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 March 31, 1999 Commission File Number 10-3140
NORTHERN STATES POWER COMPANY, A WISCONSIN CORPORATION, MEETS THE CONDITIONS SET
FORTH IN GENERAL INSTRUCTION J (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 54703
(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code (715) 839-1382
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 May 14, 1999
-------------------------------- ---------------------------
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>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
Northern States Power Company (Wisconsin)
Statements of Income (Unaudited)
<S> <C> <C>
Three Months Ended
March 31
1999 1998
(Thousands of dollars)
Operating revenues
Electric $102,640 $98,305
Gas 34,936 31,763
Total 137,576 130,068
Operating expenses
Purchased and interchange power 46,844 48,117
Fuel for electric generation 1,719 2,180
Gas purchased for resale 23,852 21,746
Other operation 12,654 11,043
Maintenance 4,365 4,159
Administrative and general 5,039 5,070
Conservation and demand side management 1,280 2,234
Depreciation and amortization 10,307 9,314
Taxes: Property and general 3,735 3,671
Current income tax 9,497 6,657
Deferred income tax 151 510
Investment tax credits recognized (210) (215)
Total 119,233 114,486
Operating income 18,343 15,582
Other income (expense)
Other income and deductions - net of applicable income taxes 2 (14)
Allowance for funds used during construction - equity 42 62
Total other income (expense) net 44 48
Income before interest charges 18,387 15,630
Interest charges
Interest on long-term debt 4,046 4,071
Other interest and amortization 770 696
Allowance for funds used during construction - debt (156) (73)
Total interest charges 4,660 4,694
Net Income $13,727 $10,936
Statements of Retained Earnings (Unaudited)
Balance at beginning of period $250,890 $244,171
Net income for period 13,727 10,936
Dividends paid to parent (6,749) (6,551)
Balance at end of period $257,868 $248,556
<FN>
The Notes to Financial Statements are an integral part of the Statements of
Income and Retained Earnings.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Northern States Power Company (Wisconsin)
Balance Sheets (Unaudited)
<S> <C> <C>
March 31, December 31,
1999 1998
ASSETS (Thousands of dollars)
Utility Plant
Electric $979,732 $972,442
Gas 113,509 113,574
Other 82,496 81,040
Total 1,175,737 1,167,056
Accumulated provision for depreciation (464,322) (457,272)
Net utility plant 711,415 709,784
Current Assets
Cash 1,291 51
Accounts receivable - net 36,937 34,748
Unbilled utility revenues 14,033 21,011
Fuel inventories - at average cost 6,921 12,406
Other materials and supplies inventories - at average cost 6,561 6,609
Prepayments and other 9,124 13,472
Total current assets 74,867 88,297
Other Assets
Regulatory assets 41,926 42,467
Other investments 7,719 7,823
Nonutility property - net of accumulated depreciation 2,729 2,803
Unamortized debt expense 1,645 1,668
Long-term prepayments and deferred charges 11,558 10,869
Total other assets 65,577 65,630
TOTAL ASSETS $851,859 $863,711
LIABILITIES AND EQUITY
Capitalization
Common stock-authorized 1,000,000 shares of $100 par value,
issued shares: 1999 and 1998, 862,000 $86,200 $86,200
Premium on common stock 10,541 10,541
Retained earnings 257,868 250,890
Total common stock equity 354,609 347,631
Long-term debt 231,885 231,863
Total capitalization 586,494 579,494
Current Liabilities
Notes payable - parent company 34,000 55,900
Accounts payable 9,918 14,301
Payable to affiliate companies (principally parent) 15,299 16,596
Salaries, wages, and vacation pay accrued 4,904 5,910
Taxes accrued 8,909 3,418
Interest accrued 4,166 4,184
Other 8,755 4,310
Total current liabilities 85,951 104,619
Other Liabilities
Accumulated deferred income taxes 111,053 110,831
Accumulated deferred investment tax credits 17,912 18,122
Regulatory liabilities 21,515 21,947
Customer advances 9,504 9,458
Benefit obligations and other 19,430 19,240
Total other liabilities 179,414 179,598
Commitments and Contingent Liabilities (see Note 3)
TOTAL LIABILITIES AND EQUITY $851,859 $863,711
<FN>
The Notes to Financial Statements are an integral part of the Balance Sheets.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Northern States Power Company (Wisconsin)
Statements of Cash Flows (Unaudited)
<S> <C> <C>
Three Months Ended
March 31
1999 1998
(Thousands of dollars)
Cash Flows from Operating Activities:
Net Income $13,727 $10,936
Adjustments to reconcile net income to cash from
operating activities:
Depreciation and amortization 10,535 9,546
Deferred income taxes 147 507
Deferred investment tax credits recognized (210) (215)
Allowance for funds used during construction - equity (42) (62)
Cash provided by changes in working capital 19,043 22,797
Cash used for changes in other assets and liabilities (415) (415)
Net cash provided by operating activities 42,785 43,094
Cash Flows from Investing Activities:
Capital expenditures (11,887) (10,523)
Decrease in construction payables (1,154) (381)
Allowance for funds used during construction - equity 42 62
Other 103 (307)
Net cash used for investing activities (12,896) (11,149)
Cash Flows from Financing Activities:
Repayment of notes payable to parent - net (21,900) (23,100)
Dividends paid to parent (6,749) (6,551)
Net cash used for financing activities (28,649) (29,651)
Net increase in cash and cash equivalents 1,240 2,294
Cash and cash equivalents at beginning of period 51 31
Cash and cash equivalents at end of period $1,291 $2,325
<FN>
The Notes to Financial Statements are an integral part of the Statements of Cash Flows.
</FN>
</TABLE>
<PAGE>
NORTHERN STATES POWER COMPANY (WISCONSIN)
NOTES TO FINANCIAL STATEMENTS
--------------------------------
Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin) is a
wholly owned subsidiary of Northern States Power Company, a Minnesota
corporation (NSP-Minnesota). The term NSP refers to NSP-Wisconsin combined with
NSP-Minnesota and its other subsidiaries.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments necessary to present fairly the financial
position of NSP-Wisconsin as of March 31, 1999 and Dec. 31, 1998, the results
of its operations for the three months ended March 31, 1999 and 1998 and its
cash flows for the three months ended March 31, 1999 and 1998. Due to the
seasonality of NSP-Wisconsin's electric and gas sales, operating results on a
quarterly and year-to-date basis are not necessarily an appropriate base from
which to project annual results.
The accounting policies followed by NSP-Wisconsin are set forth in Note 1
to NSP-Wisconsin's financial statements in its Annual Report on Form 10-K for
the year ended Dec. 31, 1998 (1998 Form 10-K). The following notes should be
read in conjunction with such policies and other disclosures in the Form 10-K.
1. BUSINESS DEVELOPMENTS
- ------------------------------
PROPOSED MERGER - As reported in NSP-Wisconsin's 1998 Form 10-K, NSP and
New Century Energies, Inc. (NCE), a utility based in Denver, Colo., have agreed
to merge. It is expected that NSP-Wisconsin will continue to exist as an
operating subsidiary of the merged company.
UNION CONTRACT EXTENSION - In March 1999, NSP management and union business
managers reached agreement on a five year extension of the collective bargaining
agreement, subject to ratification by the union membership. On April 12, 1999,
the five International Brotherhood of Electrical Workers local unions
representing NSP employees notified NSP that the membership had ratified the
terms and conditions of settlement for the contract extension, which will begin
on Jan. 1, 2000.
LONG TERM DEBT - The board of directors of NSP-Wisconsin authorized the
issuance of up to $80 million of long-term debt in 1999 or 2000. NSP-Wisconsin
currently expects to issue approximately $50 million of unsecured long-term debt
in the second half of 1999, primarily to reduce short-term debt levels.
LOSS OF CUSTOMER - One of NSP-Wisconsin's five largest combined retail
electric and gas customers, Heileman Brewing of LaCrosse, is expected to close
its brewery at the end of July, 1999. It purchases approximately $2.8 million
of utility services from NSP-Wisconsin annually. Heileman employs 550.
<PAGE>
- ------
2. REGULATION AND RATE MATTERS
- -- ------------------------------
ELECTRIC TRANSMISSION - In April 1998, NSP announced its intention to
transfer its electric transmission business to an independent company (an
Independent Transmission Company or ITC) not affiliated with the rest of NSP's
utility operations. Several developments have occurred since this commitment was
made:
- - On April 28, 1998, Wisconsin Act 204, "the Reliability Act" became law. It
includes provisions which allow the Public Service Commission of Wisconsin
(PSCW) to order a public utility that owns transmission facilities in Wisconsin
to transfer control of its transmission facilities to an ISO (an independent
nonprofit organization which would operate, but not own, the electric
transmission system) or divest the public utility's interest in its transmission
facilities to an ITO (an independent entity that would own and operate the
electric transmission system) if the public utility has not already transferred
control to an ISO or divested to an ITO by June 30, 2000. Under certain
circumstances, the PSCW has authority to waive imposition of such an order on
June 30, 2000. At March 31, 1999, the net book value of NSP-Wisconsin's
transmission assets was approximately $150 million.
- - As originally proposed, NSP anticipated divesting its transmission assets
as part of the formation of the ITC. In light of the proposed merger with NCE,
divestiture of transmission assets does not seem feasible as it would appear to
trigger adverse tax and accounting consequences. Therefore, NSP is evaluating
alternatives to divestiture of its transmission assets, which may or may not
include an ITC at this time.
There is no guarantee that NSP will be successful in forming an ITC. If
NSP is not successful in forming an ITC, the Reliability Act currently would
require the transfer of control of NSP-Wisconsin's transmission assets to an
ISO, unless a waiver is granted.
TRANSMISSION RATE CASE - As discussed in NSP-Wisconsin's 1998 Form
10-K, in the first quarter of 1998, NSP filed wholesale electric point-to-point
and network integration transmission service (or NTS - relating to the costs of
operating and maintaining the regional electric transmission network that NSP
shares with other qualifying regional utilities) rate cases with the FERC. In
March 1999, NSP filed an offer of settlement which would resolve virtually all
issues in the two cases. The offer of settlement provides an approximate two
percent reduction in point-to-point rates which, combined with anticipated
reductions in non-firm discounting, is expected to have little or no impact on
annual revenues. In addition, the settlement calls for increases in existing
ancillary service rates and, in some cases, initial service rates, resulting in
an annual increase of approximately $1 million in ancillary service revenues.
More importantly, the settlement provides for a cap on NSP's annual NTS payment
liabilities to its five NTS customers at $10 million per year. Rates are all
effective Oct. 1, 1998. The offer also provides a two or three year moratorium
period on future transmission rate changes. The length of the moratorium is
based on whether NSP forms an ITC or is ordered to join an ISO (two years), or
voluntarily joins an ISO (three years). All parties filed written comments
generally recommending FERC approval of the offer. NSP expects FERC approval
later in 1999.
<PAGE>
- ------
3. COMMITMENTS AND CONTINGENT LIABILITIES
- -- -----------------------------------------
LEGAL CONTINGENCIES - In the normal course of business, various lawsuits
and claims have arisen against NSP. Management, after consultation with legal
counsel, has recorded an estimate of the probable cost of settlement or other
disposition of such matters.
ENVIRONMENTAL CONTINGENCIES - As discussed in Note 8 to the Financial
Statements in the 1998 Form 10-K, NSP-Wisconsin had been named as one of three
potentially responsible parties in connection with environmental contamination
at a site in Ashland, Wis. and the Wisconsin Department of Natural Resources was
evaluating proposed methods of remediating the contamination. NSP-Wisconsin now
expects a final decision on the remedial strategy to be used at the site will be
made in the fourth quarter of 1999.
In September 1998 the United States Environmental Protection Agency (EPA)
released nitrogen oxide (NOx) emission regulations affecting 22 states,
including Wisconsin. The goal of the new regulations is to reduce NOx
emissions by 85 percent by May 1, 2003. Two of NSP-Wisconsin's boilers and
eight of its combustion turbines may be subject to this action. If retrofit
technology to control NOx emissions is installed on the two boilers and eight
combustion turbines, the worst case compliance cost estimates are up to $62.3
million for capital improvements and up to $13.6 million for additional annual
operation and maintenance expenses. These estimates were required to be
developed by the PSCW in order to determine the potential scope of financial
impacts associated with retrofit alternatives. It should not be construed,
however, that retrofitting the two boilers and eight combustion turbines will be
the compliance alternative of choice. If the rules are finalized in their most
stringent form, other alternatives for these older units may be deemed more cost
effective than retrofitting. The final form of the WDNR's regulations and their
applicability to NSP-Wisconsin is still uncertain.
NSP-Wisconsin has joined with two other Wisconsin-based utilities as well
as the Wisconsin Paper Council and Wisconsin Manufacturers and Commerce
industrial organizations to request a judicial review of the EPA's final NOx
rules. NSP-Wisconsin believes that the EPA improperly included Wisconsin in the
scope of the regulatory action, and it improperly calculated potential emissions
of NOx reducing the allowable emission limits for the state.
<PAGE>
4. Segment Information
NSP-Wisconsin has two reportable segments: Electric Utility and Gas
Utility. Segment information for the first quarter of 1999 and 1998 is as
follows:
Business Segments
Operating Revenues
3 Mos. Ended 3/31/99 from External Intersegment Segment Net
(Thousands of dollars) Customers Revenues Income/(Loss)
Electric Utility $102,610 $ 30 $10,264
Gas Utility 34,051 885 3,463
------ --- -----
Consolidated Total $136,661 $915 $13,727
Operating Revenues
3 Mos. Ended 3/31/98 from External Intersegment Segment Net
(Thousands of dollars) Customers Revenues
Income/(Loss)
Electric Utility $ 98,268 $ 37 $ 8,264
Gas Utility 31,129 634 2,672
------ --- -----
Consolidated Total $129,397 $671 $10,936
<PAGE>
Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
---------------------------------------
Discussion of financial condition and liquidity is omitted per conditions
set forth in general instructions J (1) and (2) of Form 10-Q for wholly-owned
subsidiaries (reduced disclosure format).
Except for the historical statements contained herein, the matters
discussed in the following discussion and analysis are forward-looking
statements that are subject to certain risks, uncertainties and assumptions.
Such forward-looking statements are intended to be identified in this document
by the words "anticipate", "estimate", "expect", "objective", "possible",
"potential" and similar expressions. Actual results may vary materially.
Factors that could cause actual results to differ materially include, but are
not limited to: general economic conditions, including their impact on capital
expenditures; business conditions in the energy industry; competitive factors;
unusual weather; changes in federal or state legislation; issues relating to
year 2000 remediation efforts; and the other risk factors listed from time to
time by NSP-Wisconsin in reports filed with the SEC, including Exhibit 99.01 to
this report on Form 10-Q for the quarter ended March 31, 1999.
On March 24, 1999, NSP and NCE entered into an Agreement and Plan of
Merger, providing for a strategic business combination of NSP and NCE. The
following discussion and analysis is based on the financial condition and
operations of NSP-Wisconsin and does not reflect the potential effects of the
combination between NSP and NCE.
First Quarter 1999 Compared with First Quarter 1998
- ----------------------------------------------------------
ELECTRIC REVENUES increased $4.3 million in total in the first quarter of
1999 compared with the first quarter of 1998. Revenues from sales to
customers increased $3.7 million or 4.6 percent largely due to more favorable
weather in 1999 as compared to 1998 and a 2.5 percent increase in retail
electric rates that was approved by the PSCW in September of 1998.
Weather-adjusted sales decreased 0.4 percent comparing first quarter 1999 with
first quarter 1998. The remaining increase in electric revenues of $0.7 million
relates to higher Interchange Agreement billings to NSP-Minnesota, which
reflects increases in NSP-Wisconsin's fuel and transmission expenses.
GAS REVENUES increased $3.2 million or 10.0 percent due primarily to
higher sales volumes. Total gas volumes increased 12.9 percent in first quarter
1999 compared with the same period in 1998. The sales increase was partially
offset by a 2.2 percent decrease in retail gas rates effective Sept. 16, 1998
and lower gas costs per unit. Lower purchased gas costs per unit, as discussed
below, are reflected in rates through the purchased gas adjustment clause
mechanism.
PURCHASED AND INTERCHANGE POWER and FUEL FOR ELECTRIC GENERATION together
decreased $1.7 million. This decrease was caused by lower purchases and lower
generation expenses necessary to support lower sales levels. In addition, fixed
expenses billed from NSP-Minnesota were lower in the first quarter of 1999 than
the first quarter of 1998.
GAS PURCHASED FOR RESALE expenses increased $2.1 million or 9.7 percent.
The cost of additional purchases required to support 12.9 percent higher gas
sales volumes was partially offset by lower gas costs per unit.
OTHER OPERATION, MAINTENANCE, ADMINISTRATIVE AND GENERAL AND CONSERVATION
AND DEMAND SIDE MANAGEMENT expenses together increased $0.8 million or 3.7
percent in the first quarter of 1999 compared to the first quarter of 1998.
Higher generating and transmission expenses in 1999 were partially offset by
lower customer service expenses, conservation demand side management, and
distribution line clearance expenses. Transmission operating expenses increased
primarily due to the amortization of $1.1 million of deferred Network
Transmission Service (NTS) costs in the first quarter of 1999. In the first
quarter of 1998, NTS costs were deferred as authorized by the PSCW.
DEPRECIATION AND AMORTIZATION increased $1 million due to increases in the
company's plant in service.
YEAR 2000 (Y2K) READINESS - To the extent allowed, the information in the
---------------------------
following section is designated as a "Year 2000 Readiness Disclosure." NSP is
incurring significant costs to modify or replace existing technology, including
computer software, for uninterrupted operation in the year 2000 and beyond as
discussed in NSP's 1998 Form 10-K.
NSP is on schedule for completion of its Y2K project.
- - On March 31, 1999, 91 percent of NSP's mission-critical systems and
processes were Y2K ready.
- - By June 30, 1999, NSP expects to complete all Y2K efforts on
mission-critical systems and processes and to finalize contingency planning.
- - By Dec. 31, 1999, NSP expects to complete remediation of low-priority
applications and complete all Y2K testing and implementation.
Since the Y2K project started in 1996 and through March 31, 1999, NSP has
spent approximately $16.3 million for Y2K efforts, which primarily is expensed
as incurred. The additional development and remediation costs necessary for NSP
to prepare for Y2K is estimated to be approximately $8 million.
Through March 31, 1999 NSP-Wisconsin had spent approximately $1 million
for year 2000 remediation. The additional development and remediation costs
necessary for NSP-Wisconsin to prepare for Y2K is estimated to be approximately
$200,000.
<PAGE>
- ------
Item 6. Exhibits and Reports on Form 8-K
- -------------------------------------------------
(A) EXHIBITS
The following exhibits are filed with this report:
27.01 Financial Data Schedule for the three months ended
March 31, 1999.
99.01 Statement pursuant to Private Securities Litigation
Reform Act of 1995.
(B) REPORTS ON FORM 8-K
None
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 (WISCONSIN)
(Registrant)
/s/
Roger D. Sandeen
Vice President, Treasurer and Controller
(Principal Financial and
Accounting Officer)
Date: May 14, 1999
--------------
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
EXHIBIT 27.01
This schedule contains summary financial information extracted from the
Statements of Income and Retained Earnings, Balance Sheets and Statements
of Cash Flows and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 711,415
<OTHER-PROPERTY-AND-INVEST> 10,448
<TOTAL-CURRENT-ASSETS> 74,867
<TOTAL-DEFERRED-CHARGES> 55,129
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 851,859
<COMMON> 86,200
<CAPITAL-SURPLUS-PAID-IN> 10,541
<RETAINED-EARNINGS> 257,868
<TOTAL-COMMON-STOCKHOLDERS-EQ> 354,609
0
0
<LONG-TERM-DEBT-NET> 231,885
<SHORT-TERM-NOTES> 34,000
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 231,365
<TOT-CAPITALIZATION-AND-LIAB> 851,859
<GROSS-OPERATING-REVENUE> 137,576
<INCOME-TAX-EXPENSE> 9,438
<OTHER-OPERATING-EXPENSES> 109,795
<TOTAL-OPERATING-EXPENSES> 119,233
<OPERATING-INCOME-LOSS> 18,343
<OTHER-INCOME-NET> 44
<INCOME-BEFORE-INTEREST-EXPEN> 18,387
<TOTAL-INTEREST-EXPENSE> 4,660
<NET-INCOME> 13,727
0
<EARNINGS-AVAILABLE-FOR-COMM> 13,727
<COMMON-STOCK-DIVIDENDS> 6,749
<TOTAL-INTEREST-ON-BONDS> 4,046
<CASH-FLOW-OPERATIONS> 42,785
<EPS-PRIMARY> 15.92
<EPS-DILUTED> 15.92
</TABLE>
- ------
EXHIBIT 99.01
- --------------
Northern States Power Company Cautionary Factors
The Private Securities Litigation Reform Act of 1995 (the Act) provides a
new "safe harbor" for forward-looking statements to encourage such disclosures
without the threat of litigation providing those statements are identified as
forward-looking and are accompanied by meaningful, cautionary statements
identifying important factors that could cause the actual results to differ
materially from those projected in the statement. Forward-looking statements
have been and will be made in written documents and oral presentations of
Northern States Power Company, a Wisconsin Corporation (NSP-Wisconsin). Such
statements are based on management's beliefs as well as assumptions made by and
information currently available to management. When used in NSP-Wisconsin's
documents or oral presentations, the words "anticipate", "estimate", "expect",
"objective", "possible", "potential" and similar expressions are intended to
identify forward-looking statements. In addition to any assumptions and other
factors referred to specifically in connection with such forward-looking
statements, factors that could cause NSP-Wisconsin's actual results to differ
materially from those contemplated in any forward-looking statements include,
among others, the following:
- - Economic conditions including inflation rates and monetary fluctuations;
- - Trade, monetary, fiscal, taxation, and environmental policies of
governments, agencies and similar organizations in geographic areas where
NSP-Wisconsin has a financial interest;
- - Customer business conditions including demand for their products or
services and supply of labor and materials used in creating their products and
services;
- - Financial or regulatory accounting principles or policies imposed by the
Financial Accounting Standards Board, the Securities and Exchange Commission,
the Federal Energy Regulatory Commission and similar entities with regulatory
oversight;
- - Availability or cost of capital such as changes in: interest rates; market
perceptions of the utility industry, or NSP-Wisconsin; or security ratings;
- - Factors affecting operations such as unusual weather conditions;
catastrophic weather-related damage; unscheduled generation outages, maintenance
or repairs; unanticipated changes to fossil fuel or gas supply costs or
availability due to higher demand, shortages, transportation problems or other
developments; environmental incidents; or electric transmission or gas pipeline
system constraints;
- - Employee work force factors including loss or retirement of key
executives, collective bargaining agreements with union employees, or work
stoppages;
- - Increased competition in the utility industry, including: industry
restructuring initiatives; transmission system operation and/or administration
initiatives; recovery of investments made under traditional regulation; nature
of competitors entering the industry; retail wheeling; a new pricing structure;
and former customers entering the generation market;
- - Rate-setting policies or procedures of regulatory entities, including
environmental externalities, which are values established by regulators
assigning environmental costs to each method of electricity generation when
evaluating generation resource options;
- - Social attitudes regarding the utility and power industries;
- - Cost and other effects of legal and administrative proceedings,
settlements, investigations and claims;
- - Technological developments that result in competitive disadvantages and
create the potential for impairment of existing assets;
- - Other business or investment considerations that may be disclosed from
time to time in NSP-Wisconsin's Securities and Exchange Commission filings or in
other publicly disseminated written documents.
- - Factors associated with Y2K compliance that might cause material
differences from the expectations disclosed include, but are not limited to, the
availability of key Y2K personnel, NSP's ability to locate and correct all
relevant computer codes, the readiness of third parties, and NSP's ability to
respond to unforeseen Y2K complications. Such material differences could result
in, among other things, business disruptions, operational problems, financial
loss, legal liability, and similar risks.
- - Regulatory delays or conditions imposed by regulatory agencies in approving
the proposed merger with NCE.
NSP-Wisconsin undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. The foregoing review factors pursuant to the Act should
not be construed as exhaustive or as any admission regarding the adequacy of
disclosures made by NSP-Wisconsin prior to the effective date of the Act.
