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, 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
August 13, 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> <C> <C>
Three Months Ended Six Months Ended
June 30 June 30
1999 1998 1999 1998
(Thousands of dollars)
Operating revenues
Electric $97,163 $95,432 $199,804 $193,738
Gas 11,301 11,650 46,238 43,413
Total 108,464 107,082 246,042 237,151
Operating expenses
Purchased and interchange power 48,738 48,263 95,582 96,380
Fuel for electric generation 2,657 3,521 4,377 5,701
Gas purchased for resale 6,813 7,359 30,665 29,105
Other operation 13,236 12,266 25,890 23,308
Maintenance 6,441 6,584 10,806 10,743
Administrative and general 4,374 4,737 9,413 9,807
Conservation and demand side management 1,281 2,234 2,561 4,467
Depreciation and amortization 10,604 9,734 20,910 19,048
Taxes: Property and general 3,764 3,634 7,499 7,305
Current income tax 2,520 1,340 12,017 7,998
Deferred income tax 101 526 252 1,036
Investment tax credits
recognized (210) (215) (419) (429)
Total 100,319 99,983 219,553 214,469
Operating income 8,145 7,099 26,489 22,682
Other income (expense)
Allowance for funds used during
construction - equity 59 81 100 142
Other income and deductions - net of
applicable income taxes 33 95 34 81
Total other income (expense) - net 92 176 134 223
Income before interest charges 8,237 7,275 26,623 22,905
Interest charges
Interest on long-term debt 4,046 4,046 8,092 8,117
Other interest and amortization 628 581 1,398 1,277
Allowance for funds used during
construction - debt (214) (82) (370) (155)
Total interest charges 4,460 4,545 9,120 9,239
Net Income $3,777 $2,730 $17,503 $13,666
Statements of Retained Earnings (Unaudited)
Balance at beginning of period $257,868 $248,556 $250,890 $244,171
Net income for period 3,777 2,730 17,503 13,666
Dividends paid to parent (6,750) (6,551) (13,498) (13,102)
Balance at end of period $254,895 $244,735 $254,895 $244,735
</TABLE>
The Notes to Financial Statements are an integral part of the Statements of
Income and Retained Earnings.
<PAGE>
<TABLE>
<CAPTION>
Northern States Power Company (Wisconsin)
Balance Sheets (Unaudited)
<S> <C> <C>
June 30, December 31,
1999 1998
ASSETS (Thousands of dollars)
Utility Plant
Electric $ 994,106 $972,442
Gas 115,006 113,574
Other 83,227 81,040
Total 1,192,339 1,167,056
Accumulated provision for depreciation (471,371) (457,272)
Net utility plant 720,968 709,784
Current Assets
Cash 152 51
Accounts receivable - net 31,362 34,748
Unbilled utility revenues 10,413 21,011
Fuel inventories - at average cost 4,096 12,406
Other materials and supplies inventories - at average cost 6,571 6,609
Prepayments and other 11,732 13,472
Total current assets 64,326 88,297
Other Assets
Regulatory assets 40,644 42,467
Other investments 7,255 7,823
Nonutility property - net of accumulated depreciation 2,729 2,803
Unamortized debt expense 1,621 1,668
Long-term prepayments and deferred charges 12,506 10,869
Total other assets 64,755 65,630
TOTAL ASSETS $850,049 $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 254,895 250,890
Total common stock equity 351,636 347,631
Long-term debt 231,907 231,863
Total capitalization 583,543 579,494
Current Liabilities
Notes payable - parent company 40,400 55,900
Accounts payable 10,017 14,301
Payable to affiliate companies (principally parent) 20,167 16,596
Salaries, wages, and vacation pay accrued 5,639 5,910
Taxes accrued 0 3,418
Interest accrued 4,107 4,184
Other 6,750 4,310
Total current liabilities 87,080 104,619
Other Liabilities
Accumulated deferred income taxes 111,347 110,831
Accumulated deferred investment tax credits 17,701 18,122
Regulatory liabilities 20,524 21,947
Customer advances 9,740 9,458
Benefit obligations and other 20,114 19,240
Total other liabilities 179,426 179,598
Commitments and Contingent Liabilities (see Note 3)
TOTAL LIABILITIES AND EQUITY $850,049 $863,711
</TABLE>
The Notes to Financial Statements are an integral part of the Balance Sheets.
<PAGE>
<TABLE>
<CAPTION>
Northern States Power Company (Wisconsin)
Statements of Cash Flows (Unaudited)
<S> <C> <C>
Six Months Ended
June 30
1999 1998
(Thousands of dollars)
Cash Flows from Operating Activities:
Net Income $17,503 $13,666
Adjustments to reconcile net income to
cash from operating activities:
Depreciation and amortization 21,368 19,513
Deferred income taxes 245 1,030
Deferred investment tax credits recognized (419) (430)
Allowance for funds used during construction -equity (100) (143)
Loss on sale of assets 14 0
Cash provided by changes in working capital 22,444 18,914
Cash used for changes in other assets and liabilities (229) (1,187)
Net cash provided by operating activities 60,826 51,363
Cash Flows from Investing Activities:
Capital expenditures (32,171) (24,803)
Decrease in construction payables (314) (212)
Allowance for funds used during construction - equity 100 143
Proceeds from sale of assets 90 0
Other 568 (144)
Net cash used for investing activities (31,727) (25,016)
Cash Flows from Financing Activities:
Repayment of notes payable to parent - net (15,500) (12,000)
Dividends paid to parent (13,498) (13,102)
Net cash used for financing activities (28,998) (25,102)
Net increase in cash and cash equivalents 101 1,245
Cash and cash equivalents at beginning of period 51 31
Cash and cash equivalents at end of period $152 $1,276
</TABLE>
The Notes to Financial Statements are an integral part of the Statements of
Cash Flows.
<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 June 30, 1999 and Dec. 31, 1998, the results
of its operations for the three and six months ended June 30, 1999 and 1998
and its cash flows for the six months ended June 30, 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.
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 between $50 million and $80 million of
unsecured long-term debt in the second half of 1999, primarily to reduce
short-term debt levels.
In July 1999, NSP-Wisconsin filed an application with the Public Service
Commission of Wisconsin seeking authority to increase its currently
authorized short term borrowing limit and to issue a new series of long term
debt.
Loss of Customer - One of NSP-Wisconsin's five largest combined retail
electric and gas customers, Heileman Brewing of LaCrosse, has decided to
close its brewery. Even though Heileman purchased approximately $2.8 million
of utility services annually, NSP-Wisconsin's total electric and gas sales
are expected to continue to grow.
Recently a consortium of private investors have announced their
intention to purchase the facility. However, at this time it is uncertain if
the brewery will reopen and, if it does reopen, whether it will purchase the
same amount of energy as it did in the past.
2. Regulation and Rate Matters
Electric Transmission - 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 Independent System Operator or 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 Independent Transmission Company or ITC (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 ITC by June 30, 2000. Under certain circumstances, the PSCW has authority
to waive imposition of such an order on June 30, 2000. At June 30, 1999, the
net book value of NSP-Wisconsin's transmission assets was approximately $152
million.
In April 1998, NSP announced its intention to transfer its electric
transmission business to an ITC not affiliated with the rest of NSP's utility
operations. As originally proposed, NSP anticipated divesting its
transmission assets to the ITC. In light of its proposed merger with NCE,
NSP's divestiture of transmission assets is not feasible because it would
trigger adverse tax and accounting consequences. Therefore, NSP is
evaluating the feasibility of alternatives to divestiture of its transmission
assets. In its regulatory filings seeking approval of the proposed merger
with NCE, NSP has proposed to transfer control of its transmission assets to
the Midwest ISO upon completion of the merger.
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 NSP-Wisconsin's 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. The point-to-point and ancillary service
rates would be retroactive to June 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.
Midcontinent Area Power Pool (MAPP) Transmission Tariff - In May 1999, MAPP
members voted to approve a MAPP regional transmission service tariff which
will supercede MAPP members' individual electric transmission service tariffs
for most wholesale transactions. The proposed MAPP tariff was filed with the
FERC in July 1999. MAPP proposed that the new tariff be effective 90 days
after a FERC order accepting the tariff for filing. NSP estimates that the
MAPP regional transmission service tariff will reduce NSP's year 2000 pretax
earnings by between $5 million and $16 million, of which about 15 percent
relates to NSP-Wisconsin. NSP and several other parties filed protests to
the MAPP tariff, asking the FERC to modify and/or delay implementation of the
new tariff. The tariff is pending FERC action, which is expected later in
1999.
Construction Authorization - In 1996, NSP and Dairyland Power
Cooperative of LaCrosse, Wis. proposed building an electric transmission
system between NSP-Minnesota's Chisago substation in eastern Minnesota and
Dairyland's Apple River substation in northwestern Wisconsin in response to a
need for additional reliability and capacity in both regions. During the
second quarter of 1999, the PSCW granted permission to build the system.
Approval from Minnesota regulators is still needed. The Minnesota Department
of Public Service (DPS) recommended not building the line as it is proposed,
although they did acknowledge the need for more transmission capacity. Its
recommendation will be considered by the Minnesota Environmental Quality
Board (MEQB), which has the authority to approve or deny the project. NSP is
currently responding to additional data requests from the DPS to be used in
the regulatory proceedings in Minnesota. A decision from the MEQB is
expected in late 1999.
2000 Wisconsin Rate Filing - On May 28, 1999 NSP-Wisconsin filed an
application for authority to maintain current retail electric and natural gas
service rates in Wisconsin. NSP-Wisconsin is required to make a biennial rate
filing in odd numbered years. Current rates were placed in effect in
September, 1998. A decision on the application is expected in the fourth
quarter of 1999.
Plant Depreciaton - In May NSP-Wisconsin filed an application with the
PSCW for recertification of certain plant depreciation rates and for approval
of a change to the remaining life technique for the calculation of straight
line depreciation for production facilities. An order is expected in the
fourth quarter of 1999. NSP-Wisconsin expects to implement that decision at
the same time as it implements the PSCW's decision on its rate filing in
January 2000. Although final approval is pending, the PSCW staff have agreed
that annual depreciation expense should be decreased by $326,000 effective
Jan. 1, 2000.
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. The Wisconsin Department of Natural
Resources (WDNR) is evaluating proposed methods of remediating the
contamination. NSP-Wisconsin now expects a final decision on the remedial
method to be used at the site will be made in the fourth quarter of 1999.
A local environmental group has recently petitioned the United States
Environmental Protection Agency (EPA) to conduct a preliminary assessment of
the Ashland site under Section 105(d) of the Comprehensive Environmental
Response, Compensation and Liability Act (CERCLA). A preliminary assessment
is a limited scope investigation to evaluate the potential for hazardous
substance releases from a site. If the preliminary assessment of the site
concludes that further investigation is necessary, the site may proceed
through several evaluative steps up to and including listing on the national
priorities list. The preliminary assessment of the Ashland site must be
completed by the spring of 2000. It currently appears that the WDNR will
perform this preliminary assessment for EPA and may also continue to serve
as the lead regulatory agency for the site. This development has not changed
the WDNR's plans to select a remedial option for the site by the fall of
1999.
As discussed in Note 8 to the Financial Statements in the 1998 Form 10-K,
NSP-Wisconsin was investigating its responsibility to remediate contamination
found at a former landfill site in Amery, Wis. NSP-Wisconsin reached a
settlement with the owner of the landfill during the second quarter of 1999
which released NSP-Wisconsin from liability.
In September 1998 the 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 the existing boilers and combustion turbines are made
compliant using retrofit technology to control NOx emissions, it could
require up to $62.3 million for capital improvements and up to $13.6 million
for additional annual operation and maintenance expenses This is the highest
compliance cost estimate and it not necessarily 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. How the WDNR will implement the new EPA NOx 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.
In the second quarter of 1999, the EPA was ordered by a federal appeals
panel to suspend implementation of the NOx rules pending further action on a
lawsuit brought by another trade group. This action means that the states
will not have to submit plans in September 1999 describing how they intend to
reduce interstate movement of pollution. It is possible that the State of
Wisconsin will now either not be required to meet the more stringent NOx
requirements or that their implementation will be delayed substantially.
4. Segment Information
NSP-Wisconsin has two reportable segments: Electric Utility and Gas
Utility. Segment information for the second quarter of 1999 and 1998 is as
follows:
<TABLE>
<CAPTION>
Business Segments
<S> <C> <C> <C>
Operating Revenues
3 Mos. Ended 6/30/99 from External Intersegment Segment Net
(Thousands of dollars) Customers Revenues Income/(Loss)
Electric Utility $ 97,133 $ 30 $4,194
Gas Utility 11,019 282 (417)
Consolidated Total $108,152 $312 $3,777
</TABLE>
<TABLE>
<S> <C> <C> <C>
Operating Revenues
3 Mos. Ended 6/30/98 from External Intersegment Segment Net
(Thousands of dollars) Customers Revenues Income/(Loss)
Electric Utility $ 95,397 $ 35 $3,519
Gas Utility 10,568 1,082 (789)
Consolidated Total $105,965 $1,117 $2,730
</TABLE>
<TABLE>
<S> <C> <C> <C>
Operating Revenues
6 Mos. Ended 6/30/99 from External Intersegment Segment Net
(Thousands of dollars) Customers Revenues Income/(Loss)
Electric Utility $ 199,743 $ 62 $14,458
Gas Utility 45,071 1,166 3,045
Consolidated Total $244,814 $1,228 $17,503
</TABLE>
<TABLE>
<S> <C> <C> <C>
Operating Revenues
6 Mos. Ended 6/30/98 from External Intersegment Segment Net
(Thousands of dollars) Customers Revenues Income/(Loss)
Electric Utility $193,665 $ 73 $11,782
Gas Utility 41,697 1,716 1,884
Consolidated Total $235,362 $1,789 $13,666
</TABLE>
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 in this report, 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 June 30, 1999.
On March 24, 1999, NSP and NCE agreed to merge. 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
The Company's net income for the quarter and six months ended June 30,
1999 was $3.8 million and $17.5 million, respectively, an increase of $1.0
million and $3.8 million, respectively, from the comparable periods a year
ago. The following analysis summarizes the specific revenue and expense
items impacting these results.
Second Quarter 1999 Compared with Second Quarter 1998
Electric revenues increased $1.7 million or 1.8 percent in total in the
second quarter of 1999 compared with the second quarter of 1998. Revenues
from sales of electricity increased due mainly to a 2.5 percent increase in
retail electric rates that was approved by the Public Service Commission of
Wisconsin in September of 1998.
Gas revenues decreased $0.3 million or 3.0 percent in the second quarter
of 1999 compared with the second quarter of 1998 due to natural gas price
decreases partially offset by higher sales levels. Total gas sales increased
4.8 percent due in part to more favorable weather and higher interruptible
sales in the second quarter of 1999. The sales increase was more than offset
by a 2.2 percent decrease in retail gas rates effective September 16, 1998
and lower gas costs per unit. Lower per unit gas costs, as discussed below,
are reflected in customer rates through the purchased gas adjustment clause
mechanism.
Purchased and Interchange Power and Fuel for Electric Generation together
decreased $0.4 million for second quarter 1999 compared to second quarter
1998. Lower variable generation expenses and lower fixed demand expenses
billed from NSP-Minnesota in 1999 were partially offset by increased variable
costs of energy purchased from NSP-Minnesota.
Gas purchased for resale decreased $0.5 million or 7.4 percent in the
second quarter 1999 compared to the second quarter 1998. The cost of
additional purchases to support 4.8 percent higher unit sales volumes was
more than offset by lower per unit gas costs charged by suppliers.
Other operating expenses increased $1.0 million in the second quarter of
1999 compared to the same period in 1998. This increase in operating
expenses is mainly due to the amortization of $1.1 million of NTS costs in
the second quarter of 1999. In the second quarter of 1998, NTS costs were
deferred as authorized by the Public Service Commission of Wisconsin.
Conservation and demand side management (DSM) expenses decreased primarily
because DSM expenses authorized were $1.0 million lower in the second quarter
of 1999 than in the second quarter of 1998. Amortization of previously
deferred DSM expenses was relatively the same for both periods.
Maintenance and Administrative and General expenses together decreased
$0.5 million or 4.5 percent in the second quarter of 1999 compared to the
same period in 1998. Lower distribution maintenance expenses were partially
offset by higher generation maintenance expenses.
Depreciation and amortization increased $0.9 million or 8.9 percent in the
second quarter of 1999 compared with the same period in 1998 due to normal
increases in the NSP-Wisconsin's plant in service and additional depreciation
authorized in September 1998.
Income tax increased $0.8 million reflecting higher pretax operating
income in the second quarter of 1999 than in the second quarter of 1998.
First Six Months of 1999 Compared with First Six Months of 1998
Electric revenues increased $6.1 million or 3.1 percent in total for the
first six months of 1999 compared with the first six months of 1998.
Revenues from sales of electricity increased largely due to a 2.5 percent
increase in retail electric rates that was approved by the PSCW in September
of 1998 and monthly average temperatures in the first six months of 1999 that
were colder than the same period in 1998.
Gas revenues for the first six months of 1999 increased $2.8 million or
6.5 percent as compared with the first six months of 1998 due to higher sales
levels partially offset by natural gas price decreases. Total gas sales
volumes increased 10.3 percent in the first six months of 1999 over the first
six months of 1998 due to colder average monthly temperatures partially
offset by lower interruptible sales in 1999. Lower costs per unit of
purchased gas, as discussed later, are reflected in customer rates through
the purchased gas adjustment clause mechanism.
Purchased and Interchange Power and Fuel for Electric Generation together
decreased $2.1 million or 2.1 percent in the first six months of 1999
compared with the first six months of 1998. Lower generation expenses and
lower fixed demand expenses billed from NSP-Minnesota in 1999 were partially
offset by increased variable costs of energy purchased from NSP-Minnesota.
Gas purchased for resale increased $1.6 million or 5.4 percent in the
first six months of 1999 compared with the first six months of 1998 primarily
due to increased natural gas purchases to support higher sales volumes.
Partially offsetting this increase were lower per unit gas costs charged by
suppliers.
. Other operating expenses increased $2.6 million or 11.1 percent in the
first six months of 1999 compared to the same period in 1998. This increase
was due mainly to the amortization of $2.1 million of NTS costs in the first
six months of 1999. In the first six months of 1998, NTS costs were deferred
as authorized by the Public Service Commission of Wisconsin.
Conservation and demand side management (DSM) expenses decreased primarily
because DSM expenses authorized were $1.9 million lower in the first six
months of 1999 than in the first six months of 1998.
Depreciation and amortization increased $1.9 million or 9.8 percent in
the first six months of 1999 compared with the same period in 1998 due to
normal increases in the Company's plant in service and additional
depreciation authorized in September of 1998.
Income tax increased $3.2 million in the first six months of 1999 compared
with the first six months of 1998 reflecting higher pretax operating income
in 1999.
Year 2000 (Y2K) Readiness - This information 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, including NSP-Wisconsin, is on schedule for completion of its Y2K
project.
o On June 30, 1999, 99 percent of both NSP's mission-critical and non-
critical systems and processes were Y2K ready.
o On June 30, 1999, NSP filed its contingency plans as required by the
North American Electric Reliability Council. NSP's contingency plans
are comprehensive and include the following actions: the establishment of
back-up or alternative data and voice communications, increasing generation
reserves, coordination with government agencies, increased staffing
levels during Y2K critical time periods and conducting readiness drills.
o By Dec. 31, 1999, NSP expects to have completed implementation and
testing of all applications.
Through June 30, 1999 NSP-Wisconsin had spent approximately $1.1 million
for year 2000 remediation. The additional development and remediation costs
necessary for NSP-Wisconsin to prepare for Y2K is estimated to be
approximately $100,000.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
The following exhibits are filed with this report:
3.01 Restated Articles of Incorporation.
3.02 By-Laws of NSP-Wisconsin as amended.
27.01 Financial Data Schedule for the six months ended June 30, 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: August 13, 1999
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NORTHERN STATES POWER COMPANY
Article 1. The name of the corporation shall be Northern States
Power Company (Wisconsin).
Article 2. The period of existence shall be perpetual.
Article 3. The business and purposes for which said corporation is
formed are: To manufacture, produce, purchase, or in any manner acquire, and
to sell, market, and distribute gas and its by-products and residual products
for light, heat, power and other purposes; to manufacture, generate, produce,
buy, and in any manner acquire, and to sell, market and distribute
electricity for light, heat, power, and other purposes; to construct,
maintain, and operate street and electric railways; to construct, maintain,
and operate water works for the purpose of supplying municipalities, private
consumers, and others with water for any and all purposes whatsoever; to
furnish signals by electricity or otherwise; to supply steam and hot water
for heating and other purposes; to own, operate, manage, and control plants
and equipment for the production, transmission, delivery, and furnishing of
heat, light, water, and power to and for the public; to manufacture, buy,
sell, rent, and deal in apparatus and appliances used or useful in, or
calculated directly or indirectly to promote the consumption of gas, water,
or electricity; to purchase or in any manner acquire, to own and hold, and to
sell, exchange, or in any manner dispose of stocks, bonds, mortgages, and
other securities; to buy, sell, exchange, and deal in all kinds of real
property; and to construct, erect, purchase, or in any manner acquire, to
own, hold, and operate, and to sell, exchange, lease, encumber, and in any
manner dispose of, gas works, water works, steam plants, hot water plants,
hydraulic works, hydroelectric works, electric works, gas distributing
systems, water distributing systems, steam distributing systems, electric
distributing systems and transmission lines, signal transmission systems, and
machinery apparatus, appliances, facilities, rights, privileges, franchises,
ordinances, and all such real and personal property as may be necessary,
useful, or convenient in carrying on the business of procuring or producing
and distributing electricity, gas, water, steam, hot water, and signals, or
in the construction, maintenance, and operation of street and electric
railways. The business of the company may be carried on in any part of the
States of Wisconsin, Michigan, and Minnesota.
Article 4. The number of shares which it shall have authority to
issue shall be One Million (1,000,000) shares of common stock, and the par
value of each share shall be One Hundred Dollars ($100). At all meetings of
the shareholders of the corporation, the holders of common stock shall be
entitled to one (1) vote for each share of common stock held by them.
Article 5. The address of the registered office at the time of
adoption of these restated articles is 100 North Barstow Street, Eau Claire,
Wisconsin 54701.
Article 6. The name of the registered agent at such address at the
time of adoption of these restated articles is J. A. Noer.
Article 7. The number of directors constituting the Board of
Directors shall be fixed by the Bylaws, but shall not be less than three.
Article 8. These articles may be amended in the manner authorized by
law at the time of amendment.
NORTHERN STATES POWER COMPANY (a Wisconsin corporation)
BY-LAWS
(as amended August 16, 1995)
ARTICLE I.
Meetings of the Shareholders
----------------------------
Section 1. Annual Meeting. The annual meeting of the shareholders of
--------------
the Company shall be held at the office of the Company in Eau Claire,
Wisconsin, at 10 o'clock in the forenoon on the first Wednesday after the
first Tuesday in May in each year, if not a legal holiday, and if a legal
holiday, then on the next succeeding day not a legal holiday, for the
purpose of electing Directors and for the transaction of such other
business as may be brought before the meeting. If for any reason the
annual meeting shall not be held at the time herein provided for, the same
may be held at any time thereafter upon notice as hereinafter provided,or
the business thereof may be transacted at any special meeting called for
that purpose.
Section 2. Special Meetings. Special meetings of the shareholders
of
----------------
the Company may be called by the Chairman of the Board, the President or
Vice President or by order of the Board of Directors whenever they deem it
necessary. The corporation shall call a special meeting of shareholders if
the holders of at least 10 percent of all of the votes entitled to be
cast on any issue proposed to be considered at the proposed special meeting
sign, date and deliver to the corporation one or more written demands for the
meeting describing one or more purposes for which it is to be held. The
corporation shall give notice of such a special meeting within thirty (30)
days after the date that the demand is delivered to the corporation. Such
special meetings shall be held at the office of the Company in the City
of Eau Claire, Wisconsin, or at any other lawful place within the State
of Wisconsin, as may be stated in the notice of the meeting.
Section 3. Notice of Meetings. Notice of the time and place of
the
------------------
annual and of each special meeting of shareholders shall be given by
the Secretary, at least ten days before such meeting, to each of the
shareholders entitled to vote at such meeting, by posting the same m a
postage-prepaid letter, addressed to each such
shareholder at the address left with the Secretary of the Company, or at
his last known address, or by delivering the same personally. The notice
of the special meeting shall also set forth the objects of the meeting. Any
or all of the shareholders may waive notice of any annual or special
meeting, and the presence of any shareholder in person or by proxy at any
meeting shall be deemed a waiver of notice thereof by him. Meetings of the
holders of stock may be held at any time and place and for any
purpose without notice when all of the shareholders entitled to vote at such
meeting are present in person or by proxy or shall waive notice and
consent to the holding of such meeting.
Section 4. Voting at Shareholders' Meetings. At all meetings of
the
--------------------------------
shareholders, each shareholder entitled to vote at each meeting shall
be entitled to one vote for each share of stock standing registered in his
name at
the time of the closing of the transfer books for such meeting, or if
such transfer books shall not have been closed, then for each share of stock
standing registered in his name at the time of such meeting, which vote
may be given personally or by proxy authorized in writing.
Section 5. Quorum and Voting Requirements. Shares may take action
on a
------------------------------
matter at a meeting only if a quorum of the shares exists. Except as
otherwise provided in the Articles of Incorporation or the Wisconsin
Business Corporation Law, a majority of the shares shall constitute a
quorum. If a quorum exists, except in the case of the election of
directors, action on a matter shall be approved if the votes cast favoring
the action exceed the votes cast opposing the action. Each director shall
be elected by a plurality of the votes cast by the shares at a meeting
at which a quorum is present. In any case, in the absence of a quorum,
the shareholders attending or represented at the time and place at which a
meeting shall have been called may adjourn such meeting from time to time
and place to place until a quorum shall be present, and at any adjourned
meeting at which a quorum shall be present any business may be
transacted which might have been transacted by a quorum of the shareholders
at the meeting as originally convened.
Section 6. Presiding Officer and Secretary. The Chairman of the
Board
-------------------------------
shall preside at all meetings of the shareholders, and in his absence
or disability or at his request the President shall preside, and in the
absence or disability of both said officers a Vice President shall preside.
The Secretary or Assistant Secretary of the Company shall act as Secretary
at all meetings of the shareholders, but in their absence the shareholders or
presiding officer may appoint any person to act as Secretary of the
meeting.
ARTICLE II.
Board of Directors
------------------
Section 1. Number, Qualification and Vacancies.
--------------------------------------
Par. 1. The business and property of the Company shall be managed
and controlled by a Board composed of nine (9) Directors, which may be
increased to such greater number, not exceeding eleven (11), as may be
determined by the Board of Directors or by the shareholders in accordance
with the provisions of this Article.
The number of directors shall be determined by the Board of
Directors, and if the Board fails to make such determination then the number
may be determined by the shareholders.
Par. 2. A Director shall hold office until the next annual meeting of
the shareholders and until his successor is elected and qualified.
Par. 3. During the intervals between annual meetings the number of
Directors may be increased, and may be decreased by the number of vacancies
then existing, by the Board of Directors, within the limitations of Section
1, Par. 1, of this Article, and in case of any such increase the Board may
fill the vacancies so created.
Par. 4. Vacancies in the Board of Directors may be filled by the
remaining members of the Board though less than a quorum.
Section 2. Place of Meeting. Any meeting of the Board of Directors
may
----------------
be held at the principal office of the Company in Eau Claire, Wisconsin, or
at any office of the Company which is hereby established in the City of
Chicago, illinois, or at any other place within or without the State of
Wisconsin which may be from time to time established by the By-Laws of
the corporation or by resolution of the Board, or which may be agreed
to in writing by all the Directors of the corporation.
Section 3. Regular and Special Meetings. A regular annual meeting
of
----------------------------
the Board of Directors shall be held at the office of the Company in the City
of Eau Claire, Wisconsin, immediately following the holding of the annual
shareholders' meeting in each year, for the election of officers and the
transaction of such other business as may come before the meeting. Other
regular meetings of the Board may be held at such times and places, either
within or without the State of Wisconsin as the Board of Directors may
by resolution from time to time determine. Special meetings of the Board
shall be held whenever called by the Chairman of the Board, President, Vice
President, Secretary or any two Directors in writing. No notice of the
annual meeting or of regular meetings of the Board need be given. Notice of
each special meeting shall be delivered personally to each Director, or
mailed to him or sent by telegraph to his residence or usual place of
business at least two days before the meeting. Meetings of the Board may be
held at any time and place either within or without the State of
Wisconsin, and for any purpose, without notice, when all of the Directors
are present at or shall waive notice and consent to the holding of such
meeting. All or any of the Directors may waive notice of any meeting and
the presence of a Director at any meeting of the Board shall be deemed a
waiver of notice thereof by him.
Section 4. Quorum. A majority of the Directors in office at a
meeting
------
regularly called shall constitute a quorum. In the absence of a quorum
the Directors present at the time and place at which a meeting shall have
been duly called may adjourn the meeting from time to time and place to
place until a quorum shall be present.
Section 5. Compensation. The Board of Directors may by
resolution
------------
establish a fixed fee and authorize payment of expenses for services
as Director, with an additional fee and expenses for attendance at each
special meeting. Nothing herein contained shall be construed to preclude
any Director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
Section 6. Members of the executive, special or standing committees
may be allowed like compensation as for special meetings of the Board of
Directors for attending committee meetings.
Section 7. Indemnification.
---------------
Par. 1. Certain Definitions. All capitalized terms used in this
Section 7
-------------------
and not otherwise hereinafter defined in this Par. 1 shall have the meaning
set forth in Section 180.0850 of the Statute. The following
capitalized terms (including any plural forms thereof) used in this Section
7 shall be defined as follows:
(a) "Affiliate" shall include, without limitation, any
corporation, partnership, joint venture, employee benefit plan, trust, or
other enterprise that directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control
with, the Company.
(b) "Authority" shall mean the entity selected by the Director or Officer
to determine his or her right to indemnification pursuant to Par. 4.
(c) "Board" shall mean the entire then elected and serving Board
of
Directors of the Company, including all members thereof who are Parties to
the subject Proceeding or any related Proceeding.
(d) "Breach of Duty" shall mean the Director or Officer breached
or
failed to perform his or her duties to the Company and his or her breach of
or failure to perform those duties is determined, in accordance with Par.
4, to constitute misconduct under Section 180.0851(2) (a) 1, 2, 3, or
4 of the Statute.
(e) "Company," as used herein and as defined in the Statute
and
incorporated by reference into the definitions of certain other
capitalized terms used herein, shall mean Northern States Power Company,
including, without limitation, any successor corporation or entity to
Northern States Power Company by way of merger, share exchange, or
acquisition of all or substantially all of the capital stock or assets
of Northern States Power Company.
(f) "Director or Officer" shall have the meaning set forth in
the
Statute; provided, that, for purposes of this Section 7, it shall
be conclusively presumed that any Director or Officer serving as a
director, officer, partner, trustee, member of any governing or
decision-making committee, employee, or agent of an Affiliate shall be so
serving at the request of the Company.
(g) "Disinterested Quorum" shall mean a quorum of the Board who are
not
Parties to the subject Proceeding or any related Proceeding.
(h) "Party" shall have the meaning set forth in the Statute;
provided,
that, for purposes of this Section 7, the term 'Party" shall also include
any Director or Officer who is or was a witness in a Proceeding at a time
when he or she has not otherwise been formally named a Party
thereto.
(i) "Proceeding" shall have the meaning set forth in the
Statute;
provided, that, for purposes of this Section 7, the term "Proceeding" shall
also include all Proceedings (i) brought under (in whole or in part) the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, their respective state counterparts, and/or any rule or regulation
promulgated under any of the foregoing; (ii) brought before an Authority or
otherwise to enforce rights hereunder; (iii) any appeal from a Proceeding;
and (iv) any Proceeding in which the Director or Officer is a plaintiff or
petitioner because he or she is a Director or Officer; provided,
however, that any such Proceeding under subsection (iv) is authorized
by a majority vote of a Disinterested Quorum.
(j) "Statute" shall mean Sections 180.0850 through 180.0859,
inclusive,
of the Wisconsin Business Corporation Law, in effect, including any
amendments thereto, but, in the case of any such amendment, only to
the extent such amendment permits or requires the Company to provide
broader indemnification rights than the Statute permitted or required the
Company to provide prior to such amendment.
Par. 2. Mandatory Indemnification. To the fullest extent permitted
or
--------------------------
required by the Statute, the Company shall indemnify a Director or
Officer against all Liabilities incurred by or on behalf of such Director or
Officer in connection with a Proceeding in which the Director or Officer is a
Party because he or she is a Director or Officer.
Par. 3. Procedural Requirements.
------------------------
(a) A Director or Officer who seeks indemnification under Par. 2
shall make a written request therefor to the Company. Subject to Par.
3(b), within sixty (60) days of the Company's receipt of such request, the
Company shall pay or reimburse the Director or Officer for the entire
amount of Liabilities incurred by the Director or Officer in connection
with the subject Proceeding (net of any Expenses previously advanced
pursuant to Par. 5).
(b) No indemnification shall be required to be paid by
the
Company pursuant to Par. 2 if, within such sixty (60) day period,
(i) a Disinterested Quorum, by a majority vote thereof, determines that the
Director or Officer requesting indemnification engaged in misconduct
constituting a Breach of duty or (ii) a Disinterested Quorum cannot
be obtained.
(c) In either case of nonpayment pursuant to Par. 3(b), the Board
shall immediately authorize by resolution that an Authority, as provided
in Par. 4, determine whether the Director's or Officer's conduct
constituted a Breach of Duty and, therefore, whether indemnification
should be denied hereunder.
(d) (i) If the Board does not authorize an Authority to determine
the
Director's or Officer's right to indemnification hereunder within such
sixty (60) day period and/or (ii) if indemnification of the requested
amount of Liabilities is paid by the Company, then it shall be conclusively
presumed for all purposes that a Disinterested Quorum has affirmatively
determined that the Director or Officer did not engage in misconduct
constituting a Breach of Duty and, in the case of subsection (i) above
(but not subsection (ii)), indemnification by the Company of the
requested amount of Liabilities shall be paid to the Director or Officer
immediately.
Par. 4. Determination of Indemnification.
----------------- ---------------
(a) If the Board authorizes an Authority to detennine a Director's
or
Officer's right to indemnification pursuant to Par. 3, then the Director
or Officer requesting indemnification shall have the absolute
discretionary authority to select one of the following as such
Authority.
(i) An independent legal counsel; provided, that such counsel shall
be mutually selected by such Director or Officer and by a majority
vote of a Disinterested Quorum or, if a Disinterested Quorum cannot be
obtained, then by a majority vote of the Board;
(ii) A panel of three (3) arbitrators selected from the panels
of
arbitrators of the American Arbitration Association in Eau Claire,
Wisconsin; provided, that (A) one arbitrator shall be selected by such
Director or Officer, the second arbitrator shall be selected by a majority
vote of the Board, and the
third arbitrator shall be selected by the two (2) previously
selected arbitrators, and (B) in all other respects, such panel shall be
governed by the American Arbitration Association's then existing Commercial
Arbitration Rules; or
(iii) A court pursuant to and in accordance
with Section 180.0854 of the Statute.
(b) In any such determination by the selected Authority there
shall exist a rebuttable presumption that the Director's or Officer's
conduct did not constitute a Breach of Duty and that indemnification
against the requested amount of Liabilities is required. The burden of
rebutting such a presumption by clear and convincing evidence shall be
on the Company or such other party asserting that such indemnification
should not be allowed.
(c) The Authority shall make its determination within sixty (60)
days of being selected and shall submit a written opinion of its
conclusion simultaneously to both the Company and the Director or
Officer.
(d) If the Authority determines that indemnification is
required
hereunder, the Company shall pay the entire requested amount of Liabilities
(net of any Expenses previously advanced pursuant to Par. 5), including
interest thereon at a reasonable rate, as determined by the Authority,
within ten (10) days of receipt of the Authority's opinion; provided, that,
if it is determined by the Authority that a Director or Officer is entitled
to indemnification as to some claims, issues, or matters, but not as to other
claims, issues, or matters, involved in the subject Proceeding, the
Company shall be required to pay (as set forth above) only the amount of
such requested Liabilities as the Authority shall deem appropriate in light
of all of the circumstances of such Proceeding.
(e) The determination by the Authority that indemnification is
required hereunder shall be binding upon the company regardless of
any prior determination that the Director or Officer engaged in a
Breach of Duty.
(f) All Expenses incurred in the determination process under this
Par. 4 by either the Company or the Director or Officer, including,
without limitation, all Expenses of the selected Authority, shall be
paid by the Company.
Par. 5. Mandatory Allowance of Expenses.
----------------------------------
(a) The Company shall pay or reimburse, within ten (10) days after
the receipt of the Director's or Officer's written request therefor, the
reasonable Expenses of the Director or Officer as such Expenses are
incurred; provided the following conditions are satisfied:
(i) The Director or Officer furnishes to the Company an
executed
written certificate affirming his or her good faith belief that he or she
has not engaged in misconduct which constitutes a Breach of Duty;
and
(ii) The Director or Officer furnishes to the Company an
unsecured
executed written agreement to repay any advances made under this Par. 5, if
it is ultimately determined by an Authority that he or she is not entitled
to be indemnified by the Company for such Expenses pursuant to Par.
4.
(b) If the Director or Officer must repay any previously
advanced
Expenses pursuant to this Par. 5, such Director or Officer shall not be
required to pay interest on such amounts.
Par. 6. Indemnification and Allowance of Expenses of Employees and
Agents.
---------------------------------------------------------------
- ---
(a) The Company shall indemnify an employee of the Company who is
not a
Director or Officer, to the extent that he or she has been successful on
the merits or otherwise in defense of a Proceeding, for all reasonable
Expenses incurred in the Proceeding if the employee was a Party because he
or she was an employee of the Company.
(b) The Company shall indemnify any person who was or is a Party or
is
threatened. to be made a Party to any threatened, pending, or
completed Proceeding, other than an action by or in the right of the Company,
by reason of the fact that he or she is or was an employee or agent of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against Liabilities and Expenses
actually and reasonably incurred by him or her in connection with the
Proceeding if he or she acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interests of the
company, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his or her conduct was unlawful. The termination of any
Proceeding by judgment, order, settlement, conviction, or upon a plea of nob
contendere or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he or
she reasonably believed to be in or not opposed to the best interest of the
Company, and, with respect to any criminal Proceeding, had reasonable
cause to believe that his or her conduct was unlawful.
(c) The Company shall indemnify any person who was or is a Party or
is threatened to be made a Party to any threatened, pending, or
completed Proceeding, by or in the right of the Company to procure a judgment
in its favor by reason of the fact that he or she is or was an employee
or agent of the Company, or is or was serving at the request of the
Company as a director, officer, employee, or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against Expenses
actually and reasonably incurred by him or her in connection with the
defense or settlement of the Proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to
the best interest of the Company, except that no indemnification shall
be made in respect to any claim, issue, or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in
the performance of his or her duty to the Company, unless and only
to the extent that the court in which such Proceeding was brought shall
determine upon application, that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such Expenses which such court shall
deem proper.
(d) Any action taken or omitted to be taken by an employee or agent
of the Company in good faith and in compliance with or pursuant to any
order, determination, approval, or permission made or given by a
commission, Board, official, or other agency of the United States or
of any state or other governmental authority with respect to the property
or affairs of the Company over which such commission, board, official,
or agency has jurisdiction or authority or purports to have jurisdiction
or authority shall be deemed prima facie to be in compliance with the
applicable standard of conduct set forth in Par. 6(b) or 6(c), whether or
not it may thereafter be determined that such order, determination,
approval, or permission was unauthorized, erroneous, unlawful, or
otherwise improper.
(e) In addition to the indemnification required by Par. 6(a)
through
6(d), the Board may, in its sole and absolute discretion as it
deems appropriate, pursuant to a majority vote thereof, indemnify against
Liabilities incurred by, and/or provide for the allowance of reasonable
Expenses of, an employee or authorized agent of the Company acting within
the scope of his or her duties as such and who is not otherwise a
Director or Officer.
Par. 7. Insurance. The Company may purchase and maintain insurance on
----------
behalf of a Director or Officer or any individual who is or was an employee
or authorized agent of the Company against any Liability asserted
against or incurred by such individual in his or her capacity as such or
arising from his or her status as such, regardless of whether the Company is
required or permitted to indemnify against any such Liability under this
Section 7.
Par. 8. Notice to the Company. A Director or Officer shall promptly
---------------------
notify the Company in writing when he or she has actual knowledge
of a Proceeding which may result in a claim of indemnification against
Liabilities or allowance of Expenses hereunder, but the failure to do so
shall not relieve the Company of any liability to the Director or
Officer hereunder unless the company shall have been irreparably prejudiced
by such failure (as determined by an Authority selected pursuant to Par.
4(a)).
Par. 9. Severability. If any provision of this Section shall be
-------------
deemed invalid or inoperative, or if a court of competent jurisdiction
determines that any of the provisions of this Section 7 contravene
public policy, this Section 7 shall be construed so that the remaining
provisions shall not be affected, but shall remain in full force and
effect, and any such provisions which are invalid or inoperative or which
contravene public policy shall be deemed, without further action or deed by
or on behalf of the Company, to be modified, amended, and/or limited, but
only to the extent necessary to render the same valid and enforceable.
Par. 10. Nonexclusivity of Section 7. The rights of a Director or
----------------------------
Officer (or any other person) granted under this Section 7 shall not be
deemed exclusive of any other rights to indemnification against
Liabilities or allowance of Expenses which the Director or Officer (or
such other person) may be entitled to under any written agreement,
Board resolution, vote of shareholders of the Company or otherwise,
including, without limitation, under the Statute. Nothing contained in
his Section 7 shall be deemed to limit the Company's obligations to
indemnify against Liabilities or allow Expenses to a Director of Officer
under the Statute.
Par. 11. Contractual Nature of Section 7; Repeal or Limitation of Rights.
-------------------------------------------------------------
- -This Section 7 shall be deemed to be a contract between the Company and
each Director and Officer and any repeal or other limitation of this Section
7 or any repeal or limitation of the Statute or any other applicable law
shall not limit any rights of indemnification against Liabilities or
allowance of Expenses then existing or arising out of events, acts or
omissions occurring prior to such repeal or limitation, including,
without limitation, the right to indemnification against
Liabilities or allowance of Expenses for Proceedings
commenced after such repeal or limitation to enforce this Section 7 with
regard
to acts, omissions or events arising prior to such repeal or
limitation.
Par. 12. Continuation of Indemnification. The indemnification
provided
-------------------------------
by this Section 7 shall continue as to a person who has ceased to be a
Director, Officer, employee, or agent and shall inure to the benefit
of the heirs, executors, and administrators of such a person.
Section 8. Telephonic Meetings. Only as herein provided, members
of
-------------------
the Board of Directors (and any committees thereof) may participate in
regular or special meetings by, or through the use of, any means of
communication by which all participants may simultaneously hear each other,
such as by conference telephone. If a meeting is conducted by such means,
then at the commencement of such meeting the Chairman of the Board (or
chainnan of the committee) shall inform the participating Directors that
a meeting is taking place at which official business may be transacted. Any
participant in a meeting by such means shall be deemed present in person
at such meeting.
ARTICLE III.
Committees
----------
Section 1. Creation and Powers. The Board of Directors
by
---------------------
resolution adopted by the affirmative vote of a majority of all of the
directors then in office may create one or more committees, appoint members
of the Board of Directors to serve on the committees and designate other
members of the Board of Directors to serve as alternates. Each
committee shall have two or more members who shall, unless otherwise provided
by the Board of Directors, serve at the pleasure of the Board of
Directors. A committee may be authorized to exercise the authority of
the Board of Directors, except that a committee may not do any of the
following: (a) authorize distributions; (b) approve or propose to
shareholders action that the Wisconsin Business Corporation Law requires to
be approved by shareholders; (c) fill vacancies on the Board of Directors
or, unless the Board of Directors provides by resolution that
vacancies on a committee shall be filled by the affirmative vote of the
remaining committee members, on any Board committee; (d) approve a plan
of merger not requiring shareholder approval; (g) authorize or approve
reacquisition of shares, except according to a formula or method prescribed
by the Board of Directors; and (h) authorize or approve the issuance or
sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of
shares, except that the Board of Directors may authorize a committee to do
so within limits prescribed by the Board of Directors. Unless otherwise
provided by the Board of Directors in creating the committee, a
committee may employ counsel, accountants and other consultants to assist
it in the exercise of its authority.
Section 2. Meetings and Quorum. A committee meeting shall be
held
-------------------
at such time and place as the committee shall fix or whenever called by order
of the Chairman of the Board, the President, or a majority of the
committee. A majority of the members of a committee shall constitute a
quorum. A committee
shall cause to be kept a full and accurate record of all of its acts
and proceedings.
ARTICLE IV.
Officers
--------
Section 1. Designation, Term and Vacancies. The general officers
of
-------------------------------
the corporation shall be a Chairman of the Board, a President, and one or
more Vice Presidents any of whom may have such additional designation as the
Board of Directors may provide, a Secretary and one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers, &.C~nim1kr
and such subordinate officers as may ftom time to time be elected by the
Board of Directors. The filling of the office of Chairman of the Board
shall be discretionary with the Board of Directors. If such office be
vacant, the functions thereof shall be performed by the office of the
President. Any two or more of the offices may be held by the same person,
except the offices of President and Secretary, and the offices of President
and Vice President. Vacancies occurring among the officers of the
corporation shall be filled by the Board of Directors. All officers
elected by the Board shall hold office until the next annual meeting of
the Directors and until their successors are elected and qualified,
provided, however, that any officer may be removed at any time by the
affirmative vote of a majority of the whole Board. All other officers,
agents and employees shall hold office during the pleasure of the
Board.
Section 2. Chief Executive Officer. The Board of Directors
shall
------------------------
designate the Chief Executive Officer of the Company.
Section 3. Duties of Chairman of the Board. The Chairman of the
Board
-------------------------------
shall preside at all meetings of the Board of Directors; he shall be ex
officio a member of all standing committees, and shall have such other
powers and perform such other duties as may be prescribed by the
Board.
Section 4. President. The President shall have general supervision
and
----------
direction of the affairs of the company and shall have all the powers and
duties appurtenant to the office of President of a corporation. He shall
preside at meetings of the Board of Directors in the absence or disability
of the Chairman of the Board. He shall be ex officio a member of all
standing committees. He shall have power to appoint and discharge,
subject to the approval of the Directors, employees or agents of the
Company and fix their compensation; make and sign agreements in the name
and behalf of the Company; he shall report to the Board all matters within
his knowledge which the interest of the Company may require to be brought
to their notice; he shall make such other reports to the shareholders and the
Board as may be required of him; and shall perform all such other duties as
are properly required of him by the Board.
Section 5. Vice President. Each Vice President shall be vested
with
--------------
all the powers and shall perform all the duties of the President in the
absence or disability of the latter, unless or until the Directors
shall otherwise determine. He shall have such other powers and perform
such other duties as shall be prescribed by the Directors.
Section 6. Secretary. The Secretary shall give, or cause to be
given,
---------
notice of all meetings of shareholders and Directors and all other
notices required by law or the By-Laws of the Company and in case of his
absence or refusal or neglect so to do, any such notices may be given
by any person thereunto directed by the President or by the Directors and
shareholders, upon whose requisition the meeting is called as provided
in the By-Laws.
He shall record all proceedings of the meetings of the shareholders and
the Directors and any committees of the corporation in the book or books to
be kept for that purpose, and shall perform such other duties as may be
assigned to him by the Directors or by the President.
Section 7. Assistant Secretary. Each Assistant Secretary shall
be
-------------------
vested with all the powers and shall perform all the duties of the Secretary
in the absence or disability of the latter and he shall perform such duties
as may be prescribed by the Board of Directors.
Section 8 Treasurer. The Treasurer shall have the custody of
all
---------
funds, securities, evidences of indebtedness, and other valuable documents
of the Company, and shall deposit all money and other valuable effects in
the name and to the credit of the Company, and in such depositories as may
be designated by the Board of Directors.
He shall give, or cause to be given, receipts and acquittances for
moneys paid in on account of the Company. He shall disburse the funds of the
Company as may be ordered by the Board or the President, taking proper
vouchers for such disbursements.
He shall enter, or cause to be entered, in the books of the Company to
be kept for that purpose, full and accurate accounts of all moneys
received and paid out on account of the Company, and whenever required by
the President or Directors, he shall render a statement of his cash
accounts.
He shall keep or cause to be kept, such other books as will show a
true record of the expenses, losses, assets, gains and liabilities of the
Company.
He shall perform all such other duties as the Board of Directors may
from time to time prescribe or require.
Section 9. Assistant Treasurer. Each Assistant Treasurer shall
be
-------------------
vested with all the powers and shall perform all the duties of the Treasurer
in the absence or disability of the latter, and shall perform such other
duties as may be prescribed by the Board of Directors.
Section 10 Controller. The Controller shall establish and
enforce
----------
accounting policies and procedures, and establish and implement
internal accounting control practices and systems to preserve the integrity
and accuracy of the Company's books of accounts. The Controller shall also be
responsible for preparing the corporate operating and capital budgets
and providing timely reports of budget deviations and financial
performance. The Controller shall perform such other duties as the
Board of Directors may from time to time prescribe or require.
Section 11. Execution of Cheques, etc. Cheques, drafts,
acceptances,
-------------------------
bills of exchange and promissory notes of the Company shall be signed in
such manner as may from time to time be directed by
resolution of the Board.
Section 12. Bonds of Officers and Employees. Any executive officer
of
-------------------------------
the Company may be required by resolution of the Board to give a bond for
the faithful discharge of his duties in such amount and wish such
sureties and containing such conditions as the Board of Directors may
approve. Any other employee of the Company may be required by
resolution of the Board or by direction of the President to give a bond in
such sum and with such sureties and containing such conditions as the
Board of Directors may approve. Any bond so required of any officer or
employee of the Company may be the undertaking of a surety company and
the premium therefor may be paid by the Company.
ARTICLE V.
Shares of Stock.
----------------
Section 1. Certificates of Stock. All certificates for shares of
the
---------------------
capital stock of the Company shall be in such form not inconsistent with
the Articles of Incorporation of the Company as shall be approved by the
Board of Directors, and shall be signed by the President or Vice
President and by the Secretary or Assistant Secretary, and shall not be
valid unless so signed. All certificates shall be consecutively numbered,
and the name of the person owning the shares represented thereby, with the
number of such shares and the date of issuance, shall be entered on the
Company's books. All certificates surrendered shall be canceled, and no new
certificate issued until the former certificate for the same number of
shares shall have been surrendered and canceled, except in cases provided
for in Section 4 of this Article.
Section 2. Transfer of Shares. Shares of stock of the
corporation
------------------
shall be transferable in person or by attorney by the endorsement and
delivery of the stock certificate and the registry of such transfer on the
books of the corporation. The transfer books of the corporation may be closed
for such period as the Board of Directors shall direct previous to and on
the day of the annual or any special meeting of the shareholders, and may
also be closed by the Board for such time as may be deemed advisable
for dividend purposes, and during such time no stock shall be transferable.
Section 3. Addresses of Shareholders. Every shareholder shall
furnish
-------------------------
the Secretary with an address to which notices of meetings and all other
notices may be served upon or mailed to him, and in default thereof
notices may be
addressed to him at his last known address.
Section 4. Lost and Destroyed Certificates. The Board of Directors
may
-------------------------------
direct that a new certificate or certificates may be issued in place of
any
certificate or certificates theretofore issued by the Company, alleged to
have been lost or destroyed, and the Board of Directors, when
authorizing the issuance of such new certificate or certificates, may in
their discretion and as
a condition precedent thereto, require the owner of such lost or
destroyed certificate or certificates, or his legal representatives,
to give to the Company a bond in such sum as they may direct as indemnity
against any claim that may be made against the Company.
Section 5. Regulations. The Board of Directors shall have power
and
-----------
authority to make all such rules and regulations as they may deem
expedient concerning the issue, transfer and registration of certificates
for shares of the capital stock of the Company.
ARTICLE VI.
Dividends.
----------
The Board of Directors may declare dividends from the surplus or
net profits of the corporation as they may m their discretion from time
to time determine. Such dividends may be declared by the Board at any
meeting, either regular or special, at which a quorum is present. Any
dividends declared upon the stock shall be payable upon such dates as may be
from time to time fixed by the Board.
ARTICLE VII.
Seal.
-----
The Common corporate seal is, and until otherwise ordered and directed
by the Board of Directors shall be, an impression upon paper of wax
bearing the words: "NORTHERN STATES POWER COMPANY, CORPORATE SEAL,
WISCONSIN." One or more duplicate dies for impressing such seal may be
kept and used.
ARTICLE VIII.
Amendment of By-Laws.
--------------------
These By-Laws may be altered, amended or repealed by the affirmative
vote of a majority of the stock issued and outstanding and entitled to vote
thereat at any regular or special meeting of the shareholders of the
Company if notice of the proposed alteration or amendment or repeal be
contained in the notice of such meeting, or by the affirmative vote of a
majority of the Board of Directors of the Company at any regular or
special meeting of the Board.
<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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1999
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 720,968
<OTHER-PROPERTY-AND-INVEST> 9,984
<TOTAL-CURRENT-ASSETS> 64,326
<TOTAL-DEFERRED-CHARGES> 54,771
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 850,049
<COMMON> 86,200
<CAPITAL-SURPLUS-PAID-IN> 10,541
<RETAINED-EARNINGS> 254,895
<TOTAL-COMMON-STOCKHOLDERS-EQ> 351,636
0
0
<LONG-TERM-DEBT-NET> 231,906
<SHORT-TERM-NOTES> 40,400
<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> 226,107
<TOT-CAPITALIZATION-AND-LIAB> 850,049
<GROSS-OPERATING-REVENUE> 246,042
<INCOME-TAX-EXPENSE> 11,850
<OTHER-OPERATING-EXPENSES> 207,703
<TOTAL-OPERATING-EXPENSES> 219,553
<OPERATING-INCOME-LOSS> 26,489
<OTHER-INCOME-NET> 134
<INCOME-BEFORE-INTEREST-EXPEN> 26,623
<TOTAL-INTEREST-EXPENSE> 9,120
<NET-INCOME> 17,503
0
<EARNINGS-AVAILABLE-FOR-COMM> 17,503
<COMMON-STOCK-DIVIDENDS> 13,498
<TOTAL-INTEREST-ON-BONDS> 8,092
<CASH-FLOW-OPERATIONS> 60,826
<EPS-BASIC> 20.31
<EPS-DILUTED> 20.31
</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:
o Economic conditions including inflation rates and monetary fluctuations;
o Trade, monetary, fiscal, taxation, and environmental policies of
governments, agencies and similar organizations in geographic areas where NSP-
Wisconsin has a financial interest;
o Customer business conditions including demand for their products or
services and supply of labor and materials used in creating their products
and services;
o 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;
o Availability or cost of capital such as changes in: interest rates;
market perceptions of the utility industry, or NSP-Wisconsin; or security
ratings;
o 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;
o Employee work force factors including loss or retirement of key
executives, collective bargaining agreements with union employees, or work
stoppages;
o 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;
o 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;
o Social attitudes regarding the utility and power industries;
o Cost and other effects of legal and administrative proceedings,
settlements, investigations and claims;
o Technological developments that result in competitive disadvantages and
create the potential for impairment of existing assets;
o 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.
o 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.
o 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.
