net (755) (3,292)
------ ------
$6,139 $3,839
====== ======
The temporary differences that resulted in accumulated deferred income
tax assets and liabilities as of December 31, 1993 are as follows (In
Thousands of Dollars):
Deferred Tax
(Assets)
Liabilities
------------
Accelerated depreciation and other
plant related $171,993
Excess deferred taxes 22,744
Unamortized investment tax credits (22,812)
Allowance for equity funds used during
construction 13,518
Regulatory liability 19,179
Other 6,140
--------
$210,762
========
Changes in the Company's deferred income taxes arising from the adoption
of SFAS 109 represent amounts recoverable or refundable through future
rates and have been recorded as net regulatory assets totalling
approximately $29 million on the Consolidated Balance Sheets. These net
regulatory assets are being recovered in rates over the estimated
remaining useful lives of the assets to which they pertain.
NOTE 8. EMPLOYEE BENEFIT PLANS:
a. Pension Plans:
The Company has noncontributory, defined benefit retirement plans
covering substantially all employees. The benefits are based upon
years of service and levels of compensation. The Company's funding
policy is to contribute at least the statutory minimum to a trust.
The projected unit credit actuarial cost method was used to compute
net pension costs and the accumulated and projected benefit
obligations. The discount rate used in determining those benefit
obligations was 7.25 percent for 1993, and 8 percent for 1992 and
1991. The long-term rate of return on assets used in determining
those benefit obligations was 9.75 percent for 1993 and 10 percent
for 1992 and 1991.
The following table sets forth the funded status of the Companys'
plans and amounts recognized in the Consolidated Balance Sheets at
December 31, 1993 and 1992 (In Thousands of Dollars):
1993 1992
---- ----
Accumulated benefit obligation--
Vested benefits $(135,303) $(119,883)
Nonvested benefits (2,962) (869)
--------- ---------
$(138,265) $(120,752)
========= =========
Projected benefit obligation $(164,271) $(144,760)
Plan assets at fair value, primarily common
stocks and fixed income securities 183,881 164,771
--------- ---------
Plan assets in excess of projected benefit
obligation 19,610 20,011
Unrecognized net transition asset (21,823) (24,270)
Unrecognized prior service cost 7,691 9,510
Unrecognized net loss 20,650 15,975
--------- ---------
Prepaid pension costs, included in
deferred charges and other $ 26,128 $ 21,226
========= =========
The net pension (benefit) recognized in the Consolidated Statements of
Income for 1993, 1992 and 1991 included the following components (In
Thousands of Dollars):
1993 1992 1991
---- ---- ----
Service cost $ 4,263 $ 3,912 $ 3,167
Interest cost on projected
benefit obligation 11,614 10,615 9,469
Actual return on assets (24,759) (12,143) (30,035)
Amortization and deferral 8,430 (5,317) 14,603
-------- -------- --------
Net pension (benefit) $ (452) $ (2,933) $ (2,796)
======== ======== ========
b. Postretirement Health-care and Life Insurance:
Effective January 1, 1993, the Company prospectively adopted Statement
of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("SFAS 106"). SFAS 106
establishes standards of financial accounting and reporting for the
Company's postretirement health-care and life insurance benefits.
SFAS 106 requires the accrual of the expected cost of such benefits
during the employees' years of service based on actuarial methodologies
that closely parallel pension accounting requirements. The Company has
elected delayed recognition of the transition obligation and is
amortizing the discounted present value of the transition obligation to
expense over 20 years. The cost of providing postretirement benefits,
including the transition obligation, is being recovered in retail rates
and wholesale rates under current regulatory practices.
For 1993, the annual net postretirement benefits costs recognized in
the Consolidated Statements of Income consist of the following components
(In Thousands of Dollars):
Service cost $ 1,463
Interest cost on projected benefit
obligation 3,151
Actual return on plan assets (696)
Amortization of transition obligation 1,560
Amortization and deferral (27)
-------
Net postretirement benefits cost $ 5,451
=======
The following table sets forth the plans' funded status recognized in
the Consolidated Balance Sheets (In Thousands of Dollars):
1993
----
Accumulated postretirement benefit obligation--
Retirees $ (27,358)
Fully eligible active plan participants (5,429)
Other active plan participants (9,980)
---------
Accumulated benefit obligation (42,767)
Plan assets at fair value 7,073
---------
Accumulated benefit obligation
in excess of plan assets (35,694)
Unrecognized transition obligation 29,638
Unrecognized loss 2,025
---------
Accrued postretirement benefit liability $ (4,031)
=========
The postretirement benefits cost components for 1993 were calculated
assuming health care cost trend rates ranging from 12.5 percent for
1993 and decreasing to 5 percent by the year 2002. The health care
cost trend rate considers estimates of health care inflation, changes
in utilization or delivery, technological advances, and changes in
the health status of the plan participants. Increasing the health
care cost trend rate by one percentage point in each year would
increase the accumulated postretirement benefit obligation as of
December 31, 1993 by $2.54 million and the aggregate of the service
and interest cost components of postretirement expense by $.4
million.
The assumed discount rate used in determining the accumulated
postretirement obligation was 7.25 percent. The long-term rate of
return on assets was 9.50 percent. Plan assets are primarily
invested in common stock, bonds and fixed income securities. The
Company's funding policy is to contribute the tax advantaged maximum
to a trust.
The costs for the postretirement health-care and life insurance
benefits, based on an actuarial determination, were $1,335,000 and
$1,078,000, respectively, for 1992 and 1991.
c. Other Postemployment Benefits:
In November 1992, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 112, "Employers'
Accounting for Postemployment Benefits" ("SFAS 112"). SFAS 112
establishes standards of financial accounting and reporting for the
estimated cost of benefits provided by an employer to former or
inactive employees after employment but before retirement. The
effect of adopting SFAS 112, which must be adopted January 1, 1994,
will not be material.
NOTE 9. CAPITALIZATION:
a. Common Shareowner's Investment:
A retail rate order effective October 1, 1993, requires the Company
to maintain a utility common equity level of 50.31 percent of total
utility capitalization during the projected test year August 1, 1993
to July 31, 1994. In addition, the PSCW ordered that it must approve
the payment of dividends by the Company that are in excess of the
level forecasted in the projected test year ($56.8 million), if such
dividends would reduce the Company's average common equity ratio
below 50.31 percent.
b. Preferred Stock:
On October 27, 1993, the Company issued two new series of preferred
stock through two separate public offerings. The 6.2 percent Series
is non-redeemable for ten years and the 6.5 percent Series is non-
redeemable for five years. The proceeds from the sale were used to
retire 150,000 shares of 7.56 percent Series and 149,865 shares of
8.48 percent Series preferred stock.
c. First Mortgage Bonds:
During 1992, the Company issued $279 million of first mortgage bonds,
of which $235 million was used to refinance the principal amount of
existing series in order to take advantage of lower interest rates.
The remaining proceeds were used for the payment of short-term debt
and general corporate purposes.
Substanitially all of the Company's utility plant is secured by its
first mortgage bonds. Current maturities on first mortgage bond
issues outstanding are as follows: none in 1994 through 1996,
$55 million in 1997 and $8.9 million in 1998.
The fair value of the Company's first mortgage bonds is estimated at
$428,841,000 and $406,281,000 as of December 31, 1993 and 1992,
respectively, and is based on the quoted market prices for similar
issues or on the current rates offered to the Company for similar
debt.
NOTE 10. COMMITMENTS AND CONTINGENCIES:
a. Coal Contract Commitments:
To ensure an adequate supply of coal, the Company has entered into
certain long-term coal contracts. These contracts include a demand
or take-or-pay clause under which payments are required if contracted
quantities are not purchased. Purchase obligations on these coal and
related rail contracts total approximately $263 million through
December 31, 2004. The Company's management believes it will meet
minimum coal and rail purchase obligations under the contracts or
recover in rates any demand or take-or-pay costs if minimum purchase
obligations are not met. Minimum purchase obligations on these
contracts over the next five years are estimated to be $67 million in
1994 and $27 million in 1995, 1996, 1997 and 1998, respectively.
b. Purchased Power:
Under firm purchase power contracts, the Company is obligated to pay
$11 million, $8 million, $5 million, $7 million and $14 million in
1994, 1995, 1996, 1997 and 1998, respectively. For 1994, this
represents 2,515 megawatts of capacity. Purchase obligations on
these purchase power contracts total approximately $169 million
through December 31, 2007.
c. Manufactured Gas Plant Sites:
Historically, the Company has owned 11 properties that have been
associated with the production of manufactured gas. Currently, the
Company owns five of these sites, three are owned by municipalities,
and the remaining three are owned by private companies. In 1989, the
Company initiated investigation of these manufactured gas plant
sites. The Wisconsin Department of Natural Resources ("DNR") has
been involved in reviewing preliminary investigation plans and has
received reports regarding these investigations. Based on the
results of the Company's preliminary investigations, the Company
recorded an estimated liability and corresponding deferred charge of
approximately $15 million as of December 31, 1991.
In 1992, and into the beginning of 1993, the Company continued
its investigations and studies. The Company confirmed that there was
no contamination at two of the sites and received a close out letter
from the DNR related to one of those sites and requested a close out
letter for the other site. Additionally, the investigation of
historical records at a third site indicated a minimal likelihood of
any significant environmental impacts. In February 1993, the Company
completed more current cost estimates for the environmental
remediation of the eight remaining sites. The results of this more
current analysis indicated that during the next 35 years, the Company
will expend approximately $81 million for feasibility studies, data
collection, soil remediation activities, groundwater research and
groundwater remediation activities, including construction of slurry
containment walls and the installation of groundwater pump and
treatment facilities. This estimate was based on various
assumptions, and is subject to continuous review and revision by
management.
Based on the cost estimate set forth above, which assumes a 4
percent average inflation over the 35 year period, the Company will
spend approximately $4.2 million, $1.5 million, $2.1 million, $4.4
million and $4.2 million in 1994 through 1998, respectively. The
cost estimate also contemplates that primarily groundwater pump and
treatment activities will take place after 1998 through and including
2027. During this time, the Company estimates that it will incur
average annual costs of $2.0 million to complete the planned
groundwater remediation activities.
With respect to rate recovery of these costs, the PSCW has
approved a five year amortization of the unamortized balance of
incurred environmental costs deferred to date.
Based on the present regulatory record at the PSCW, management
believes that future costs of remediating these manufactured gas
plant sites will be recovered in rates.
d. FERC Order No. 636:
In 1992 the FERC issued Order No. 636 and 636-A which requires
interstate pipelines to restructure their services. Under these
orders, existing pipeline sales service would be "unbundled" such
that gas supplies would be sold separately from interstate
transportation services (pipelines serving the Company implemented
new services November 1, 1993). Pipelines will, however, seek to
recover from their customers certain transition costs associated with
restructuring. Any such recovery would be subject to prudence
hearings at the FERC and state regulatory commissions.
NOTE 11. SHORT-TERM DEBT AND LINES OF CREDIT:
The Company maintains bank lines of credit, most of which are at the bank
prime rates, to obtain short-term borrowing flexibility, including
pledging lines of credit as security for any commercial paper outstanding.
The carrying amount approximates fair value because of the short maturity
of these items. Amounts available under these lines of credit totaled $70
million at December 31, 1993 and 1992 and $52.5 million at December 31,
1991. Information regarding short-term debt and lines of credit is as
follows (In Thousands of Dollars):
<TABLE>
<CAPTION>
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
As of end of year--
Commercial paper outstanding $49,000 $26,000 $23,000
Notes payable outstanding $10,000 $25,000 $14,000
Compensating balance requirements $ - $ - $ 75
Discount rates on commercial paper 3.24%-3.40% 3.15%-3.90% 4.68%-5.50%
Interest rates on notes payable 3.34% 3.46%-3.62% 4.74%-5.07%
For the year ended--
Maximum month-end amount of short-term
debt $59,000 $51,000 $37,000
Average amount of short-term debt
(based on daily outstanding balances) $30,423 $22,160 $15,168
Average interest rate on short-term debt 3.29% 3.63% 6.09%
</TABLE>
NOTE 12. SEGMENT INFORMATION:
The following table sets forth certain information relating to the
Company's consolidated operations (In Thousands of Dollars).
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1993 1992 1991
---- ---- ----
<S> <C> <C> <C>
Operation information:
Customer revenues--
Electric $ 503,187 $ 477,735 $ 488,552
Gas 138,384 119,362 117,775
Water 3,927 3,722 3,707
---------- ---------- ----------
Total operating revenues $ 645,498 $ 600,819 $ 610,034
========== ========== ==========
Operating income--
Electric $ 118,785 $ 109,459 $ 116,339
Gas 10,431 8,724 15,070
Water 990 998 1,157
Income taxes, current and deferred (35,667) (30,541) (33,111)
Other income and (deductions), net 789 2,650 60
Interest expense, net (31,223) (32,071) (31,602)
---------- ---------- ----------
Net income $ 64,105 $ 59,219 $ 67,913
========== ========== ==========
Investment information:
Identifiable assets, including
allocated common plant at
December 31--
Electric $1,170,010 $1,064,418 $1,014,032
Gas 228,257 210,965 122,176
Water 17,703 14,464 13,516
Assets not allocated 134,687 123,803 99,867
---------- ---------- ----------
Total assets $1,550,657 $1,413,650 $1,249,591
========== ========== ==========
Other information:
Construction and nuclear fuel
expenditures--
Electric $ 139,805 $ 113,252 $ 86,829
Gas 18,876 13,974 9,856
Water 1,908 1,538 1,030
---------- ---------- ----------
Total construction and nuclear
fuel expenditures $ 160,589 $ 128,764 $ 97,715
========== ========== ==========
Provision for depreciation and
amortization-
Electric $ 53,398 $ 49,554 $ 45,319
Gas 7,329 6,578 6,038
Water 470 284 335
---------- ---------- ----------
Total provision for
depreciation $ 61,197 $ 56,416 $ 51,692
========== ========== ==========
</TABLE>
NOTE 13. CONSOLIDATED QUARTERLY FINANCIAL DATA (Unaudited):
Seasonal factors significantly affect the Company and, therefore, the data
presented below should not be expected to be comparable between quarters
nor necessarily indicative of the results to be expected for an annual
period.
The amounts below were not audited by independent public accountants,
but reflect all adjustments necessary, in the opinion of the Company, for
a fair presentation of the data (In Thousands of Dollars).
Operating Net Operating
Quarter Ended Revenues Income Net Income
------------- --------- ------------- ----------
1993:
March 31 $182,023 $26,405 $17,740
June 30 141,049 16,936 8,237
September 30 144,440 21,045 13,096
December 31 177,986 31,091 21,104
1992:
March 31 $169,015 $26,415 $18,001
June 30 129,038 14,731 6,445
September 30 137,530 19,359 11,917
December 31 165,236 27,730 19,045
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by Item 10 relating to directors and nominees
for election as directors at the Company's 1994 Annual Meeting of
Shareowners is incorporated herein by reference to the information under
the caption "Election of Directors" in the Company's Proxy Statement (the
"1994 Proxy Statement") filed with the Securities and Exchange Commission.
The information required by Item 10 relating to executive officers is set
forth in Part I of this Annual Report on Form 10-K. The information
required by Item 10 relating to delinquent filers is incorporated herein
by reference to the information under the caption "Compliance with Section
16(a) of the Securities Exchange Act of 1934" in the 1994 Proxy Statement.
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is incorporated herein by reference
to the information under the caption "Compensation of Executive Officers"
in the 1994 Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The information required by Item 12 is incorporated herein by reference
to the information under the caption "Ownership of Voting Securities" in
the 1994 Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Item 13 is incorporated herein by reference
to the information under the caption "Election of Directors" in the 1994
Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(a) (1) Consolidated Financial Statements
Included in Part II of this report:
Report of Independent Public Accountants on Schedules
Consolidated Statements of Income for the Years Ended December 31,
1993, 1992 and 1991
Consolidated Balance Sheets, December 31, 1993 and 1992
Consolidated Statements of Cash Flows for the Years Ended December
31, 1993, 1992 and 1991
Consolidated Statements of Capitalization, December 31, 1993 and
1992
Consolidated Statements of Common Shareowner's Investment
Notes to Consolidated Financial Statements
(a) (2) Financial Statement Schedules
For each of the years ended December 31, 1993, 1992 and 1991
Schedule V. Property Plant and Equipment
Schedule VI. Accumulated Provision for Depreciation and Accumulated
Amortization of Nuclear Fuel
Schedule VIII. Valuation and Qualifying Accounts and Reserves
Schedule X. Supplementary Income Statement Information
All other schedules are omitted because they are not applicable or
not required, or because that required information is shown either in
the consolidated financial statements or in the notes thereto.
(a)(3) Exhibits Required by Securities and Exchange Commission
Regulation S-K
The following Exhibits are filed herewith or incorporated herein by
reference. Documents indicated by an asterisk (*) are incorporated
herein by reference.
3A* Restated Articles of Organization, as amended, of the Company
(including the Articles of Amendment to the Company's Restated
Articles of Organization creating the New Preferred Stock)
(Exhibit 4.1 to the Company's Form 8-K/A, Amendment No.1 to
Current Report, dated October 20, 1993)
3B* By-Laws of the Company as revised to January 1, 1993
4A* Indenture of Mortgage or Deed of Trust dated August 1, 1941,
between the Company and First Wisconsin Trust Company and
George B. Luhman, as Trustees, filed as Exhibit 7(a) in File
No. 2-6409, and the indentures supplemental thereto dated,
respectively, January 1, 1948, September 1, 1948, June 1,
1950, April 1, 1951, April 1, 1952, September 1, 1953,
October 1, 1954, March 1, 1959, May 1, 1962, August 1, 1968,
June 1, 1969, October 1, 1970, July 1, 1971, April 1, 1974,
December 1, 1975, May 1, 1976, May 15, 1978, August 1, 1980,
January 15, 1981, August 1, 1984, January 15, 1986, June 1,
1986, August 1, 1988, December 1, 1990, September 1, 1991,
October 1, 1991, March 1, 1992, May 1, 1992, June 1, 1992 and
July 1, 1992 (Second Amended Exhibit 7(b) in File No. 2-7361;
Amended Exhibit 7(c) in File No. 2-7628; Amended Exhibit 7.02
in File No. 2-8462; Amended Exhibit 7.02 in File No. 2-8882;
Second Amendment Exhibit 4.03 in File No. 2-9526; Amended
Exhibit 4.03 in File No. 2-10406; Amended Exhibit 2.02 in File
No. 2-11130; Amended Exhibit 2.02 in File No. 2-14816; Amended
Exhibit 2.02 in File No. 2-20372; Amended Exhibit 2.02 in File
No. 2-29738; Amended Exhibit 2.02 in File No. 2-32947; Amended
Exhibit 2.02 in File No. 2-38304; Amended Exhibit 2.02 in File
No. 2-40802; Amended Exhibit 2.02 in File No. 2-50308;
Exhibit 2.01(a) in File No. 2-57775; Amended Exhibit 2.02 in
File No. 2-56036; Amended Exhibit 2.02 in File No. 2-61439;
Exhibit 4.02 in File No. 2-70534; Amended Exhibit 4.03 File
No. 2-70534; Exhibit 4.02 in File No. 33-2579; Amended
Exhibit 4.03 in File No. 33-2579; Amended Exhibit 4.02 in File
No. 33-4961; Exhibit 4B to the Company's Form 10-K for the
year ended December 31, 1988, Exhibit 4.1 to the Company's
Form 8-K dated December 10, 1990, Amended Exhibit 4.26 in File
No. 33-45726, Amended Exhibit 4.27 in File No.33-45726,
Exhibit 4.1 to the Company's Form 8-K dated March 9, 1992,
Exhibit 4.1 to the Company's Form 8-K dated May 12, 1992,
Exhibit 4.1 to the Company's Form 8-K dated June 29, 1992 and
Exhibit 4.1 to the Company's Form 8-K dated July 20, 1992)
10A*# Executive Tenure Compensation Plan as revised November 1992
10B*# Form of Supplemental Retirement Plan, as revised November 1992
10C*# Forms of Deferred Compensation Plans, as amended June, 1990
(Exhibit 10C to the Company's Form 10-K for the year ended
December 31, 1990)
10C.1*# Officer's Deferred Compensation Plan II, as adopted
September 1992
10C.2*# Officer's Deferred Compensation Plan III, as adopted
January 1993
10F*# Pre-Retirement Survivor's Income Supplemental Plan, as revised
November 1992
10H*# Management Incentive Plan
10I*# Deferred Compensation Plan for Directors, as adopted June 27,
1990
12 Computation of ratio of earnings to fixed charges and
preferred dividend requirements after taxes
21 Subsidiaries of the Company
99 1994 Proxy Statement for the Annual Meeting of Shareowners to
be held May 18, 1994
Pursuant to Item 601(b)(4)(iii) of Regulation S-K, the Company hereby
agrees to furnish to the Securities and Exchange Commission, upon
request, any instrument defining the rights of holders of
unregistered long-term debt not filed as an exhibit to this
Form 10-K. No such instrument authorizes securities in excess of
10 percent of the total assets of the Company.
# - A management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K.
1. The Company filed a report on Form 8-K dated October 20, 1994,
which reported, under "Item 5. Other Events", the agreement to
sell: (i) 150,000 shares of its 6.2% Preferred Stock, with a
stated value of $100, in a public offering through Goldman,
Sachs & Co.; and (ii) 599,460 shares of its 6.5% Preferred
Stock, with a stated value of $25 in a public offering through
Robert W. Baird & Co. Incorporated.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized on the 23rd day of February 1994.
WISCONSIN POWER AND LIGHT COMPANY
By: /s/ Erroll B. Davis, Jr.
Erroll B. Davis, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities indicated on the 23rd day of
February 1994.
/s/ Erroll B. Davis, Jr. President, Chief Executive Officer
Erroll B. Davis, Jr. and Director (principal executive
officer)
/s/ Daniel A. Doyle Controller and Treasurer
Daniel A. Doyle (principal financial and accounting
officer)
/s/ L. David Carley Director /s/ Milton E. Neshek Director
L. David Carley Milton E. Neshek
/s/ Rockne G. Flowers Director /s/ Henry C. Prange Director
Rockne G. Flowers Henry C. Prange
/s/ Donald R. Haldeman Director /s/ Henry F. Scheig Director
Donald R. Haldeman Henry F. Scheig
/s/ Katharine C. Lyall Director /s/ Carol T. Toussaint Director
Katharine C. Lyall Carol T. Toussaint
/s/ Arnold M. Nemirow Director
Arnold M. Nemirow
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON SCHEDULES
To Wisconsin Power and Light Company:
We have audited in accordance with generally accepted auditing standards,
the consolidated financial statements included in Wisconsin Power and
Light Company's annual report to shareowners incorporated by reference in
this Form 10-K, and have issued our report thereon dated January 28, 1994.
Our audit was made for the purpose of forming an opinion on those
statements taken as a whole. Supplemental Schedules V, VI, VIII and X are
the responsibility of the Company's management and are presented for
purposes of complying with the Securities and Exchange Commission's rules
and are not part of the basic consolidated financial statements. These
schedules have been subjected to the auditing procedures applied in the
audit of the basic consolidated financial statements and, in our opinion,
fairly state in all material respects the financial data required to be
set forth therein in relation to the basic consolidated financial
statements taken as a whole.
Milwaukee, Wisconsin, ARTHUR ANDERSEN & CO.
January 28, 1994.
<PAGE>
INDEX TO SCHEDULES
WISCONSIN POWER AND LIGHT COMPANY
INDEX TO FINANCIAL STATEMENT SCHEDULES
FOR THE YEARS ENDED DECEMBER 31, 1993, 1992 AND 1991
FINANCIAL STATEMENT SCHEDULES:
V. Property Plant and Equipment
VI. Accumulated Provision for Depreciation and Accumulated
Amortization of Nuclear Fuel
VIII. Valuation and Qualifying Accounts and Reserves
X. Supplementary Income Statement Information
NOTE: All other schedules are omitted because they are not applicable or
not required, or because that required information is shown either
in the financial statements or in the notes thereto.
<PAGE>
<TABLE>
Schedule V
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
UTILITY PLANT AND OTHER PROPERTY AND EQUIPMENT
DECEMBER 31, 1993
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Other
Balance at Retirements Changes Balance at
Beginning Additions or Sales Debit or Close
Classification of Period at Cost at Cost (Credit) of Period
<S> <C> <C> <C> <C> <C>
Plant in service--
Electric--
Organization......... $ 51 $ -- $ -- $ -- $ 51
Steam production..... 534,058 6,960 (3,352) 12,604 550,270
Nuclear production... 123,753 1,982 (212) -- 125,523
Hydraulic production. 10,142 144 (11) -- 10,275
Other production..... 17,508 9 -- -- 17,517
Transmission......... 178,642 9,314 (2,457) 4,633 190,132
Distribution......... 408,950 85,987 (6,664) (4,643) 483,630
General.............. 38,682 9,319 (5,211) 9 42,799
Completed work not
classified......... 130,532 (32,028) -- -- 98,504
Acquisition adjmt.... 1,026 (1,026) -- -- --
--------- -------- -------- ------- ----------
Total electric..... 1,443,344 80,661 (17,907) 12,603 1,518,701
--------- -------- -------- ------- ----------
Gas--
Organization......... 10 -- -- -- 10
Manufactured gas
production......... 99 -- (7) -- 92
Distribution......... 152,803 19,229 (2,438) 276 169,870
General.............. 3,314 1,302 (144) -- 4,472
Completed work not
classified......... 23,507 (3,668) -- -- 19,839
--------- -------- -------- ------- ----------
Total gas.......... 179,733 16,863 (2,589) 276 194,283
--------- -------- -------- ------- ----------
Water................ 19,542 1,006 (160) 49 20,437
--------- -------- -------- ------- ----------
Common............... 93,973 12,412 (173) 591 106,803
--------- -------- -------- ------- ----------
$1,736,592 $110,942 $(20,829)(a) $13,519 $1,840,224
========= ======== ======== ======= ==========
Construction work
in progress--
Electric............. $ 54,316 $13,093 $ -- $ -- $ 67,409
Gas.................. 2,510 (2,124) -- -- 386
Water................ 221 312 -- -- 533
Common............... 1,926 5,478 -- -- 7,404
--------- -------- -------- ------- ----------
$ 58,973 $16,759 $ -- $ -- $ 75,732
========= ======== ======== ======= ==========
Nuclear fuel.......... $ 140,652 $ 6,673 $ -- $ -- $ 147,325
========== ======== ======== ======= ==========
Other property and
equipment.......... $ 746 $ 182 $ (268) $ 12 $ 672
========== ======== ======== ======= ==========
<FN>
(a) Includes $7,705 of land sales.
</TABLE>
<PAGE>
<TABLE>
Schedule V
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
UTILITY PLANT AND OTHER PROPERTY AND EQUIPMENT
DECEMBER 31, 1992
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Other
Balance at Retirements Changes Balance at
Beginning Additions or Sales Debit or Close
Classification of Period at Cost at Cost (Credit) of Period
<S> <C> <C> <C> <C> <C>
Plant in service--
Electric--
Organization......... $ 51 $ -- $ -- $ -- $ 51
Steam production..... 534,346 3,595 (3,883) -- 534,058
Nuclear production... 123,441 1,001 (689) -- 123,753
Hydraulic production. 10,091 52 (1) -- 10,142
Other production..... 17,508 -- -- -- 17,508
Transmission......... 174,687 4,431 (471) (5) 178,642
Distribution......... 382,323 31,642 (6,253) 1,238 408,950
General.............. 34,613 6,317 (975) (1,273) 38,682
Completed work not
classified......... 111,107 19,425 -- -- 130,532
Acquisition adjmt.... 1,758 (732) -- -- 1,026
--------- -------- -------- ------- ----------
Total electric..... 1,389,925 65,731 (12,272) (40) 1,443,344
--------- -------- -------- ------- ----------
Gas--
Organization......... 10 -- -- -- 10
Manufactured gas
production......... 169 -- (14) (56) 99
Distribution......... 135,794 18,574 (1,567) 2 152,803
General.............. 3,064 255 (5) -- 3,314
Completed work not
classified......... 32,625 (9,118) -- -- 23,507
--------- -------- -------- ------- ----------
Total gas.......... 171,662 9,711 (1,586) (54) 179,733
--------- -------- -------- ------- ----------
Water................ 18,691 1,033 (182) -- 19,542
--------- -------- -------- ------- ----------
Common............... 84,668 9,845 (634) 94 93,973
--------- -------- -------- ------- ----------
$1,664,946 $86,320 $(14,674)(a) $ 0 $1,736,592
========== ======== ======== ======= ==========
Construction work
in progress--
Electric............. $ 23,039 $31,277 $ -- $ -- $ 54,316
Gas.................. 277 2,233 -- -- 2,510
Water................ 242 (21) -- -- 221
Common............... 3,577 (1,651) -- -- 1,926
--------- -------- -------- ------- ---------
$ 27,135 $31,838 $ -- $ -- $ 58,973
========== ======= ======== ======= ==========
Nuclear fuel.......... $ 135,847 $ 4,805 $ -- $ -- $ 140,652
========== ======= ======== ======= ==========
Other property and
equipment.......... $ 715 $ 115 $ (84) $ -- $ 746
========== ======= ======== ======= ==========
<FN>
(a) Includes $34,000 of land sales.
</TABLE>
<PAGE>
<TABLE>
Schedule V
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
UTILITY PLANT AND OTHER PROPERTY AND EQUIPMENT
DECEMBER 31, 1991
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Other
Balance at Retirements Changes Balance at
Beginning Additions or Sales Debit or Close
Classification of Period at Cost at Cost (Credit) of Period
<S> <C> <C> <C> <C> <C>
Plant in service--
Electric--
Organization......... $ 51 $ -- $ -- $ -- $ 51
Steam production..... 526,313 11,056 (3,023) -- 534,346
Nuclear production... 113,202 11,162 (923) -- 123,441
Hydraulic production. 10,063 56 (22) (6) 10,091
Other production..... 17,510 -- (2) -- 17,508
Transmission......... 159,048 15,428 8 203 174,687
Distribution......... 367,838 21,543 (6,868) (190) 382,323
General.............. 13,121 1,567 (817) 20,742 34,613
Completed work not
classified......... 120,190 (9,083) -- -- 111,107
Acquisition adjmt.... -- 1,758 -- -- 1,758
--------- -------- -------- ------- ----------
Total electric..... 1,327,336 53,487 (11,647) 20,749 1,389,925
--------- -------- -------- ------- ----------
Gas--
Organization......... 10 -- -- -- 10
Manufactured gas
production......... 166 3 -- -- 169
Distribution......... 127,396 9,514 (1,130) 14 135,794
General.............. 2,259 275 (263) 793 3,064
Completed work not
classified......... 33,619 (994) -- -- 32,625
--------- -------- -------- ------- ----------
Total gas.......... 163,450 8,798 (1,393) 807 171,662
--------- -------- -------- ------- ----------
Water................ 18,137 614 (60) -- 18,691
--------- -------- -------- ------- ----------
Common............... 103,194 9,178 (6,167) (21,537) 84,668
--------- -------- -------- ------- ----------
$1,612,117 $72,077 $(19,267)(a) $ 19 $1,664,946
========== ======= ======== ======= ==========
Construction work
in progress--
Electric............. $ 15,430 $ 7,609 $ -- $ -- $ 23,039
Gas.................. 442 (165) -- -- 277
Water................ 110 132 -- -- 242
Common............... 1,732 1,845 -- -- 3,577
--------- -------- -------- ------- ----------
$ 17,714 $ 9,421 $ -- $ -- $ 27,135
========== ======= ======== ======= ==========
Nuclear fuel.......... $ 129,643 $ 6,204 $ -- $ -- $ 135,847
========== ======= ======== ======= ==========
Other property and
equipment.......... $ 561 $ 291 $ (137) $ -- $ 715
========== ======= ======== ======= ==========
<FN>
(a) Includes $4,000 of land sales.
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VI
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
ACCUMULATED PROVISION FOR DEPRECIATION AND
ACCUMULATED AMORTIZATION OF NUCLEAR FUEL
YEAR ENDED DECEMBER 31, 1993
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Additions --
Provision Charged To Deductions
--------------------- -----------------------
Clearing
Balance at and Balance
Beginning Other Net Other at Close
Description of Period Income Accounts Retirements Salvage Changes of Period
<S> <C> <C> <C> <C> <C> <C> <C>
Electric.... $(610,356) $(50,474) $ (1,776) $ 17,901 $(1,350) $ 3,100 $(642,955)
Gas......... (74,661) (6,864) (108) 2,590 281 804 (77,958)
Water....... (6,236) (479) -- 159 126 209 (6,221)
General..... (28,733) (5,948) (1,212) 144 (144) -- (35,893)
--------- -------- -------- -------- ------- ------- ---------
(719,986) (63,765) (3,096) 20,794 (1,087) 4,113 (763,027)
Nuclear fuel (123,729) -- (5,596) -- -- (129,325)
--------- -------- -------- -------- ------- ------- ---------
$(843,715) $(63,765) $ (8,692) $ 20,794 $(1,087) $ 4,113 $(892,352)
========= ======== ======== ======== ======= ======== =========
Other prop
and equip... $ (17) $ (3) $ -- $ -- $ -- $ -- $ (20)
========== ======== ======== ======== ======= ======== =========
<CAPTION>
YEAR ENDED DECEMBER 31, 1992
(In Thousands)
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Additions --
Provision Charged To Deductions
--------------------- -----------------------
Clearing
Balance at and Balance
Beginning Other Net Other at Close
Description of Period Income Accounts Retirements Salvage Changes of Period
<S> <C> <C> <C> <C> <C> <C> <C>
Electric.... $(575,729) $(46,992) $ (946) $ 12,237 $(1,401) $ 2,475 $(610,356)
Gas......... (70,625) (6,461) (70) 1,586 77 832 (74,661)
Water....... (6,339) (484) -- 183 110 294 (6,236)
General..... (22,896) (4,841) (1,180) 634 (397) (53) (28,733)
--------- -------- -------- ------- ------- ------- --------
(675,589) (58,778) (2,196) 14,640 (1,611) 3,548 (719,986)
Nuclear fuel (117,165) -- (6,558) -- (6) (123,729)
--------- -------- -------- -------- ------- ------- ---------
$(792,754) $(58,778) $ (8,754) $ 14,640 $(1,611) $ 3,542 $(843,715)
========= ======== ======== ======== ======= ======== =========
Other prop
and equip... $ (15) $ (2) $ -- $ -- $ -- $ -- $ (17)
========= ======== ======== ======== ======= ======== =========
</TABLE>
<PAGE>
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
ACCUMULATED PROVISION FOR DEPRECIATION AND
ACCUMULATED AMORTIZATION OF NUCLEAR FUEL
YEAR ENDED DECEMBER 31, 1991
(In Thousands)
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E COLUMN F
Additions --
Provision Charged To Deductions
---------------------- -----------------------
Clearing
Balance at and Balance
Beginning Other Net Other at Close
Description of Period Income Accounts Retirements Salvage Changes of Period
<S> <C> <C> <C> <C> <C> <C> <C>
Electric.... $(536,495) $(44,882) $ (149) $ 11,647 $ (36) $ (5,814) $(575,729)
Gas......... (66,521) (6,216) (32) 1,394 205 545 (70,625)
Water....... (6,247) (461) -- 60 135 174 (6,339)
General..... (31,195) (3,807) (2,400) 6,162 (834) 9,178 (22,896)
--------- -------- -------- -------- ------- -------- ---------
(640,458) (55,366) (2,581) 19,263 (530) 4,083 (675,589)
Nuclear fuel (110,353) -- (6,803) -- (9) (117,165)
--------- -------- -------- -------- ------- -------- ---------
$(750,811) $(55,366) $ (9,384) $ 19,263 $ (530) $ 4,074 $(792,754)
========= ======== ======== ======== ======= ======== =========
Other prop
and equip... $ (14) $ (1) $ -- $ -- $ -- $ -- $ (15)
========= ======== ======== ======== ======= ======== =========
</TABLE>
<PAGE>
<TABLE>
SCHEDULE VIII
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
($ In Thousands)
<CAPTION>
Additions
Balance at Charged to Balance at
beginning costs and end of
Description of period expenses Deductions period
<S> <C> <C> <C> <C>
Year ended December 31, 1993:
Allowance for doubtful accounts.... $ 226 $ 114 $ 81(1) $259
====== ====== ====== ====
Year ended December 31, 1992:
Allowance for doubtful accounts.... $ 261 $ 90 $ 125(1) $226
====== ====== ====== ====
Year ended December 31, 1991:
Allowance for doubtful accounts.... $ 821 $ 994 $1,554(1) $261
====== ====== ====== ====
<FN>
(1) Uncollectible accounts written off, net of recoveries.
</TABLE>
<PAGE>
SCHEDULE X
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
Year Ended December 31,
1993 1992 1991
Real estate and
personal property. $16,316 $16,685 $15,488
Payroll............. 8,680 8,440 7,733
Other............... 1,149 1,045 1,160
------- ------ ------
$26,145 $26,170 $24,381
======= ======= =======
The amounts of maintenance and repairs, depreciation and taxes charged to
other expense accounts are not significant. The amounts charged to the
respective accounts for advertising aggregated less than one percent of
total consolidated revenues, and no royalty expenses were incurred.
<PAGE>
WISCONSIN POWER AND LIGHT COMPANY
Exhibit Index for the Year Ended
December 31, 1993
Item Description
12 Computation of ratio of earnings to fixed charges
and preferred dividend requirements after taxes
21 Subsidiaries of the Company
99 1994 Proxy Statement for the Annual Meeting of
Shareowners to be held May 18, 1994 (To be filed with the
Securities and Exchange Commission under Regulation 14A within
120 days after the end of the Company's fiscal year)
EXHIBIT 12
<TABLE>
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED DIVIDEND REQUIREMENTS AFTER TAXES.
<CAPTION>
1993 1992 1991 1990 1989
(In Thousands)
<S> <C> <C> <C> <C> <C>
Net Income....................... $ 64,105 $ 59,219 $ 67,913 $65,085 $57,346
Add:
Interest on bonds................ 28,422 29,254 30,107 27,032 27,556
Other interest expense........... 3,854 4,146 2,382 4,196 3,066
Estimated interest component
of rental payments............. 3,030 2,428 2,965 2,744 2,439
-------- -------- -------- ------- -------
Net income as adjusted........... $ 99,411 $ 95,047 $103,367 $99,057 $90,407
======== ======== ======== ======= =======
Fixed charges:
Cash dividends on
preferred stock................ $ 3,928 $ 3,811 $ 3,811 $ 3,811 $ 3,811
Interest on bonds................ 28,422 29,254 30,107 27,032 27,556
Other interest expense........... 3,854 4,146 2,382 4,196 3,066
Estimated interest component
of rental payments............. 3,030 2,428 2,965 2,744 2,439
-------- -------- -------- ------- -------
Total fixed charges and
preferred dividends............ $ 39,234 $ 39,639 $ 39,265 $37,783 $36,872
======== ======== ======== ======= =======
Ratio of earnings to
fixed charges and
preferred dividends............ 2.53X 2.40X 2.63X 2.62X 2.45X
======== ======== ======== ======= =======
</TABLE>
EXHIBIT 21
WISCONSIN POWER AND LIGHT COMPANY AND SUBSIDIARIES
SUBSIDIARIES
The subsidiaries and affiliates of the Company as of December 31, 1993,
are as follows:
<TABLE>
<CAPTION>
Percentage of
Voting Stock
State of Owned by the
Name of Subsidiary Incorporation Company
<S> <C> <C>
South Beloit Water, Gas and Electric Company.. Illinois 100%
NUFUS Resources, Inc.......................... Wisconsin 100%
REAC, Inc..................................... Wisconsin 100%
Wisconsin River Power Company................. Wisconsin 33-1/3%
Wisconsin Valley Improvement Company.......... Wisconsin 13%
</TABLE>
No separate financial statements are submitted for any subsidiary since
none of these subsidiaries qualifies as a significant subsidiary under SEC
rules.
