United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
X Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For Quarter Ended JUNE 30, 1994 Commission File Number 10-
3140
NORTHERN STATES POWER COMPANY, A WISCONSIN CORPORATION,
MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H (1) AND
(2) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE
REDUCED DISCLOSURE FORMAT.
Northern States Power Company
(Exact name of registrant as specified in its charter)
Wisconsin
39-0508315
(State or other jurisdiction of (I.R.S.Employer
Identification No.)
incorporation or organization)
100 North Barstow Street, Eau Claire, Wisconsin
54702
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code
(715) 839-2621
NONE
Former name, former address and former fiscal year, if changed
since last report
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 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
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 July
31, 1994
Common Stock, $100 par value 862,000 Shares
All outstanding common stock is owned beneficially and of
record by Northern States Power Company, a Minnesota
corporation.<PAGE>
Northern States Power Company (Wisconsin)
NOTES TO FINANCIAL STATEMENTS
In the opinion of management, the accompanying unaudited
financial statements contain all adjustments necessary to
present fairly the Company's financial position as of June 30,
1994 and December 31, 1993 and the results of its operations for
the three and six months ended June 30, 1994 and 1993 and cash
flows for each of the six months then ended.
The accounting policies followed by the Company are set forth in
Note 1 to the Company's financial statements in the 1993 Form
10-K. The following notes should be read in conjunction with
such policies and other disclosures in the Form 10-K.
1.Rate Matters
There were no changes in any of the Company's jurisdictions'
rates since the 1993 SEC Form 10-K was filed.
The Company has offered and some of its wholesale customers
have accepted discounted rates for extended term contracts.
These discounts will not materially affect the company's
earnings.
2.Accounting Changes
Postemployment Benefits
Effective January 1, 1994, the company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) 112,
Accounting for Postemployment Benefits. This standard requires
the accrual of certain postemployment costs (such as injury
compensation and severance) that are payable in future time
periods. The annual expense for costs accrued under SFAS No.
112 is not materially different than amounts recognized under
the company's prior accounting method. The Company has recorded
its full liability related to such costs in 1994.
Stock Compensation Expense
The FASB had previously issued an Exposure Draft considering the
accrual of compensation expense related to certain stock awards
beginning in 1997 with disclosure required beginning in 1994.
On June 8, 1994 the FASB decided that there would not be
disclosure requirements for 1994.
3. Contingent Liabilities
The Company is contingently liable to several financial
institutions for debt incurred by companies under the Company's
Economic Development Guaranty Program. At June 30, 1994, the
Company was contingently liable for approximately $1.8 million
under the agreements. No losses were sustained under these
agreements during 1992, 1993 nor during the first six months of
1994; the Company anticipates no future material losses will
result from these agreements.
4.Parent Company and Intercompany Agreement-Resolution of
Operating Contingency
Although the Company does not own a nuclear facility, any
impacts on such facilities owned by Northern States Power
Company (Minnesota), the parent company, would be a cost
included under the Interchange Agreement and the Company would
be charged its proportion of the impact.
The parent company proposed construction of a temporary onsite
dry cask (container) storage facility for spent nuclear fuel at
its Prairie Island Nuclear Generating Plant (Prairie Island).
At present operating levels, the current Prairie Island onsite
storage pool will be filled in 1994.
On May 10, 1994, the Governor of the State of Minnesota signed
into law a bill that authorizes NSP to install 17 dry casks at
Prairie Island if the Company satisfies certain
responsibilities. The first increment of five casks would be
available after NSP executes an agreement with the Governor
concerning the renewable energy and alternative siting
commitments contained in the new law. The second increment of
four casks would be available if the Minnesota Environmental
Quality Board finds that NSP has applied for an alternative site
license, used good faith in locating an alternative site and has
committed to build or purchase 100 megawatts (MW) of wind
generation. The final increment of eight casks would be
available unless prior to June 1, 1999, the Legislature
specifically rejects this authorization for the final eight
casks, which can only happen if NSP fails to meet the renewable
energy commitments of 225 MW of wind generation and 50 MW of
biomass generation by December 31, 1998.<PAGE>
Item 2.Management's Discussion
and Analysis of Results of Operations
Discussion of financial condition and liquidity is omitted per
conditions set forth in general instructions H (1) and (2) of
Form 10-Q for wholly-owned subsidiaries. (Reduced disclosure
format.)
The Company's net income for the second quarter and six months
ended June 30, 1994 was $3.4 million and $21.7 million,
respectively. Net income decreased $2.6 million for the second
quarter and $0.2 million for the six months ended June 30 from
the comparable periods a year ago. The decrease in net income
in the second quarter is due to increased fuel and purchased
power costs and increased maintenance costs. The decrease in
net income in the six months ended June 30 reflects these cost
increases offset by the first quarter's increased revenue from
electric sales.
ELECTRIC SALES AND REVENUES
Electric revenues for the second quarter of 1994 increased $3.3
million (3.8 percent) from the electric revenues for the second
quarter of 1993. Electric sales increased 5.8 percent in the
second quarter of 1994 as compared with the second quarter of
1993 mainly due to the comparably warm temperatures in June
1994. The increased electric wholesale rates effective in
September of 1993 resulted in approximately $0.2 million of the
increase in the second quarter.
In addition, electric revenues decreased $0.1 million because of
a decrease in other operating revenue. Other operating revenues
consist primarily of charges billed to Northern States Power
Company, a Minnesota Corporation (Minnesota Company) through the
Interchange Agreement. The Interchange Agreement is a cost-
sharing arrangement between the Company and the Minnesota
Company in which electric generation and transmission costs for
the combined systems of the two companies are shared.
Electric revenues for the six months ended June 30, 1994,
increased $8.5 million (4.7 percent) from the six months ended
June 30, 1993. Electric sales revenues increased $7.9 million
from the previous year. The increase was mainly due to
favorable weather conditions in 1994. Also, an increase in
other operating revenues of $0.6 million occurred, largely the
result of Interchange Agreement revenues.
GAS SALES AND REVENUES
Gas revenues decreased $0.3 million (2.3 percent) in the second
quarter 1994 compared to the second quarter 1993. This is the
net result of a 14.2 percent decrease in interruptible gas
sales, a 7.6 percent decrease in firm gas sales due to
comparably warmer temperatures in 1994, and higher commodity
costs.
Gas revenues increased $4.2 million (10.3 percent) in the first
six months of 1994 compared to the first six months of 1993.
This is primarily due to a $3.1 million increase in purchased
gas commodity and transportation costs in purchased gas
adjustment clause revenues. A 2.5 percent increase in sales due
to 1994's cooler temperatures also contributed to the increase.
OPERATING EXPENSES
Operating expenses increased $5.9 million in the second quarter
of 1994 as compared to the second quarter of 1993. Gas
purchased for resale increases made up $1.1 million of this
increase and were the result of higher commodity costs combined
with increased purchased volumes to supply the increased sales.
The Company's increased electric sales during the second quarter
of 1994 over the second quarter of 1993 combined with increased
costs associated with the NSP System's new (effective May 1993)
contract with Manitoba Hydro, resulted in the Company's fuel for
electric generation and its purchased power and fuel as
purchased under its interchange agreement with its parent to
increase by approximately $4.2 million.
In the second quarter of 1994, maintenance projects on the
Company's transmission lines resulted in a $1.1 million increase
over the prior year's same quarter. Depreciation on increased
plant has increased by approximately $0.5 million over 1993's
level. Offsetting impacts of the mentioned expense increases
are reflected in the decrease of $2.2. million in current income
tax expense.
Operating expenses increase $13.5 million for the six months
ended June 30, 1994, compared to the same period in 1993. Gas
purchased for resale increases made up $3.1 million of the
increases primarily as a result of volumes purchased to supply
the increase in sales. Purchased and interchange power combined
with the Company' generated fuel increased by approximately $5.7
million as a result of the aforementioned sales increases and
Manitoba Hydro contract. Maintenance expenses increased $1.5
million and depreciation $1.1 million.
The company's Provision for Deferred Income Taxes has decreased
by approximately $2.2 million as a result of debt reacquisitions
that occurred in 1993. Offsetting impacts are reflected in the
current income tax expense.
OTHER INCOME
There were no material changes to other income and deductions in
the first two quarters of 1994 as compared with the first two
quarters of 1993.
INTEREST CHARGES
In March 1993, the Company issued $110.0 million of first
mortgage bonds due March 1, 2023 with an interest rate of 7-
1/4%. The proceeds from these bonds were used to redeem $47.5
million of
9-1/4% bonds, $38.4 million of 9-3/4% bonds, and $7.8 million of
9-1/4% bonds. In October 1993, the Company issued $40.0 million
of first mortgage bonds due October 1, 2003 with an interest
rate of 5-3/4%. The proceeds from these bonds were used to
redeem $24.3 million of 7-3/4% bonds and $10.8 million of 4-1/2%
bonds.
These transactions were the primary reasons for a $0.4 million
reduction in the second quarter's interest charges compared to
the charges of the second quarter of 1993 and in a $0.7 million
reduction in the first six month's interest charges compared to
the charges of the first six months of 1993.
<PAGE>
PART II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K
There were no reports on Form 8-K filed for the three
months ended June 30, 1994.
<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.
NORTHERN STATES POWER COMPANY
(Registrant)
Date: August 11, 1994 /s/
Kenneth J. Zagzebski
Controller
(Principal Accounting Officer)
Date: August 11, 1994 /s/
Neal A. Siikarla
Treasurer
(Principal Financial Officer)
<PAGE>
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Northern States Power Company (Wisconsin)
Balance Sheet
June 30 December 3
1994 (*) 1993
ASSETS (Thousands of dollars
UTILITY PLANT
Electric...................................... $822,023 $810,691
Gas........................................... 84,245 81,567
Electric...................................... 47,348 43,279
Total..................................... 953,616 935,537
Accumulated provision for depreciation...... (332,730) (320,938)
Net utility plant......................... 620,886 614,599
OTHER PROPERTY AND INVESTMENTS.................. 6,801 6,887
CURRENT ASSETS
Cash and cash equivalents..................... 309 449
Accounts receivable - net..................... 35,728 37,716
Materials and supplies - at average cost
Fuel........................................ 2,311 2,293
Other....................................... 7,893 8,692
Accrued utility revenues...................... 10,016 17,230
Prepayments and other......................... 9,853 9,855
Deferred tax asset............................ 1,537 1,254
Total current assets...................... 67,647 77,489
DEFERRED DEBITS
Unamortized Debt Expense ..................... 2,982 3,078
Regulatory assets ............................ 31,057 30,036
Other ........................................ 4,445 4,890
Total Deferred Debits ...................... 38,484 38,004
TOTAL................................ $733,818 $736,979
LIABILITIES
CAPITALIZATION
Common Stock - authorized 870,000 shares of $100 par value,
issued shares: 1992 and 1991, 862,000....... $86,200 $86,200
Premium on common stock....................... 10,461 10,461
Retained Earnings............................. 214,449 205,114
Total common stock equity................. 311,110 301,775
LONG-TERM DEBT 216,600 217,600
Total capitalization...................... 527,710 519,375
CURRENT LIABILITIES
Notes payable - parent company................ 10,700 23,500
Long-term debt due within one year............ 500 0
Accounts payable.............................. 12,334 15,264
Salaries, wages, and vacation pay accrued..... 4,578 5,481
Payable to affiliate companies (principally pa 11,267 11,636
Federal taxes accrued......................... 1,970 1,606
Other taxes accrued........................... 3,171 2,492
Interest accrued.............................. 4,816 4,823
Other......................................... 2,859 1,917
Total current liabilities................. 52,195 66,719
DEFERRED CREDITS
Accumulated deferred income taxes............. 94,488 88,426
Accumulated deferred investment tax credits... 22,913 23,653
Regulatory liabilities ....................... 19,136 22,416
Other......................................... 17,376 16,390
Total Defered Credits...................... 153,913 150,885
TOTAL................................. $733,818 $736,979
(*) Unaudited
The Notes to Financial Statements are an integral part
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Northern States Power Company (Wisconsin)
Statements of Income
Three MontSix Months Ended
June 30 June 30
(Thousands of dollars)
1994(*) 1993 1994(*) 1993
Operating revenues
Electric..................... $88,520 $85,255 $189,068 $180,569
Gas.......................... 11,585 11,852 45,041 40,824
Total...................... 100,105 97,107 234,109 221,393
Operating expenses
Fuel for electric generation. 1,053 345 2,799 1,365
Purchased + interchange power 43,883 40,562 87,345 83,052
Gas purchased for resale..... 10,168 9,060 30,080 26,995
Administrative and general... 7,245 6,652 14,263 13,464
Other operation.............. 12,373 12,106 25,164 24,439
Maintenance.................. 5,626 4,549 9,770 8,306
Depreciation and amortization 7,568 7,082 15,092 13,999
Taxes: Property and general.. 3,436 3,203 6,950 6,502
Current income tax expense... 375 2,535 11,145 8,797
Net Prov - Defer Income Tax.. 1,341 1,053 2,432 4,672
Net Investment tax credit adj (236) (239) (472) (478)
Total...................... 92,832 86,908 204,568 191,113
Operating income.............. 7,273 10,199 29,541 30,280
Other income
Other income + deduct'n - net 141 325 194 500
AFDC -
Equity.................... 194 92 346 238
Total Other income.......... 335 417 540 738
Income before interest charges 7,608 10,616 30,081 31,018
Interest charges
Interest on long-term debt... 3,963 3,989 7,937 8,416
Other interest + amortizat'n. 326 653 614 885
AFDC
Debt...................... (122) (88) (218) (203)
Total...................... 4,167 4,554 8,333 9,098
Net Income.................... $3,441 $6,062 $21,748 $21,920
Statements of Retained Earnings
Balance at beg. of period.....$217,214 $202,846 $205,114 $192,816
Net income for period......... 3,441 6,062 21,748 21,920
Net Additions............... 3,441 6,062 21,748 21,920
Dividends paid................ 6,206 5,827 12,413 11,655
Balance at end of period......$214,449 $203,081 $214,449 $203,081
(*) Unaudited
The Notes to Financial Statements are an integral part of
the Statements of Income and Retained Earnings
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Northern States Power Company (Wisconsin)
Statements of Cash Flows
Six Months Ended
June 30
(Thousands of $)
1994(*) 1993(*)
Cash Flows from Operating Activities:
Net Income......................................... $21,748 $21,920
Adj to reconcile net income to cash from operating
Depreciation and amortization.................. 15,935 15,236
Deferred income taxes.......................... 5,779 4,283
Investment tax credit adjustments.............. (740) (478)
Allowance for funds used during construction - (346) (238)
Other........................................... 0 0
Cash prov. from (used by) changes in working capital 6,837 6,679
Cash prov. from (used by) changes in oth assets+liab. (3,633) (443)
Net cash provided from operating activities 45,580 46,959
Cash Flows from Financing Activities:
Issuance of long-term debt.......................... 0 107,314
Issuance (repayment) of short-term debt............ (12,800) (18,850)
Redempt'n of long-term debt(Incl. Reacquisit'n Prem (500) (100,319)
Dividends paid..................................... (12,413) (11,654)
Net cash used for financing activities (25,713) (23,509)
Cash Flows from Investing Activities:
Capital expenditures............................... (21,875) (23,418)
Increase (decrease) in const'n related accts pay 924 (764)
AFDC - equity...................................... 346 238
Other............................................ 598 (248)
Net cash used for investing activities (20,007) (24,192)
Net increase (decrease) in cash and cash equivalents (140) (742)
Cash and cash equivalents beginning of period....... 449 881
Cash and cash equivalents end of period............. $309 $139
The Notes to Financial Statements are an integral part of
the Statement of Cash Flows
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