SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report
(Date of earliest
event reported): June 10, 1998
Interstate Energy Corporation
(Exact name of registrant as specified in its charter)
Wisconsin 1-9894 39-1380265
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
222 West Washington Avenue, Madison, Wisconsin 53703
(Address of principal executive offices, including zip code)
(608) 252-3311
(Registrant's telephone number)
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Item 5. Other Events.
On June 10, 1998, Wisconsin Power and Light Company ("WP&L"), a
subsidiary of Interstate Energy Corporation (d/b/a Alliant Corporation),
announced a preliminary agreement relating to the replacement of the steam
generators at the Kewaunee Nuclear Power Plant ("Kewaunee") and the
transfer by Madison Gas & Electric Company ("MG&E") of its interest in
Kewaunee. A copy of the press release issued announcing the preliminary
agreement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
Pursuant to the preliminary agreement, MG&E will transfer its 17.8%
interest in Kewaunee to Wisconsin Public Service Corporation ("WPSC") in
exchange for an interest in a natural gas-fired combustion turbine
generating plant owned by WPSC. Following the ownership transfer, WPSC
will own a 59% interest in Kewaunee. WP&L's interest in Kewaunee will
remain at 41%. Under the preliminary agreement, and following the
ownership transfer, the steam generators at Kewaunee will be replaced at
an estimated cost of approximately $90 million. WP&L's share of such cost
is expected to be approximately $37 million.
The preliminary agreement is subject to (i) approval of the Board
of Directors of each company, (ii) the parties reaching agreement on final
purchased power arrangements and on amendments to the joint operating
agreement, and (iii) approval by the Nuclear Regulatory Commission of the
transfer of the ownership interest in Kewaunee. The agreement between
WP&L and WPSC to replace the steam generators also remains subject to
Public Service Commission of Wisconsin approval of the regulatory and
ratemaking accounting treatment requested by the companies as well as the
transfer of MG&E's ownership interest in Kewaunee. If the requisite
approvals are obtained, it is expected that the ownership transfer and
steam generator replacement would begin in the spring of 2000.
This Current Report on Form 8-K includes forward-looking
statements. These forward-looking statements can be identified as such
because the statements include words or phrases such as "estimated" or "it
is expected" or words of similar import. Similarly, statements that
describe future plans are also forward-looking statements. Such
statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those currently
anticipated. Factors which could affect actual results include
unanticipated events impacting regulatory approval of the preliminary
agreement described above and unexpected costs or unanticipated
difficulties associated with the replacement of the steam generators at
Kewaunee. These factors should be considered in evaluating the forward-
looking statements, and undue reliance should not be placed on such
statements. The forward-looking statements included herein are made as of
the date hereof and Interstate Energy Corporation undertakes no obligation
to update publicly such statements to reflect subsequent events or
circumstances.
Item 7. Financial Statements and Exhibits.
(a) Not applicable
(b) Not applicable
(c) Exhibits.
The exhibit listed in the accompanying Exhibit Index is
filed as part of this Current Report on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
INTERSTATE ENERGY CORPORATION
Date: June 18, 1998. By: /s/ Erroll B. Davis, Jr.
Erroll B. Davis, Jr.
President and Chief Executive Officer
<PAGE>
INTERSTATE ENERGY CORPORATION
EXHIBIT INDEX TO FORM 8-K
Dated June 10, 1998
Exhibit
No.
(99.1) Press release, dated June 10, 1998, announcing a
preliminary agreement relating to the replacement
of the steam generators at the Kewaunee Nuclear
Power Plant ("Kewaunee") and the transfer by
Madison Gas & Electric Company of its interest in
Kewaunee
Exhibit 99.1
[Text of Press Release]
Kewaunee Nuclear Plant Owners Reach Proposed
Agreement on Ownership Changes
June 10, 1998 -- The replacement of the steam generators at the
Kewaunee Nuclear Power Plant will take place if a proposed agreement
between the plant owners is approved by the Public Service Commission of
Wisconsin (PSCW). The agreement was announced today by Wisconsin Public
Service and Alliant Utilities-Wisconsin Power and Light. Under the
agreement, current co-owner Madison Gas & Electric would no longer hold an
ownership share of the plant once the steam generator replacement work
begins.
The change in the ownership structure also requires the approval
of the federal Nuclear Regulatory Commission (NRC).
Today's agreement, if approved, will result in Public Service
assuming the entire 17.8% ownership interest of Madison Gas and Electric.
This will increase Public Service's ownership share from the current 41.2%
to 59%. Alliant Utilities-Wisconsin Power and Light will continue to own
41% of the plant. The total cost of the steam generator replacement
project is expected to be about $90 million.
Pat Schrickel, president of Wisconsin Public Service
Corporation, said, "The agreement is complicated, but it protects the
interests of customers and stockholders of all three companies. And it
keeps Kewaunee as a valuable asset and a clean, safe, economic source of
electricity." The PSCW has already approved the proposed steam generator
replacement project as the best option to ensure a reliable supply of
electricity for the state.
"Kewaunee is critical for maintaining electric system
reliability in Wisconsin," said William Harvey, president of Alliant
Utilities-WP&L and executive vice president-generation for Alliant. "The
plant provides a reliable, low-cost source of electricity, producing
enough energy to meet the yearly demand of half-a-million Wisconsin
residents."
"MGE will replace Kewaunee with other existing Wisconsin
generation and with part of the new high-efficiency, gas-fired generation
which will be on-line before the asset swap occurs," said Mark Williamson,
senior vice president - energy services for Madison Gas and Electric. He
said MGE's customers will continue to receive the high reliability they
expect. MGE continues to believe that alternatives to Kewaunee are better
for its customers and shareholders. "This agreement allows each company
to pursue what each believes is best for its own customers and
shareholders," said Williamson.
Public Service and Madison Gas and Electric will exchange assets
to accomplish the ownership change. If the agreement is approved, Madison
Gas and Electric will receive a portion of Public Service's ownership
interest in a natural gas-fired combustion turbine generating plant. The
exchange of ownership is expected to occur just before the steam
generators are replaced in the spring of 2000.
The agreement is contingent upon the boards of directors of each
company approving the asset exchange, finalizing purchased power
agreements, amendments to the joint plant operating agreement required
when ownership of the Kewaunee plant changes, and NRC approval of the
ownership change. The agreement by Alliant-Wisconsin Power and Light and
Public Service to replace the steam generators is contingent upon PSCW
approval of the regulatory and ratemaking accounting treatment requested
by the companies and of the proposed asset exchange.
The schedule for gaining approval of the proposed agreement is
not yet known.
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