ML19309F405

Annual Financial Rept 1979

ML19309F405
Person / Time
Site:	Point Beach
Issue date:	03/14/1980
From:	Mcneer C WISCONSIN ELECTRIC POWER CO.
To:
Shared Package
ML19309F402	List: ML19309F401 ML19309F405
References
NUDOCS 8004290425
Download: ML19309F405 (33)

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PERCENT 1979 1978 INCREASE Earnings per Share of Common Stock S3.75

$3.50 7.1 Dividends per Share of Common Stock

$2.345

$2.21 6.1 Total Operaung Revenues

$867,565.000

$752.611.000 15.3 Earnings Available for Common Stockhciders.

S 70,164,000

$ 64.268.000 9.2 j

Average Number of Common Shares Outstanding 18,705,000 18.354.000 1.9 i

E!ectnc Sales to Reta:1, Municipal and Ccoperative Customers (thousand KWH).

17,541,493 17,307.755 1.4 Gas Sales (thousand therms) 706,101 680.759 3.7

- Retail. Municipal and Cooperative Customers (year end)

Electnc 795,664 782.845 1.6 Gas 206,032 197.603 4.3 1

REPORT TO STOCKHOLDERS l

s, Nineteen seventy-nine was a year of significant f '.

1'I accomphshment for Wiscons.n Elecinc despite oppressive inflation and deepening energy prcblems 7

for the nation. Revenues, eamings and dividends all 7

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increased, work progressed on a major coal-fired power plant, and there were positne signs that customers were continuing their efforts to both conserve energy and use it more wisely.

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T While util t'es which re!y heavily on oil-fired power

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plants were severely affected by supply problems and 7

sharp pnce increases in 1979. Wisconsin E!ectnc's we;l s.

balanced fuel mix again proved to be a stabiliz:ng factor en our operations.

i More than 49 percent of the efectncity generated by Wisconsin E!ectnc in 1979 came from coal about 41 percent came frcm nuclear power. 5 percent from natural gas and nearly 3 percent from hydroelectnc 7 y.,,

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piants in northern Wiscons n and the Upper Peninsula

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of Michigan. The remaining 2 percent came from oil IS.,

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Y rates continued to be among the lowest of those in the 8

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.g g.. NT nation's largest metropohtan areas. The pnce of natural gas increased, but only to reHect the greater charges cf our pipehne supo:ier.

As the highhghts on page 1 reveal.1979 was a year of financial improvement. Total revenues were up more 1

than 15 percent. Earnings per share of common stock g

continued to rise to an all-time high of $3.75 in 1979.

compared to $3.50 in 1978 Common stock dividend g

l payments were :ncreased for the 19th year in a row, to

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' f share have increased 30 percent in the past five years.

$2.34W a share. Common dividend payments per I

I The effects of rate increases granted to Wiscons:n f'g Electnc in the spnng of 1979 were realized largely in

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the second half of the year resulting in the improved earnmgs. Greater natural gas revenues, brought about by increased sa!es and a near-record number of new customers, also contnbuted to tre earn;ngs improvement.

l As we look to the future, however, the rate of inflation continues to be a major concern for Wiscorsin E!ectnc.

the utility industry and the nation. Like most l

companies, we have expenenced substant;al increases in the day-to-day costs of doing business. We have intensified efforts to control costs and improve the 1

efficiency of our operations, but unless inflation acates.

2

we expect to go before the regulatory agencies almost Tnis plant has been in the planning stages for a annually for rate increases. A request for a 9 percent number of years, and the decision to cancel the electnc rate increase, filed w th the Puche Service project was not an easy one. The increasing Commission of Wisccnsin in August 1979. was pending uncertainties concerning the licensing of nuclear plants at the end of the year.

coupied with the slower growth in peak demand for y,

, we amq 74 b@s My d The effects of inflation are both short-term and long.

wa@ cal b poceed we me Aed term. They are covious in the racicly escalating costs of construction. in the rising costs of coal and cther Because of the moderate growth expected in Jak fuel, and in wages and supplies and all the other demand, we will not need adC:tional electnC generating expenses of prCducing and distnbuting erergy.

Capacity for a number of years This g:ves us flexibihty e aW Mal CpWas m h Pernaps more senous are the long-term effects -

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tne high cost of money to fanance major construct;on programs. and the depressing e'fect which h.gn On the nat.onal level. there has been much talk and interest rates nase on t e market once of common httle acDon as our energy problems have become more stocks, incluc:ng your own Wisconsin Eiectnc stock.

severe. Tne efforts of energy companies have been increasingly frustrated by the lacx of nat:ena!

Whve Wisconstn Sectnc s safes of e' ectr, city and commitment to energy goals. Our nation must cevelop natura! gas ;ncreased :n 1979. customers at the same practical energy guidehnes and exhibit the backbone time f.ere resocnd.ng to efforts to conserse energy to a! low their implementation. We must move ahead ana sn;ft e+ectricity use to off-peak Smes.

with a ba!anced program to maka the most effective These deveicaments are encourag:ng. as it is use of domestic energy resources and encourage new imoeratise to rnnimee tne add t:on of on-peak technolog:es.

e:ectncal loads tn order to reduce the need to build N cows M sWW @Me, Wem me new power plants in nese high cost t,mes By hcid.ng down grcwin in peak cemand. Ae wi!! Ce able to keep aW mst Mcmasingh @W on coal and War gy to pMe our su@ d We2c4 Ma@, m cur construct.cn orogram within reasonabie amits, to the tenefit of both stockholders and customers.

sCmsm we must come b H on nuclear and coal plants, which have served us well In previous Annua! Reports. I nave outhned the positive in the past. to provide most of the e! ectr: city our steps tne comoany is taking to control the growtn in customers wi!! need for the remainder of this century.

peak e! ectr, Cal demand We continue to be committec saw W des M MM b d W to th's orogram. wntch inc!uces the aggressive e

ess comn4 pemM W &duais promct.cn ct conservation. ! cad management activiDes to develop a: ternate energy sources on a practical and and changes :n rates to make the pnce of energy more ec e m Cass closely reflect the cost of provia.ng service.

Working together, we can meet the difficult chalienges As we enter a new decade, Wiscons.n E!ectnc is weil we face today in order to have the energy available orecared to supply our cu tomers energy tomorrow.

3quirements. With conservat;on and f:rm commitments from our pgeline suppher we expect to be able to meet tne needs of cur natural gas customers and d

accommodate tne increasag numcer of requests for conversion to gas for heating President The f;rst u~t v the coal f; red Pleasant Pra!rie Power March 14.1980 Plant,s neanng comolet:on in Kenosha County and will i

beg:n coeration in 1980, w:th a second unit also under construcSon In early 1981 Wiscons:n E!ectnc and two cther utihbes dec:cea to acandon p!ans for tne Haven Nuc! ear P! ant.

3

OUR DIRECTION FOR THE 1980s Wisconsin Electric's mission in the 1980s, as in the past, will be to provide our customers with an adequate supply of reasonably priced energy, to earn a fair return on our stockholders' investment and to provide meaningfu employment for those who serve our customers and stockholders.

Accomplishing those goals in the 1980s will require new approaches, open minds, creativity and determination -along with continued application of the sound business and engineering practices traditional with our company.

These areas are of cnticalimportance:

Fuels. Our nation's number one goal for this decade must be to reduce dependence on imported oil, for that reliance not only affects all aspects of the energy supply picture, but our economic and national security interests as well. The dimension of the energy problem is such that we cannot afford to tum our backs on any potential energy source.

Every fuel and potential fuel has supporters promoting it? greater development and use. But no single fuel can scIve cur energy dilemrna today. We must expand the use cf conventional electrical generation methods using coal, nuclear aM h,droelectric power to reduce oil dependence. At the same time, it is in the nationalinterest to aggressively develop the energy resources of the sun, wind, nuclear fusion and other technologies.

As a supplier of electricity and natural gas to a large part of Wisconsin and Michigan's Upper Peninsula, Wisconsin Electnc must play a role in this national effort. Through our own efforts and industry research, we have increased our program to make more meaningful use cf solar energy, the wind, small dams, solid waste and other attemate resources in energy production. We expect to continue to produce more than 90 percent of the electricity our customers use with Amenca's most abundant fuels -coaland uranium.

Conservation. This must continue to be the keystone of our energy efforts in the 1980s. Both in Wisconsin and on a nationallevel, substantial amounts of energy are being saved in homes, factories, stores, public buildings and on the road. But more can be accomplished.

Wisconsin Electric will continue to r.ncourage prudent and effective use of both electricity and natural gas. We will provide information and assistance to help our customers conserve. We will ccntinue to stress the need to shift electricity usage to off peak periods, both to relieve the need for additional power plants and to reduce the use of natural gas and oil at our peaking plants.

We do not believe, however, that conservation alone will provide the additional energy resources Wisconsin and the nation will need in the future. Domestic energy production must expand, but even with d

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this expansion. we expect to see a continuing shift from petroleum to electricity, natural gas and other energy sources for many applications.

Growth. It is our corporate objective to hold down the growth in peak demand for electricity consistent with the sound economic development of our service area. By controlling peak demand, we will be able to reduce the need to build expensive new power plants, thus maintaining both earnings and electric rates at reasonable levels.

Our forecasts anticipate a continuation of electricity usage patterns similar to what they are today. But if economics or technology change those patterns, we will be prepared to modify our generation planning.

A major breakthrough in the development of a practical electric car or widespread use of solar heating with electricity as a backup source, for example, could considerably change the demand for electricity.

The Price of Energy. In the face of continued inflation, electricity and natural gas prices have increased.

There will be further increases in all energy costs in the future.

Our goal for the 1980s is to furtherimprove the efficiency of our cperations, utilizing the most e'conomical fuels and methods, to maintain reliable energy service and hold rate increases to the rate ofinflation or below.

Responsibility to Those We Serve. Increasingly. Wisconsin Electric wi!I be in the midst of conflicting public attitudes and ideologies about energy in the 1980s. Because there is little unanimity on energy issues, managing our business in the coming decade will require a careful analysis of emerging issues and a consideration of divergent views.

While our pnmary obligation is to provide dependable energy services at a reasonable cost, we can best serve our customers when we understand their concerns. In an effort to establish two-way communications, company officers have had a senes of meetings with various customer and employe groups during the past two years. Many useful suggestions made at these meetings for improving efficiency and service have been implemented. In addition, informational meetings with stockholders have been held in various parts of our service area with three of these gathenngs held in 1979. Over 15.000 stockholders have been invited to participate in these informal meetings.

We will continue to keep our customers, stockholders and employes fully informed about our operations, maintain an open dialogue and be lespcnsive to their concems. We re-emphasize our commitment to provide efficient and courteous service to allcustomers, and to protect the value of our stockholders' investment. We willmake the energy decisions necessary to provide the greatest benefit to those we serve.

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THE YEAR IN REVIEW Planning for the Future Plant in Sheboygan A major addition to the company's generat.ng capacity With the add:t;cn of these coal-fired units. the company will be made in mid-1980. when the first 580,000-will be well-prepared to supply our customers' needs kilowatt unit at the coal-fired Pleasant Pra:ne Power in the 1980s.

Plant is scheduled to tegin producing electncity. The Dunng the past two years, our customers have plant. located in Kenosha County, has been under intensified their efforts to conserve elecincity and shift construction since 1976 A second 580.000-nilowatt electncal use to off-peak t.mes in response to the unit at Pleasant Praine also is well underway.

company's program. As a result, we have been able to Pleasant Pra:ne is the largest construction project ever reduce our forecast of future electncal demand and undertaken by the comCany. and will play an important have delayed plans for a coal plant which was role in meeting our customers' electncal requirements scheduled for operation in the late 1980s. Sites near in the 1980s. When operat ng at full caoac.ty, the plant Port Washington, Wis., and Escanaba. Mich., have wil! be ab'e to supply enough electnc:ty to meet almost been under consideration for this plant, which is not one-third cf the Company's peak load requ:rements.

now expected to be needed until the early 1990s.

No other company power piants are under construction in February 1980. Wisconsin Electric and two other at the present time. although Wisconsin Elecnc is util; ties planning the Haven Nuclear Plant announced negotiating for the possibk' putt Mse of one-half that they have decided to abandon plans for the plant.

ownersnip :n a new 400.000-kilowatt generating unit at The 900.000-kilowatt facihty had been planned for 1989 Wisconsin Power and Light Cofs Edgewater Power operation at a site near Sheboygan. Wis.

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Tne decision to cance! the piant was made foilowing was shifted to the Haven site near Sheboygan in 1977, an orcer by the Putiac Service Comm:ss:on of A two-year deferral in the operational date of the p' ant Wisconsin (PSCW) which estachsned the accounting was announced in 1979 cecause of expected hcensing treatment for expenditures which have a! ready been derays by the Nuc! ear Pegulatory Commission.

made on the proposed plant. The commission datermined that $36 7 mHiton spent on the project was Downtown Milwaukee Project

" prudently made in me course cf pursuing regulatory Planning :s continuing on a pro,ect to build a new review" and instructed the comoany to write off those corporate headquarters oudd:ng in downtown expend;tures over a mree-year genod The company's Milwaukee. A study conaucted oy an indepencent share of that amount is $21.9 maan.

architectural firm concluded that constructing a single headauarters building would be the most efficient While the Cor"cany teneves that it.s important for metnod to provide for present and future office needs.

l Wisconsin and tre nat;on to mainta,n the nuc! ear cot:on ine company's present headquarters build:ng is,t o

'cr tre generation of e!ectncity recent regulatory years old, and Wisconsin electric employes are now i

decisions. the uncerta:nties in federal hcensing and located in five down:own Milwaukee buildings.

I other factors have made it impractical to procee0 witn the Haven prc;ect.

l Construction is underway on a new e'ectric substat,on l

l The nuclear plant had baon under consideration s.nce in downtown Milwaukee whicn will strengthen the the early 1970s. The platit onginaly was proposed for suoply of e!ectnc poner to the area A redevelooment a site near Lane Kosn.cnong :n Jefferson County and of the downtown area is anticipated, with several l

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projects in tre construct:en and O!anning stages. A rates, a load management program and customer major hotel is nearing comp'etion, work will beg,n scon conservat:on on a downtown ma:l, a new federal bu.ld ng is planned Time-of-use rates, whicn first went mto effect in 1978.

and several other buddmg projects have been were extended to a larger number of customers in announced 1979. These rates charge more for e!ectncity during Wisconsin Electnc's plans for the downtown area a!so peak demand periods and less during off-peak times include plans for a new parking structure, addit:onal to more accurately reflect the economics of providing steam lines. and eventual retirement of two oid electncity For instance, it costs more to produce downtown power plants.

electnc:ty on weekdays than at night and on weekends, and it costs rhore during the hot summer Financing months tnan during the rest of the year. Larger and Even witn the moderate growth in e:ectncal peak 9

demand forecast for the future. Cap;tal expenC*tures

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are expected to continue at a high leNel dunng the cady ceak demand is more expensive to produce, early part of the 1980s. For tae rext five years. capital since owed dams e oMet less eHoem coal sams requ'rements are expected to accroach $1.5 bdhon. Of

• C' '88 tnat amount, $800 million wdl be raised interna:ly and the rema.nder from outside sources.

Our industoal. major commercial and largest residential custows am now on daq woNse rates we am Constructon expenditures in 1979 amounted to $252 ver m the dapme and low at mgm Rates 6 au mdhon. and are expected to tota! about $340 mdl.cn in cems hase a seannal dMewat 1980. The ccmpany raised $26 mnhon in 1979 through the sa:e of pc!iution contrci bonds and $50 mdhon frr,,,m These rates provide economic incentive for customers three-year bonds soid in a p'ivate D!acement Common to reduce on-peak electncal usage, or to sh:ft da:ly stock was sold througn a comomat'on of div:dend usage to cff peak times, in estaclisnmg seasona! rates, remestment and the Tax Reducten Act Stock tne PSCW set a 50 percent difference between winter Ownership Nn (TRASOP). an emp!cye stock and summer rates. Althcugh the company is committed ownership plan funced through federal tax cred ts and to the time-of-use concept, we beheve this a;fference is emo:cye contr.but:cns.

too severe. In our current rate case, we have asked the commiss:on to reduce tne winter-summer c:fferential.

in 1980, the company is conside me sa!e of bonds and offenngs cJ preferred and r-ocn stocks, The company's major load management activity is a depend:ng on market cond;t:ons New ommon s!cck system-wide water heater Control program Installatron also Aill be sold through dividend reinvestment and of equipment for this system is Cont:nuing.

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.he load management system wdl allow disoatchers at i

our System Control Center to remotely and se'echve!y Load Management and Conservation turn off e!ectnc water heaters cunng times of heavy Wisconsin E!ectric is cont.nuing to move forward with demana. The system wdl be the first of its kind in the innovative prcgrams designed to hcid down the growth country to coera'e on a full-time basis. Customer in the ceak demand for e:ectncity and to encourage partcpat:on in the program is vcluntary more eff:cient energy use by our customers.

Deve!coments dunng the past two vears mdicate that We esumate mat W comohg WM msmal aM these programs are showing success.

an eWC 6 heaWS, WW pam psMW needs wdl be reduced by 125,000 kilowatts.

Centrothng e!ectncal demand is important cecause am em ammd a w Nam

!cwer load growth de!ays the need for expensive new power O! ants, and extencs the time we have to finance to expiore tne potential of solar water heating in and put these facdities.n serace.

sconsh Domesx sdar water heaMg sysm han been insta!!ed at the homes of four emoloyes, and after The company's efforts to comrol peak e!ectrical a winter's expenence.'tne program wiil be expanded to cemand center around three activities: t;me-of-use include 300 Wisconsin E!ectnc residental customers.

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e The solar water heating system has been designed to Rate increases meet the needs of a typical family of four and to take Final erectric rate increases approved by varicus advantage of the company's lower off peak rates regulatory commissions in the first half of 1979 amount When the sun is shining, hot water will be provided to approximately $53 milhon on an annual basis. These by solar energy. At nignt and dunng extended cloudy included an overall 9 percent increase granted by the penods, water in a storage tank will be heated by an Pubhc Service Commission of Wisconsin (PSCW)in efectne element The solar system is expected to March. and a 15 percent increase authonzed by tne supply about half the hot water needs of the homes' Michigan commission in Apnl for our customers in occupants The solar devices will be monitored by the Michigan's Upper Peninsula.

Company to orovide informat.on on operating costs.

The Wisconsin commission's act.on was the result of a in another project the company is study:ng " stored rate request filed by the company in Apol 1978, while cochng" for residential air conditioning as part of a the rate request in M.chigan was f.!ed in December research activity being conducted in cooperat:cn with 1978. The Michigan increase was the first change in the U.S Department of Energy Stored coohng base rates for those customers in 2n years. In equipment uses a conventional air conditioning unit to addition, an increase for wholesale Customers under freeze water in a storage tank dunng off-peak t:mes the junsdiction of the Federal Energy Regulatory The stcred ice is then used to provide cochng dunng Ccmmission was approved by that agency in May.

high-demand penods Equipment has been 'nsta3ed in 70 hor"es :n the metropchtan M!waukee area in crder Deso'te these increases. however, the high rate of to conduct the research which will conDnue over the inflation is conbnuing to affect al1 phases of the next two years. The stored cochng concept has been comoany's operation. and has resulted in further proven workable over the past three years in test increases in the cost cf doing business. This trend is homes and company cff;ces.

expected to continue in 1980. As a resu:t, the company fded a request W.th the PSCW in August 1979, to Dunng 1979. botn Wisconsin E!ectnc and our increase 1930 revenues by 0.2 percent. This request is subsidiary, Wisconsin Natural Gas Co. continued still pend:ng. with action expected to be taken in the act;ve pubhc informaton programs to promote energy first hatt of 1980.

conservaton The censervat.cn effort was promoted through the use of radio. television and newspaper Recurnng increases in e!ectric rates dunng the past advertising, as well as in bock!ets, bdl inserts and few years have tended to obscure the fact that special presentations.

Wisconsin Electnc customers continue to receive exceptional value for every dollar they spend on Opin.cn surveys and energy usage show that these electnCity. Our rates cont.nue to be lower than those in programs have been effective in increasing customer most other parts of the nation. A stuay in 1979 showed understanding of the need to conserve natural gas and that, based on a monthly use of 500 kilowatt-hours, electncity.

electne rates in Milwaukee were the fourth lowest As the resu:t of an energy audit program started at among the nation's 20 largest metropohtan areas.

Wisconsin Natural in 1977, more than 13.000 home Despite general concerns about rising pnces, it also is energy surveys have been conducted by company significant that a 1979 pubhc opinion survey found that personnel. For 1979, the company averaged more than seven out of ten customers interviewed felt that the 140 home surveys a week A simdar home energy company's requests for rate increases were justified.

inspection program has been implemented by A pnmary reason for the company's favoracle rates Wisconsin E!ectnc, and is now avadable to electric as has been the effic:ent operation of Point Beach Nuclear weil as gas customers.

Plant, which has produced an economical supply of Wisconsin Electric's pubhc information program was electncity during a time of rapidly nsing pnces.

I recogn: ad by the Public Utiht:es Communicators Associa' on for the "Best Utdity Communications Nuclear Operations Program' in 1979, and Wisconsin Naturai's acovity was After the much publicized Three Mile Isiand (TMI) cited as the best public re!ations program of the year accident in Pennsylvania. the company formed a task by the Amencan Gas Associahon.

force to cetermine if any changes were needed in the i

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3 CCerations Of our PC'nt BeaCn NuC! ear P! ant The task and to ceselop both our Coal nd nuclear resources force CCnduCted a CetaLed ana ysts Cf tre O' ant's The Com0any plans !o use a Combination Of Coal and procedures 3nd CCerations and CCnC.udea that no nuclear pCaer 04 ants to provide mest et our erectriCai s:gnMCant modtficatiGns were necessary energy for tre remainder of this Century We Celieve th s batanced fuel mix M!! provide the mCs!

The Presidential Commiss.Cn wnlCh invest gated the I'.11 accident reCCmmended several steDs to improve deDendab'e and economical power suDply to meet the needsCf our Cus!Cmers nuC' ear sate!y and Concluded tnat the nation Can Cont nLe to utlize nqCl ear poner if :t is managed well.

Point BeaCn Nuclear P: ant. which began oDeration in Point Beach ccerations wiil CCnt.nue to ce reviewed in 1970. has been one of the nation's outstanding nuclear response to regulatory reafrements. re:,ommendations plants botn from the standpoint of safety and of the Pres;0ential Commiss>on, and analyses made by dependacrhty of operation The procedures antCh have ciner utees. manufaC!urers and sC:entific groups led to tn.s outstanding performance record are being shared uth otner utikties tnrough the Comcany's in a major energy accress <n 1979. Pres: cent Carter part!C:pation in two newly Created industry groups -

pointed out inat further de.e'Coment Ct nuC! ear power the inst tute of NuC ear Power Operations. estabiisned is necessary.f the nat on is to meet its energy to uograde the train:ng and performance of reaC!or recu rements. S,maarly. a Comcrehensne e ergy study operators. and the NuC! ear Safety Analysis Center. set released by ine Nat,onal A acemy Cf Sciences rn uo to investigate tne TMI accident and to anatyze C

January 1980 C.ted tre need to nCrease Corservat.on ruC: ear safety issues.

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li Po:nt Beach continued to succiy a major part of the May 1979, wnen an 581 muhon sett'ement agreement company's e! ectr: cal require ents in 1979. a'tnougn was announced The settle,rrent is tne result of lega the company has experienced orobtems wdn action started oy the company in 1975 when detencrat.on of steam generator tubes cart'culany :n Westinghouse sa:d.t could not continue to succly Unit 1 at tre ptant. Tne detencrat on. which is beheved uranium for our Point Beacn Nuciear P' ant under a due to chemicals used to ccnd.tton water in the steam 1968 contract citing commercial imoract: cab:hty sucpty systems dur:ng the early yea's of plant bccause of uranium price increases operation. has !ed to 'eaks in some of the steam The terms of the agreement provided for Westinghouse generator tubes As a resu;t. about 10 percent of the to suop'y fuel and other items which will reduce future tubes :n Un:t 1 s steam generators have teen p ugged.

costs at Point Beach removing them from seroce anc the un:t is now teing cperated at a lower power 'e'.el to reduce further included in the sett ement was $8 muhon in cash.

detenorat on. Because of the conservatne design of together with future c:scounts for equtpment and scare tne p; ant. however. tre un:t can te operated eff,c:ently parts for Point Beach valued at $9 2 mdhon fuel mth 25 percent of as tubes cut of service fabrication serv.ces through 1992 est: mated to tctal

$37A mdhon. and 135 muhon pounds of uranium to be Even if it u t mate!y becomes necessary to rectace the supphed ever the next severa' years est: mated to total steam generators in Un:t - an oct.on wn:cn is now

$26 4 manon.

te:ng cons >de'ed - cur cusicmers wdl continue to enicy sucstant'al savings cecause of the lo^er cost Natural Gas Operations cceraton of Po.nt Beacn S nce tre plant began Natural gas supphes continue to te staole. w.tn no operat cn the savings comcarea to e'ecinc.ty annual curtadments expected for the next several generated at coa' fired p! ants nave amounteo to more years The company's pioehne suppher is optimistic than $280 milhon.

eve!Coment of future supphes which will Westinghouse Settlement ensure a cependacie long-term gas supp:y.

A icng-stanc.ng :ega d:spute be! ween Wisconsin Wiscons n Natural Gas Co. reported that sa!es Electnc and West:nghouse Electnc Corp was enced in exceeded 79 bnhon cucic feet in :ne 1978-79 contract L12::ers :m:3c: me coat at Te Can Creen P:ser pan

?~e ::'":rys :a*;est : cal-::e:: art k.cg :979 ::311 red a arts ge"erated G ce':en: ct ar e'ec:n:4 At r g": a.'.'s: rs n ?htarat Gas C: crea mstals a ren gas serece :: a n ve

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year, about 11 percent more than the onginal amcunt Chtfs E:ectnc Service Co.. a subsidiary of Cleveland contracted wth our pipenne suppher. For the current Chffs Iron Co.

contract year, which runs from Sect 1.1979 to Aug The decis ons Aere made because cf market condtons 31.1980. Wisconsin Natural has received approval to and a prehminary study wh,ch faded to show potentra purchase an acd tional 10 behon cubic feet of annual aavantages sufficient to lustif y proceeding further oserrun gas.14 percent over the present contract voiume of 72 buhon cut c feet Upper Peninsula Power. headquartered in Houghton.

M:ch. provides efectnc senace to over 42.000 customers W,sconsin Natural reported a sharp increase in the in Upper Michigan C!.ffs E'ectnc Service owns a major number of requests for conversion from cil to natural part of a large coal-fired cower plant in Marquette. Mich.

I gas in 1979 ref:ecting the continu.ng upward spiral of and supphes energy to iron mines in that area oil costs and the uncerta.nty cf supply Management Changes Dunng the year. Wisconsin Natu ai connected 10.289 r

new heating customers. the second largest annual John H Goetscn was elected secretary of W:sconsin

,ncrease in the company's histor/ The company was E! ectr <c at the Board of Directors meeting in May He succeeded Ho vard L Warhanek. wno retired as serving more tnan 200.000 gas customers at the end of ine year uth requests for nea gas service sti!!

secretary and ' ice pres: dent af ter more than 40 years of strong despite a decrease in cu'! ding At the start cf service with th 3 comoany 1980. Wisconsin Natural had a wa t'ng hst of 1.860 Tne beard a:so appointed Jonn W F:eissner and Daan L.

rescentia; reg'csts for new or add t:onal ser. ice Freitag assistant secretaries of Wisconsin Electnc.

Canversions cf non-heatng customers to gas neat were 2.:6 percent more in 1979 than ir: ne preced ng year Re Beat of Weects d our Mscam %smm Natural Gas Co.. elected Mr Goetsch secretary to Consolidation Study succeed Mr Warnanek. and appointed Mr F;eissner Wiscons n Eiectr c nas discont.nued study:ng the ass stant secretary and Garden A. Wuhs assistant pcss.tity of ccmt,ning e! ectr:c cceraticr's utn Upper treasurer Mr. Goetsch and Mr. Fie ssner a'so were Peninsala Po^er Co. The comoan/ a!so decided not to

^3med secretary and ass.stant secretary. respective y, of proceed furtner with a study of possible acquis.t:cn of WE s other suosidiary. Badger Service Co

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MANAGEMENT'S DISCUSSION and Analysis of operations

s Net income and Earnings ref:ecting irr pa. cN er conservation and the cooler Consolidated net income of Vhsconsin Electnc Power summer in 1979. The average number of electnc Co was $82 5 mdhen in 1979.15 percent greater than customers showed a 2 percent growth in both years.

in 1978. The increase primanly resulted from rate rehef The volume of natural gas sold increased 3.7 percent granted dunng 1979 and to a lesser extent from an in 1979 and 5.1 percent in 1978 compared to the increase in the sales of electnc:ty and natural gas.

preceding penods. Sales increased in both 1979 and Earnings per share increased by 7 percent over 1978 1978 pnnc pally because of improved availability of to $3.75 a share, despate a larger provision for natural gas supplies. Sales to residential heating preferrec stock divi 0 ends and more common shares customers in 1979 were up only 1 percent over 1978, outstanding reflecting customer conservation and mdder weather in 1978 net income was up $3 4 m@cn or 5 percent in December 1979. The average number of gas over 1977 while earnings per share of 33 50 were 4 customers dunng both years rose approximately percent greater than the previous year.

3 percent.

Rate Increases Operating Revenues and Sales in March 1979. the Pubhc Service Commission of Higher rates for our utihty services and the recovery of Wisconsin (PSCW) approved a 9 percent increase in higher costs for fuel, purchased power and purchased e'ecinc rates for retail customers in Wisconsin and in gas through adjustment tanff s were pnmarily rescons:ble Apr:I 1979 the M:chigan Pubhc Service Commission for the revenue increases over pncr years. Revenues authorized a 15 percent increase in e!ectnc rates for rose $115 m@on in 1979 and $83 m@on in 1978 Michigan retail customers. Dunng Janua*y 1978 the ya e co pany a 3 percent increase M Kiiowatt-Four sa!es to retail. munic: pal and cooperative eiectric rates for Wisconsin retail customers designed customers were up 1.4 percent :n 1979 from the to produce $11 m@co on an annual basis.

precectog year compared to an increase of 51 per-cent in 1978. Sales cf electric:ty to otner puche utht:es Precsures of inflation and rising operating costs w4l Ae'e lower m both 1979 and 1978 than in preced ng requ re add.ttonal rate relief dunng 1980 in crder to years As a result. total kdowatt-hour sa'es :ncreased maintain earnings. The company has a request for $59 only 12 percent 'n 1979 and 3 0 percent in 1978. Use milhon cf add.tional annual electnc revenues pcnd;ng of electricity per resident al customer dec'med 1.9 before the PSCW. The request is based on anticinated percent in 1979 after rema:ning constant in 1978.

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Operating Expenses increase in 1979 and 70 percent of the increase in Fuel and purchased power costs increased 21 percent 1978 ref!ects the higher cost of gas purchased from in 1979 over 1978 pnmanly because of higher pnces the pipenne suopt.er. Tne remaining increases in cost for 'ossd fuel add.t:onal purchases of power from other reffect a 3 5 percent increase in 1979 and a 5.3 utikties and greater use of gas-f. red generat.on These percent increase in 1973 in the volumes of gas costs were part:a!!y offset by 58 mohon in cash purchased for resale. The larger purchases can be received from the Westinghouse Electnc Corp as part attnbuted to improved gas supphes. The average cost of the settlement of uranium ht:gation Of th:s amount.

per therm of gas purchased for resale has nsen l

$7.5 muhon was refunded to customers through fuel neaddy from 15.3 cents in 1977 to 20.4 cents in 1979 adjustment clauses. Because of increased ma:nte-The increases from year to year in other operation nance at Point Beach Nuclear Plant, there was a 12 exoenses primarhy ref!ect the general nse in wage and percent recuction in nuclear generation in 1979 wn:c't once leve!s. Ot*'er operation excenses for 1979 include reau, red the purchase of larger amounts of electric.ty from other ut,hties and the use of more expensive tne wnte-off cf $2 3 mdhon (net of income taxes) of the a'ternative energy sources. The ccmpany expects to company's snare of capitahzed expenditures for the be able to reduce the amount of power it purchases planned nuc! ear plant near Lake Koshkonong. The from cther compan es in 1980. wnen Unit 1 at P!easant PSCW deemed sucn expenditures to have teen Pra:ne Power P! ant ceg ns cperaton prudent. but of no future value when the s,te cf the plant was changed to Haven The company has filed in 1978 h gher fossil fuel costs. greate energy a mot:en to recover this wnte-off as the result of a court purchases anc ut.hzatton of cd-fired generation were dec:sion which reversed the PSCW's order mandat'ng the ma;cr f actors whiCn caused fuel and purchased the wnte-off.

power costs to increase 26 percent oser 1977. A certon of tne ncrease ;n these excenses during 1978 he increase in maintenance cunng these ceriocs is attnoutacte to the extended coal m:ners'str:ke which reftects pnnc'pa:ly the timing of scheduled repairs to required tne company to use more excensive energy m ;or generaSng units and the r.se in wage and pnce sources in order to conserve coal supcLes leve!s. Part of the unusually h:gh increase in ma<nte-nance during 1979 was caused by acd:tionalinspections The cost of gas purchased for resaie ircreased 24 and analyses at the Point Bern Nuc' ear Plant required percent in 1979 and 17 percent in 1978 over ne by the Nuclear Pegulatory Commission, to some precec,ng penods. Approximately 85 percent of the degree prompted by the Tnree Mde Island accident.

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CONSTRUCTION EXPENDITURES Eanungs 7,

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The changes in income taxes cnarged to coerating 1978 tnan in the pnor years onmanly because of expense dunng these per'ods resu!t ma'nly from increased constructon work in progress associated vanations in pre tax inccme. Income taxes for the year with expend.tures on Un;ts 1 and 2 of the Pleasant 1979 also were affected by the recucDon :n the federal Prair e Power Plant and to a lesser extent to income tax rate from 48 percent to 46 percent as of expend tures on the Germantown combustion turbines Jan.1,1979 income taxes. :nclud;ng income taxes prior to the latter going into service in 1978 charged to Other income ana Deduct:ons.

approumated 44 cercent of :ncome be' ore income Preferred Stock Dividend Requirement taxes in 1979 compared to 49 percent.n 1978 The The preferred stock dividend requirement increased in reducDon in the effective tax rate for 1979.s pnmanIY both 1979 and 1978 over previous periods because of due to tre icwer fede ai tax rye and !arger noncash the issuance of the 8 80 percent Senal Preferred Stock cred.ts to income for anowance for funds used dann9 in Decemcer 1978 construction (AFCC) than a year ago AFOC credas are exc!uded from taxabte incor e Financing Stra.gnt l.ne deoreciaton :ncreased :n both 1979 and The issuance of new secunt,es dunng 1979 and 1978 1978 oser the precea:ng years pr:nc.pai!y because of was required primanly to provide funds for the larger invesrents.n ubbty plant anc h gner electnc Company's Construct cn program. A s:gnificant number depreciabon rates ar"ch became ettective July 1.

of adc1tional long-term financ:ngs wol be reautred over 1978 the next five years. Tentabve plans for 1980 ca 1for acqu rng $190 mil hon of new capda! through a Interest Expense combinaton of the sa e of long-terrn deot, preferred Interest escense,rcreasea.n ccth 1979 and 1978 stock, common stock and add.Donal leasing of nuclear oecause of the :ssuance of ne.v bonds and larger fuel. Market condit'ons mil influence the tming and short term corrca ngs at hgner rates than n precea.ng amount of any secunty !ssue. At Dec. 31,1979. the pericas company had knes of Cred;t of $126 mAcn for short-term corrowings whicn can be temporanly ubhzed if Allowance for Funds Used During Construction market concibcns for long-term secunt.es are ACDC cred ts were substa-trally greater in 1979 and unta.crable-

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SUMM ARY OF OPER ATIONS - veia sseco ce:evesa u I

s 1979 1978 1977 1976 1975 (Thousand3 Cf Dollars)

Operating Revenues 5867.565

$752.611 5669.903

$592.441 S506.568 Operat4ng Expenses l

Fuel and purchased power 246.913 204.183 161.927 141.574 126.044 Gas purcnased for resa'e 143.844

$ 15 948 98.999 84.519 60.863 Otner oceration expenses 167o 147.622 138.095 123.671 109.655 55.879 49 334 42.727 38.231 Ma:ntenance 66.

Decreciat:en - straight hne 59.t$55 54.160 49.702 47.535 45.505 Income taxes.

64.282 66.610 70.529 58.971 47.327

"*9.624 644.402 568.586 498.997 427,625 Ocerat:ng Income i l 7.941 108.209 101.317 93.444 78.943 0:ner income and Deducbons M sce4aneous inccme - net.

969 153 876 439 1,076 Anowance for other funcs used curing construccon 7,535 3 372 238 8.504 3.525 1.114 439 1.076 Ircome Before interest Charges 126.445 111.734 102.431 93.883 80.019 Interest Cna ges Interest e cense 50.078 42.024 34 388 33.753 31.008 Anowance tcr ocrrce.ea funds used cunng construct:on (6.165)

(1.895)

(152) 43.913 40.i29 34 236 33.753 31.008 Net Income 82.532 71.605 68.195 60.130 49.011 Preferred Stock Dividend Recut ement (12.368)

(7.337)

(7.088)

(7.088)

(7.088)

Earnings Avanac'e for Common Stockhoiders S 70.164 5 64 268 5 61.107

$ 53 042 3 41.923 Earn'ngs per snare 53 75 53 50 53 36 53.19 52 54

\\

~a

, w

' ~

5 UblT COSTS OF FUEL -

PEAK OEMAND ELECTRIC SALES --

Megawatts Methon Megawatt-hours.

gg g

i 4000

~

20 7, ~

o

'i.

.KX)0 15 3

4

,o

'f 00 00 MA)0 10 e-t 4

~

1000 S

1 00 0

i 0

0 0

75 76 77 79 1979 1970 72

/4 76 79 70 72 74 76 1979

~

17 g

IN3GME GTATEMENT-Yte.a ssoso ccCausen si WiSCONSW ELECTTdC POWEA COMPANY SYSTEM s 4 1979 1978 (Thousands of Dollars)

Operating Revenues Electric.

.S667,757 5583.162 Gas.

191,238 161,177 Steam.

8.570 8.272 Total Operating Revenues 867,565 752,611 Operating Expenses Fuel (Note A) 179,050 155,615 Purchased power 67,863 48.568 i

Gas purchased for resale 143,844 115.948 l

Other operation expenses (Note B).

133,442 112,573 Ma;ntenance 66,824 55.879 Taxes other than income taxes.

34,464 35.049 Depreciation (Note C)

Straight line.

59,855 54.160 Deferred income taxes (Note D) 17,192 3.873 Federal income tax (Note D).

12.452 31.904 Investment tax credit adjustments - net.

27,657 23.946 State income tax (Note D) 6.981 6.887 Total Operating Expenses 749,624 644,402 Operating income 117,941 108.209 Other Income and Deductions Interest income 2,491 1,659 Allowance for etner funds used during construction (Ncte E) 7,535 3.372 Miscellaneous - net 185 (322)

Income taxes (Note D)

(1,707)

(1.184)

Total Other Income and Deductions 8,504 3,525 income Before Interest Charges.

126,445 111,734 Interest Charges Long term debt 40.875 36,998 Allowance for borrowed funds used dunng construction (Note E)

(6,165)

(1,895)

Other 9.203 5.026 Total Interest Charges 43,913 40.129 Net income 82,532 71.605 Preferred Stock Dividend Requirement.

12.368 7.337 Eamings Available for Common Stockholders.

.S 70.164 5 64.268 Average Number of Shares of Common Stock Outstanding (Thousands).

18,705 18.354 Eamings Per Share of Common Stock

$3.75 53.50 The notes 07 pages 22 through 27 are an integral part of the financial statements.

18

RETAINED EARNIN30 STATEMENT veracNesocecaveensi e SCJNSiN ELEOTRIC POWER COMPANY sv%fEV 1979 1978 (Thousands of Dollars)

Balance, January 1

, $225,022 S201,424 Additions Net income 82,532 71,605 Transfer of amortization reserve - hydroelectnc projects 305 307,554 273.334 Deductions Dividends - Cash Preferred stock.

12,178 7,088 Common stock.

43,784 40.537 55,962 47,625 Cost of issuing capital stock 104 687 56,066 48.312 Balance, December 31

.S251,488 S225.022 STATEMENT OF CH ANGES IN FIN ANCIAL POSITION-va4a ssosaccesuscasi 1979 1978 (Thousa'1ds of Dollars)

Financial Resources Provided Operations Net income

. S 82,532 S 71,605 Depreciation - stra:ght line 59,855 54,160

- deferred income taxes 17,192 3.873 Accumulated deferred investment tax credits.

23,598 19,942 Nuc! ear fuel expense 12,767 8,782 Allowance for funds used dunng construction (13,700)

(5.267)

Total from operations 182,244 153,095 Common stock.

14,864 5,516 Preferred stock.

59,455 Long term debt 75,525 104,882 Ca'e of nuclear fuel 5,192 Release of construction funds held by trustees 10,695 Short term borrowings 108,559 3,675 Contnbutions in aid of construction.

4,259 3,338 Miscellaneous 1,004 (2.528) i S397,150

$332.625 l

Financial Resources Used Construction expend;tures.

.S252,258 5220.563 Nuclear fuel 37,362 33,436 Dividends 55,962 47,625 i

Retirement of fang term debt 9,511 12.165 i

Construction funds held by trustees 23,447 12,153 Increase in working capital (other than short term borrowings and long term debt due currently) 18,610 6.683 l

S397,150 S332.625 The notes on pages 22 through 27 are an integral part of the financial statements.

19

CALANCE CHEET,NYSYSTEM oscaveen si WISCONSIN ELECTRIC POWER CCUP/

8 4 1979 1978 (Thousands of Doilars) l ASSETS Utility Plant Electric

, $1,571,082

$1,511,172 Gas 184,642 173,918 Steam 17,274 17,161 l

1,772,998 1,702,251 Accumulated provision for depreciation (725,821)

(653,291) 1,047,177 1,048,960 Construction work in progress 411,397 217,108 Nuclear fuel 94,709 55,420 Accumulated provision for amortization.

(11,773)

(2,617) j 82,936 52.803 Net Utility Plant 1,541,510 1,318.871 Nonutility Property.

7,453 6,539 Accumulated proviston for depreciation (630)

(383)

Net Nonutili.ty Property 6,823 6,156 4

Construction Funds Held by Trustees (Note F).

24,905 12,153 Current Assets Cash 5,026 5,947 I

Temporary cash investments 11,098 2,900 Accounts receivable (Note G) 51,544 50,013 Accrued utility revenues 71,686 59,787 Fossil fuel (at average cost) 59,179 46.665 Materials and supplies (at average cost) 34,131 25,193 Prepayments and other assets 6,649 6,588 Total Current Assets 239,313 197,093 i

Deferred Charges and Other Assets,

18.113 30.898

$1,830,664

$1,565,171 i

i The notes on pages 22 through 27 are an integral part of the financial statements.

20

)

o D L 1979 1978 (Thousands of Dollars)

I LIABILITIES Capitalization Common Stock Equity (Note H)

Common stock (authonzed 41,000.000 shares,510 par value: issued 19.085.720 anc 18,473,747 shares)

, S 190,857 S 184,737 Premrum on capital stock 144,040 135,296 251,488 225.022 Retained earnings.

Total Common Stock Equity 586,295 545,055 Preferred Stock (Ncte J) 160 451 160,451 Long Term Debt (Note I) 643.227 589.576 Total Capitalization 1,396,063 1,295,082 J

l Current Liabilities Long term deot due current:y (Note l}

13,493 7,662 Notes payable to banks (Note K) 19,700 21,441 Commercial paper (Note K) 114,322 4,022 Accounts payable.

69,326 54,711 Pay c1 and vacation accrued.

12,309 11,171 Taxes accrued -income and other.

33,774 26,732 Interest accrued 12,42' 10,600 Customer deposits 1,998 1,863 Other 5,563 6,771 l

Total Current Liabilities 282,973 144,973 i

Deferred Credits and Other Liabilities Accumulated deferred investment tax credits 73,554 49,956 Nuclear fuel costs accrued (Note D) 19,646 17,372 Unamortized accrued utility revenues 29,556 33,778 Other 6,630 6.027 j

Total Deferred Credits and Other Liabilities 129,386 107,133 l

l Contnbutions in Aid of Construction 22,242 17,983 Commitments (Note L) and Contingencies (Note M)

$1.830,664

$1,565,171 Tre notes on pages 22 through 27 a;e an integral part of the financial statements.

21-

N5TED TO FINANCIAL OTATEMENTO WISCONSN ELECTRIC POWER CCVP.hY SYSTEM Summary of Significant Accounting Policies General Debt Premium, Discount and Expense The accounting records of the company and :ts utility Long term debt premium or discount and expense of subsidiary are kept as prescobed by the Federal issuance are amortized by the straight lir e method Energy Regulatory Commiss:on, modified for over the lives of the debt issues. Unamortized amounts requirements of the Public Service Commission of pertaining to debt reacquired for sinking fund purposes Wisconsin (PSCW). The consolidated financial are wntten off currently.

statements include the accounts of the company and its subsidiaries, Wisconsin Natural Gas Company and A - Rental Expense Badger Service Company.

Total rental expense was $16,521,000 in 1979 and

$20,989,000 in 1978. This includes charges of Revenues

$15,000.000 in 1979 and $19,835.000 in 1978 for the Meters are read and accounts are bil!ed monthly. Since portion of nuc! ear fuel which is leased. The nuclear fuel January 1,1977 utility revenues have-been recognized lease can be terminated by the company or the lessor on the accrual basis and include estimated amounts on two years' notice. The lease of any batch of fuel for service rendered but not billed. Accrued utility automatically terminates at the end of 78 months, or 18 revenue of $52 million at December 31,1976 is being months after removal from the reactor, unless the recorded as revenue in equal amounts over a ten year parties extend the term. The company has agreed to penod as prescribed by PSCW.

pay the lessor for the unamortized cost of the nuclear Fuel fuel in the event the lease is terminated. The company has an option to purchase the nuclear fuel at the The cost cf fcssil and nuclear fuelis expensed in the higner of such unamortized cost or fair market va!ue.

penod consumed.

Rental payments are made monthly based on the Nuclerar fuel expense includes an estimate for offsite amount of nuclear fuel leased and the amount of storage of spent nuclear fuel for ten years after

! eased nuclear fuel burned.

removal from the reactor. No salvage value is The nuclear fuel lease is treated as an operating lease recognized for scent nuclear fuel The accounting for by PSCW in determining revenue requirements, and nuc! ear fuel follows the ratemaking treatment for ruch the value of the leased fuel is not included in the costs.

company's rate base. Had the lease been accounted Gas Purchased for Resale for as a capitai lease, expenses before income taxes The cost of purchased gas sold is expensed in the and indeterminate effects of corresponding ratemaking pened the gas is received from the pipeline supplier.

treatment wouM nave been decreased $599.000 in 1979 and $891,000 in 1978, and an asset and Property corresponding liability equal to the unamortized cost of Electric and gas utility property is recorded at original the leased nuclear fuel would have been recorded at ccst, and steam utility and nonutility property is December 31 in the amounts of $9,534,000 in 1979 recorded at cost. Additions to utility property and and $21,499,000 in 1978.

signFicant replacements are charged to utility plant at B - Pension Plans cost. Cost includes material, labor and allowance for funds used during construction (see Note E).

Several noncontributory pension plans cover all eligible Replacements of minor items of property are charged employes. Normal employe pension cost is accrued to maintenance expense. The cost of depreciable and funded currently and unfunded prior service property, together with removal cost less salvage, is liability is amortized over periods from ten to thirty charged to accumulated provision for depreciation years. The unfunded prior service liability of the when property is retired.

pension plans is not significant. Substantially all vested and accrued benefits under the plans have been income Taxes funded. Pension expense was $7,449,000 in 1979 and Deferred income tax accounting is practiced in respect

$5,715,000 in 1978.

to significant t: ming differences. The federal investment tax credit is accounted for on the deferred basis and is C - Depreciation reflected in income ratably over tne life of the related Depreciation expense is accrued at straight line rates property.

certified by PSCW. Depreciation rates include 22

O estimates of salvage and plant removal costs. Nuclear PSCW practice. Related interest was accrued in the plant dmreciation rates provide for an amount to cover amounts of $1,682,000 in 1978 and $807,000 in 1979.

estim. ;d plant decommissioning costs.

E - Allowance for Funds Used During Additional depreciatico is accrued in accordance with Construction ( AFDC)

PSCW requ:rements which is equal to the tax effects of timing differences related to property and nuclear fuel AFDC is inciuded in utility plant accounts and including principally the use for ta'x purposes of represents the Cost of borrowed funds used during accelerated depreciation methods (see Note D).

plant construction and a rate of retum on stockholders' capital used for construction purposes. On the income D -Income Tax Expense statement the cost of borrowed funds (before income Below is a summary of income tax expense and a taxes) is a reduction of interest expense at i the retum reconciliation of totalincome tax exDense with the tax on stockholders' capital is an item of nonca n other expected at the federal statutory rate.

income.

1979 1978 The company is limited by PSCW to capitalizing AFDC gnousa,ds of Dona s>

caly on construction work in progress exceeding 10%

Crent ta< e< cense 5 21.140 5 39 975 of its net investment rate base. Revenues granted by imestment tax crec t a1ustments - net 27 657 23.946 PSCW in rate orders include the equivalent of a return De' ames charged to decreciat.on on investment in construction work in progress below 92 3 873 this limit. AFDC was capitalized in 1979 and 1978 at a 70 ai tax encen'e 5 65 989 5 67 794 rate of 7% approved by PSCW.

Inccme cefore mcome taxes.

514 1521 5139 399 F - Construction Funds Held by Trustees Eicectec 'an at 'ecera' statutory rate 5 68 320 5 66 912 Mowance for tu as usec aunng The construction funds were established to finance n

construction (6 3c2)

(2 528 pollution control and environmental improvement S

e ta= rr of federa, ta<

facilit'es at the company's new Pleasant Praine Power g

g Plant. Proceeds from the sales of municipal revenue cine" (no. tem coer 5% of encected tas) 11256)

(1 616) bonds issued by the Town of Pleasant Prairie in 1978

.ota tax excense

$ 65.999 5 67.794 and 1979 were deposited in the funds under loan agreements with the company. As a revenue source Tne aggregate amount of deferred income taxes and collateral for the loans, the company has issued to included in the accumulated provision for depreciation the town :ts first mortgage bonds in the aggregate at Decemter 31 was $140.253,000 in 1979 and principal amount of 552 mi!! ion. Funds are released to

$122 404.000 in 1978.

the company as qualifying property is constructed at in 1978 the company filed claims for refunds with the internal Revenue Ser/ ice (IRS) for the years 1970-72.

G - Accounts Receivable 7he c! arms seek a refund of federal income taxes for the deduction of storage and other costs for spent Accounts receivable are shown on the balance sheet nuclear fuel. Such costs were disa!! owed as a current after deducting an accumulated provision for doubtful accounts in tne amount of $1,175,000 for 1979 and deduction by IRS on audit and the resulting assessment was withheld from a previous refund.

5826,000 for 1978. Uncollectible account wnte-offs net Management is contest:ng the disallowance, but of recoveries were $2.316,000 in 1979 and $1,552,000 0

pencing resolution the company recorded the tax effect of these costs for the years 1970-78 and for l

1979 by increasing the current feceral income tax H - Common Stock and Premium on Capital Stock j

provisions and norma!izing those amounts cy reducing Under the Automatic Dividend Reinvestment and Stock deferred income taxes by $14,738,000 in 1978 and Purchase Plan, sales of 426,901 shares of common

$2,057,000 in 1979. resulting in no effect on net stock were made in 1979 and 114,506 shares in 1978.

income. Deferred nuclear fuel costs accrued were Proceeds from the sales were $10,173,545 in 1979 and reduced by the amounts of taxes provided. This

$3.148,083 in 1978. Sales of common stock under the accounting for income taxes is in accordance w:tn Tax Reduction Act Stock Ownership Plan (TRASOP) 23

N&TE3 recaucoi i

were 185.072 shares in 1979 and 83,173 shares in The matunties and sinking fund requirements through 1978. Proceeds from the TRASOP sales were 1984 for the aggregate amount of long term debt S4.690,986 in 1979 and $2.367,709 in 1978. The outstanding at December 31,1979 are shown below. Of i

increase in premium on capital stock is the excess of the annual sinking fund requirefnents, S3.190,000 for the proceeds from sales over the $10 par value of the the year 1980 and $3,990,000 for the years 1981-84 common stock sold.

maype satisfied by certifying additional mortgaged 1 - Long Term Debt r

O'C'*D*' 3I

)

Matunt:es Sinbng Fund 19I9 1978 t

(Thousands u ooaars) 1980 St 3.493.000

$5.725.000 1981 2.147.000 6.350 000 l

Arst Mor* gage Bonds 1982 59.137.000 6.315.000 Msconsin Electnc Power Comoany 24% Ser:es due 1979.

.5 S 7,574 6.190 000 i

1983 24% Ser es due 1980.

10.995 11.122 1984 16.733.000 6.190.000 j

3%% Ser es due 1992.

9.324 9.502 Future sinking fund requirements have been I

anticipated by advance purchases of bonds to the e e cue 19 15 647 i

35% Senes due 1966.

22.070 22.332 extent of $3.001,000 and cert:fication of property in the j

44% Senes due 1988.

23.062 23.457 amount of $3.190,000. Sinking fund requirements for j

5 % Seres due 1990.

26.871 26.913 1980 have been satisfied.

i Ste% Se<ies due 1996 28.097 28.122 l

64% Senes due 1997.

38 081 38.115 Substantially a'l utlhty plant and nonutil.ty prcperty is

)

6t % Seres due 1998.

33.808 33.834 e

i 610% Senal Ser:es due 1999 2008,

25.000 25.000 subject to the hen of the apphcab!e mortgage.

I 6 25% Sena' Senes due 1999 2008.

1.000 1.000

)

7%% Ser es due 1999 38 991 38 995 J - Preferred Stock 8%% Senes due 1999.

39 555 39.591 l

45*. Senes 1e 2004.

12.000 December 31 84% Seres due 2006 60 000 60.000 3979 1979 6 45% Ser.es due 2006 4.000 1

6 50% Senal Senes due 2007-2009 -

10.000 (inousands et ooia s)

I 8F % Ser:es due 2008 80,000 90.000 Pre' erred Stock (cumula!.ve) e

1. sconsm Oem h Wany -

Former Wisconsin Michigan Power Six Per Cent. Preferred Stou -

Company (mergeo witn comcany in 1977) a@onad 45m shavs.

2% Senes due 1980.

640 640

$100 par va'ue: issueo 44 508 J

3%% Senes due 1981.

2.147 2.147 shares; not caiaole.

.5 (451 5 4.451 35% Senes due 1984.

2.164 2.164 I

Sena! Preferred Stocx -

44% Senes due 1991.

3.623 3.623 i

4b% Seres due 1993.

5.052 5.077 authonzed 1.560.000 snares:

I

$100 par a ue 54% Senos due 1996.

9.251 9.271 g

64% Senes due 1997.

11.539 11.539 shares: redemption once $101 26.000 26.000 6%% Seres due 1998.

9.889 9.899 3

8.90% Senes -issued 400.000 l

8%% Senes due 1999 11.829 11.829 shares, redemption once $107 Wscons:n Natural Gas Company to December 1,1980 and l

3b% Senes due 1980.

1.858 1.861 dechning amounts thereafter to 4W Senes due 1986.

3.631 3.633

$101 after Decemoer 1.1985 40.000 40.000 4%% Senes due 1987.

4.499 4.504 7.75% Senes -issued 300.000 44% Senes due 1990.

6.513 6.513 shares: redemption once $107 6%% Series due 1992.

9.435 9.462 to Noverrcer 1.1981 and 84% Senes due 1994 9.730 9 796 cechning amounts thereafter to Sh% Senes due 199c.

9.912 9 941

$101 a'ter Novemcer 1.1986 30.000 30.000 629.991 563.103 8 80% Senes issued 600.000 shares. redempt.on crice $108 80 Debentures (unsecured) to January 1.1984 and declining Wiscons;n E ectnc Power Corrpany amourts thereaMer to $101 7 % Sines due 1993.

33.531 34.429 after December 31,1993 60.000 60.000 663.522 597.532 Senal Preferred 5:ock -

Unamortized Discount - net.

(802)

(294) authonzed 5.000.000 snares.

Long Te-n Debt Due Current:y (11493)

(7.662)

$25 par value. unissued.

Total Long Term Dect.

.5649.227 5589.576 Total Preterred Stock.

5160.451

$160.451 l

24

f e.

I k

}

)

l l

K - Notes Payable and Commercial Paper off to a deferred account pending s'absequent action in The average interest rate for debt outstanding at separate rate dockets for each utility in wnich they Decemoer 31,1979 was 12.20% for notes payaole and would prop se a formula for having the amount so reclassified borne by their ratepayers. The Commission 13 35% for commercial paper. Average short term apoealed the Oc?ber Circuit Court decision to the borrowing outstanding dunng 1979 amounted to Wisconsin Court of Appeats in December 1979. Other

$66.483.000 with a weighted average interest rate of f

1136% Maximum short term borrowing during 1979 precertification expenditures, related to the project were was $134,022,000.

transferred to the Haven nuclear project oursuant to the PSCW crder.

All bank loans outstanding at December 31,1979 were demand notes held by banks in fiduciary capac:::es.

An intervenor petition before the Dane County Circuit l

Commercial paper outstand;ng matured in January and Court requested review of the PSCW finding that the February 1980.

expenditures for the Koshkonong project were Unused lines of credit 'or short term borrowing reasonao!e and prudent. Although the actions of l

amounted to $126.055.000 at December 31.1979 in regulatory bodies cannot be predicted with assurance, support of various informal lines of credit from banks, the company continues to believe that expenditures in the companies have agreed to mainta:n unrestricted connection with the Koshkonong project were compensating balances With the except:on of funds reasonable and prudent and that such expenditures recuired for daily operations, the cash balance shown should, therefore, be recognized for ratemaking l

cn the ca!ance sheet at December 31,1979 as we!I as purposes.

$1,100,000 cf non-interest beanng cert ficates of l

deposit included in temporary cash investments Under date of February 14.1980. the company and l

represent compensat.ng balances.

otner participants received an order from the PSCW stating that expenditures capitalized to June 30,1979 in connection with the Haven project were prudent and L - Commitments requinng the company to amortize its investment of I

Construct;on expenditures through 1984 a<e estimated

$21.9 mdlion to operating expense monthly over a l

to be $1.3 bi; hon, of which $340 mihion is planned for three-year period starting with comp!etion of the next 1980. Commitments.for generation faciht.es at rate proceeding. The order forther directed nat within December 31.1979 amcunted to $247 million. part of 30 days tne company advise the Commission of its which is cancelable. with the 20andonment of the decision as to continuance of the Haven apphcation or Haven project, this amount was reduced to $143 witndrawal thereof and abandonment of the project. On i

mokon February 29,1980, tne company notified tne Commission of its intention to abandon the project.

M - Contingencias g o he o e,

e company wW W aHowed to earn on the unamortized expenditures through On March 2.1979 the company was ordered by PSCW inclusion in the capital base for return purposes.

(Commission) to wnte off throughout 1979 its share

($2.3 million after income tax effect) of certa!n Public nearings were held by PSCW in November 1979 capitalized expenditures related to the discontinued on the financial, accounting and rate making effects of Koshkonong nuclear plant project in which the steam generator tube degradation at Point Beach company was a participant with three otrer utikties.

Nuclear Plant. On December 20 the Commission The Commission deemed that such expenditures were issued an amended notice of investigation and order prudently made. but of no future va:ue. The wnte-off directing the company to present testimony on reduced 1979 earnings by 5012 a share However, in replacement power costs and any associated costs October 1979 tne Brown County Circuit Court reversed denving from unscheduled down time as a result of the the March 2 order of PSCW and on November 15 tube degradation. The company believes that the ordered the matter remanded to the Commission for addit;onal costs of fuel or replacement power incurred mod:fication of the order. The comcany and other as a result of this tube degradation problem will utihties filed with PSCW on Novemcer 30 a motion for continue to be recoverao!e, eitner under existing tanffs an accounting order which would reclass:fy the wnte.

or othervwise. through the Company's e!ectric rates.

i l

25 l

NLTED icovausci N - Quarterly Financial Data (Unaudited)

Three Months inded March June Septemcer Decemoer (Thousands of Dettars) 1979 1978 1979 1978 1979 1978 1979 1978 Total cperahng revenues

.5236.760

$204 802

$183.158 5164.910

$213.261

$184 798

$234.386 $198.101 Operat ng income 26.360 25 590 28.074 23.188 38.654 34.223 24.853 25 208 Net income 18.049 17.697 19 343 14 583 30.069 25.287 15.071 14.038 Earnings per share of common stock.

50 81 50 87 50 87 50 70

$144

$128

$0 63 50 65 Because of seasonal factors v.hich affect the utility business and ditterences between summer and winter electnc rates. the quarterly resu!!s of operat.ons are not d rectly Comparable.

O -Information by Segments of Business War Ended December 31 1979 1978 (Thousands ct Dci;ars)

Eiectnc Ccerations Revenue from anatftlated customers

.5 667.757

$ 583.162 intersegment sales 206 198 Operarng revenues 667.963 583.360 Oceratng income tefore income taxes 160.656 153.948 Decrec.atton - stra gat line 52.619 47.432 Construenon excerattures.

238.728 212.063 Gas Ocerancos Pe ent.e from unatfcate. ' customers 191.238 161.177 Intersegment sa es 24.584 3 224 Operating reeenues.

215 822 164.401 Operanng income before income ta=es 20.027 18.908 Depreciabon - stra,ght hne 6.697 6 217 Construction expt nditu'es.

12.772 8.153 Steam Operat.cos Oceranng revenues (unaffmated) 8 570 8.272 Operaung ir come before income taxes.

1.540 1.963 Depreciat'on - stra grt kne 539 511 Ccnstruction expenc:tures.

243 273 Consobcated Ocerating revenues (evetucing intersegment sa'es eliminated in conso6idation) 867.565 752.611 Trat;ng income cefore.ncome taxes 182.223 174.819 preciaban - straight hne 59 855 54.160

'tructon expendeures (rc!ud:ng

. iut.l.ty; 252.258 220.563 At Decemcer 31 Net ident.fiaole Assets Electric.

.51.643.722 S1.387.513 Gas 168.635 159.369 Steam ano ncnuti!.ty 18.307 18 289 To al Conschaated Assets

.51.830 664

$1.565.171 Intersegment sa!es consist pnncipally of gas sold by Wisconsin Natural to the company at rates approved by PSCW.

26

a jo

• 6 4

P - Supplementary Information Concerning the statement of income A4usted for irflation Year Ended December 31,1979 Effects of Inflation (Unaudited)

As Peported Adjusted for j

The Financial Accounting Standards Board requires in Financial General statements infiat.on

{

that, beginn ng in 1979. certain information relating to the effects of changing prices (inflation) be included in

• '*'5 C' Do"5) j the annual report to stockholders for certain large.

Operat;ng Revenues.

$868

$ 868 Oo pubhcly held enterposes. No changes to the basic ceprb" r

s ra,gN kne.

60 119 financial statements are required nor have any been Otner expenses.

626 626 made. While the required information is one means of income taxes.

64 64 displaying inflation's effects, it should not be Tctat Operat;ng Expenses.

75o 809 i

considered as the only means of measunng infiabon, Operating income.

118 59 i

nor necessanly the most meaningful for a public utility.

Other income and Deauctions.

8 8

Interest Cha'ges and Pre' erred 1

Information in the table at the right, adjusted for general stock Dividends.

(56)

(56) inflation, reflects conversion of historical costs into Earnings Avanabie for Common average 1979 dollars. The Consumer Price Index for stocknoiders (enesuc>ng reduction All Urban Consumers was used for this purpose.

(c),'rae e co )ot

$ 70

$ 11 The only operating expense which has been adjusted Earnings Per sha'e of Common is depreciation, this was computed using the same ston

$3 75

$0.59

)

accounnng pnnciples as those used for the reported Reset on of utd.ty plant to amount j

financial statements. The cost of fossil and nuc! ear fuel recoveracie tnrougn regwatory l

has not been restated because increases in fuel prices process

$(138)

}

are passed on to ratepayers currently through fuel Gam from dechne in purchasing adjustment tanffs. Income tax expense has not been j

adjusted because the effects of inflation are not j

recognized for tax purposes.

Note - Eamings (loss) after reduction of ret util.ty piant to recoverao;e cost would hac taan $(127.000,000) adjusted I

The reducnon of utikty plant to the amount recoverable ter general infianon.

j through the regulatory process ($138 million) shows tne l

impact of 1979 inflation on the company's reported net inflation are trending down, whereas historical dollar dividends increased from $1.90 a share in 1975 to plant cost not recognized by the increased

$2.345 in 1979. The downward trend will continue depreciation (SS9 milhon). The gain from decline in purchasing power of debt and preferred stock ($122 unless inflation is controlled or changes are made in million) is the benefit accruing to the company in 1979 the income tax laws cr the regulatory process.

l because tnese items will ulbmately be repaid in dollars in compliance with the Securities and Exchange of reduced purchasing power.

Commission requirement, the company's annual In the following five-year summary, selected historical report to the Commission (Form 10-K) will include the -

items have been restated in average 1979 doi!ars. The unaudited estimated cost of replacing present p

uchve capacity and the corresponding i

absolute numbers are not as meaningful as the five-j year trend. For example, dividends adjusted for depreciation expense based on replacement cost.

I Selected Supplementary Financial Data Adjusted for tne Ef'ects of inflaton (All amoun!S are stated in average 1973 dollb.S)

Year Ended December 31 1979 1978 1977 1976 1975 l

(Malions of Dollars Except Per share Amounts) l Common stock equity at year end.

$555 l

Ocerating revenues adiusted for generalint;aton.

$868-

$837

$802

$755

$683 Casn dividends per share adjusted for generalinflation S 2.345'

$ 2.46

$ 2.50

$ 2.52.

$ 2.56 Market once per share of commen stock at year end adjusted for generalinflat.on

$ 21.64 -

$27.86

$36.36

$3913

$37.91 Consumer once index - average for year 217.4 195.4 181.5 170.5 161.2

• Actual amount for 1979.

l 27,

REPERT GF INEEPENEENT ACCSUNTANTS FICC

-.}-{w aterlouse iCo, To the Scard cf D. rectors and the Stockholders of Wisconsin Electric Poser Company in our ooinion the accompanying conschdated balance sheet and the retated consciidateo statements of income, reta:ned earnings, and changes :n financial position cresent fa:rly the financial pos: tion of Wisconsin E!ectric Power Company and its subsidiarres at December 31, 1979 and 1978. and the resutts of their operations and the changes in their f:nancial posit:on for ne years inen ended in conformity with generally accected accounting pnnciples consistently apphed. Our examinat:ons of these statements were made in accordance with genera lly accepted aud: ting stancards and accord ngly included such tests of the accounting records and such other auo:::ng procedures as we considered necessary in the circumstances.

.~>

Milwaukee, Wiscensin January 24.1980 28

S,TATISTICAL INFCRM ATISN e

WISCONs4 ELECTA 1C Po AE A CcVPANY SYSTEM 1979 1978 1977 1976 1975 Financial Net encome (5000) 82 532 71 605 68 195 60.130 49 011 Pre' erred s:cca avicend reaul'emert (5000)

(12 368i (7 337)

(7 088)

(7.088)

(7.088)

Ea'ntrgs a,a ia0:e ter commen s:oca (5000) 70,164 64 268 61 107 53 042 41.923

• . of ccerateg revenues 8 09 8 54 9 12 8 95 8 28

• s cf ret rq on ave < age com-on ew.!/

12 51 12 18 12 19 12 09 10 02 Rat o of mamet to cock value of common stocn - Decemcer 31 74 88 1 10 1 16 1 13 Tees hec :targes ear ed ce'o'e ecome ta=es 3 97 4 32 5 09 4 56 4 13 Earnings ce* src..e of commen siccw (5) 3 75 3 50 3 36 3 19 2 54 Div'dends ca. cer snare of common s:cca (5) 2 345 2 21 2 09 1 93 1 90 A.erage numcer o+ sra<es of common s::ck 18 705 029 18 354 149 18 212 721 16.642 249 16.480 868 Plant and Production Gass u'..ti mant i 5000) 2 279 104 1 974 779 1 732 848 1616 405 1.548.505 mest+e-t a gross pa-t cer Ae<ense Jada' t s) 2 63 2 62 2 59 2 73 3 06 Customer E ect :c (5) 2 610 2.278 2019 1.906 1.851 Gas (5) 596 681 875 866 874 Gereratrg cacace re;aaatts) 3 781 3 6e6 3 577 3.594 3.603 r

S, stem cea. re;,ana s) 3 313 3 339 3 452 3.216 3.109 Sales, Revenue and Customers Electric Vep satt Fours Ne'ge e<3 tea 16 506.481 16 945.796 17 CSS 664 16.790 936 16.281.565 Dur ~ asea 2 374 000 1.720 042 1 077 832 614 392 469 123 Totai cutcut t 8 S80.481 13 665 838 t8163 696 17.405 378 16 750 668 Co cany use transm ss<cn 'osses ana.nac:cunted 'or (1 209 869)

(1.196 165i (1 203.322)

(1 248 770)

(1.187.402)

Tota! sa es t 7 670 612 17.469 673 16 960 374 16 '56 608 15.563 2S6 Cee atmg evenues (5000) 667.757 583 162 519.182 462 597 405.232 Ccerat rg rco~e ce' re :nc ~e *aies t 5000) 160 656 153 943 151 492 136 817 112.211 Custome s (Enc ot, ear) 795 670 782.651 766.730 754 703 742.900 Gas T erms roosaacs)

Pu :rasec 704.945 681.169 646 916 728 390 707.685 r

Comcarf use. O st< but.cn ' esses s::rea gas and ura::cunted for 1.156 (410) 827 (24 567)

(410) 7ctaf sa es 706.101 680 753 647.743 703 823 707.275 OceraMg re.en es (5000) 191.238 161 177 143 265 122 525 94 956 u

Cce<at rg <ncome cefore income taxes (5300) 20 027 18 908 18.963 13.853 12.343 C.st:me's (E-c c' fear) 206 032 197 602 191 607 186.329 180.251 Steam Service Sa es (Wors of counds) 2.198 2.352 2 193 2 319 2.218 Ocerat ng evenues (5000) 8 570 8 272 7.456 7.319 6.380 Custome's tEac of, ear) 555 610 615 625 627 29

m RAN2E CF OTCCK PRIZES AND CIVIDEND 1978/1979 s,

,,7,

~ (;

Stock Transfer Agents Common Stocn. Sa Per Cent P*eferred Stock and $100 cm c~

Par Value Ser'ai Pre' erred. 3 60% Senes. 8 90% Series.

o, p< ce a sae o,v p<< aeo.

a

,omposae NvsE 7 75% Series and 8 80% Ser es Corvos.te N'SE.

%aner av per w

s an Lc sna,e re Loa Pc;er S.rko sra.

i s 5a s at.

s 2sw sw s 27 s25w 231 W M.c.%gan Street 2

$6 2s.

2* i 595 26 %

23%

PO Box 2046 3

56 29 4 27%

595 26 ',

24 %

Mowaunee. WI 53201

.......16...

... 28.%... 25..

..$.95....

-54

• 24. -

4 Common Stock and 5100 Par Vatue Sertal Preferred Stocn.

e aos s, n p3 8 m seus PM 8 90% Ser:es 7 75% Senes and 8 80*. Series 0,

e,<e arge 04 p <e a ege s

P Cynposae N esE Manetwers Hmer TNst Compam osc per Compos te NvsE s er

,e r

to.

4 New Yorn P!a23 sr a,e

%7 t3.

ew h W M 5 t

s2 225 s107 02 s2 225 srx4 59P.

s'oo' 2

2 225 136 i.

2 225 131 D

3 2 225 iC6 1015 2 225 10h 94 Stock Registrars a

2 225 t G4 37's 2 225 95 735 Common Stock 7 75s se es eq r 75s se,.esas p4rst Wisconsin Trust Capany D..

Pr<e Ar;e Dw

• • <e acce 777 E Wisconsin Asenue Lanc per Compcsae Nys,E Manaukee. WI 53202 sr co+oosae NvsE e

s,,e y

L.

3,e re La.

Manufacturers Hanover Trust Company i

st 33'S s 36 s d2 st 33's s $6 se2'.

2

• 9375 13 93

• 9375 99 60 7 4

y p,

3 13375 H

67 1 93'S 834 6 "i New York. NY 10015

'." 75...

I." '.'.

Sa Per Cent Preferred S!cen 92

83 3 60s se' eses 3 60s se.es p*3 M&l Marshaj & lisiey Bann 0,.

ose, me om o,er ? e 770 N Water Street mey p.,

cwe pe, cwe'r s eo

%14aukee. WI 53202 snye te. ea s e aoeo s* <e tra sa

- a

$100 Par Value Ser ai P<e' erred Stocn. 3 60% Ser.es s 43,

s 9c s 3e.

53 )

i s >a s 4,5 33 4

x ar.

3a %

First Wiscons.n Trust Company 2

y 3

n Jaw av.

n 34 %

36's 777 E. Wisconsin Asenue

'...f

.. 36 '....3* '.

3".'...

3?.*

Maaaiee. WI 53202 3

s.. a-com p s s=pccem *J

$100 Par Va'ue Senal Pre' erred Stock. 8 90% Ser:es. 7 75%

x a e, e

ov een e Seres and 8 80% Seres x,.,,

oc

cwe, er c we.

- r s.e s sree Lc. sa r as.co yg, 93,shail & Ils e/ Bann 5 se

o. a.a a

770 N Water Street i

9O

'N' UIZ U

'N Mo^aukee. WI 53202 3

1 $J Na A.,e 1 50 fd 5 3 as e1 Manufactu'ers Hanose, T*ust Company

'9

.!.53

............ ?....

4 New York P'a2a 62

• ^ 5* 'J 53 5

..as se,espa m i s m se nam)

New York, NY 10015

0..

meaca.

0, p.<eacce are ec o.c me cwer pc ow t e cwe Stock Usting and Trading snare

~ < * -

c.

5aare Hr tsa Common Stock and $100 Par Vaiue Serial Preferred Stock.

3 -

8{,e22 59,7('

8 90% Seres and 7 75% Ser:es a e bsted and traded on si 9

3 2 20

• ct uw the New Ycrn Stock Exchange 4

s e cow s +e.

2 20 93 %

S2%

g,x Per Cent Preferred S!ccw and $100 Par Va'ue Senal Pre + erred Stock. 3 60% Senes and 8 80% Ser es are traded

%e cece, aas eu an regse awan, J.ooe ts cc o.ve"es ses cus: anes s ne me a-5 ne cm sw. sme 342 on an eser-the-counter tas.s a ce rece-o-a ins +e cree, ss.o eco uo s a<n s p+eneo se a m The Company's tradrg symeci en the New York Stock s, es Excnange is WPC.

A cooy of Wisconsin E!ectnc's 197910.Ye3r Statistical Report is avadable by wnt ng the Corporate Secretary. J H Goetsen.

231 W '.tenigan St.

P O. Box 2046. Mdwaukee. W 53201 30

..o i

i DIRECTORS OFFICERS 1

FREDERICK M. BELMORE CHARLES S. MCNEER (53:29) l Corporate Cerector and Consstant Formony Pres. dent and Cn.e' Esecutive Omcer Cnerman of tae soard of Directors Mi Ross enc i

(manufacturer and astreutor of rosoite and RUSSELL W. BRITT (53:31) s ooratorv s com ed ewomem sue.2cv a

1.

of G 0 Seee & Co and v.co mesident.

Esecut.ve vice me.com G 0 Seane & Co SOL BURSTEIN (57;14)

RUSSELL W. BRITT e,eca,ve veo p.e.oen, E=ecutive vice mesusent of tee Comoany THOMAS J. CASSIDY (55,33) 1 SOL BURSTEIN sen.or v>ce pres.eem Esecutive v<e Pres.aet of tee Comcey NICHOLAS A. RICCI (55;32)

RICHARD L JOHNSON se.or vice pres.oene p e oe,i or tre venna Cso ranuracurer se

• 'l,'j,"e'na' "*'e,e','*%"' "" "

ROBERT H. GORSKE (47;15) j v.ce Pres.aen ans con,m Counsei CHARLES S. MCNEER a

j besdent and Cmet E.eeur.ve Ofbcer of tre JOHN H. MCLEAN (55:26) 1 Company V;ce Pres.de%CustomW Aetabons DONALD K. MUNDT HUBERTO R. PLATZ (51;13)

Esecutive V ce P*esdent. The Norte*estern Musum vice P es.aent-Engmeenng and Constructen L.te insurance Co I

PHILIP G. SIKES (62:28) j JOHN P. REEVE veo m,,o,..sniem occat,ans nei,rea Forme, a e cene ana Cm.et Executive omen. aco. con Puers manu'acture at eso cacer and coated pacerst teen a O'v s.on of 'i.CR RICHARD E SKOGG (51:28)

Czo, and temer v.ce President NCR Coro Vice Pres.oentOcerar:ng Servces i

j MORRIS W. REID JOHN E. SPEAKER (49;3) indecencent Veagement ConsJtant Formeny Vee President-Commurbcat.or's j

Cearraan of the Soso or Drectors of J t Case Co. a

,,a,y, co C NORMAN C. STORCK (64;42) co uct.on " '"'

vee bes.oent-Oms.on Coerat.ons JON G. UDELL l

ire.n va pryessor or sus. ness me va.ve s.#, o, JOHN H. GOETSCH (46.21)

1. scors.n et Vad' son Secrerary I

JERRY G. REMMEL (48;24) 4 Yempers o tre E=ecut ve Comm tree are d. rectors l

Beamore Jereson. McNeer Aeene sN UJed ad eas.,rw other erec'ers re sterna'e memters ve+cers at t*e av#i coram.rree,e erecio,,

RICHARD R. P!LTZ (39;15) se,mve sonnsm vunat pee.e me.d a~2 use Corconer vemters e ine Comoeasmon Cmnee we airectors ae.more.,onnson a,a soe e JOHN W. FLEISSNER (55:9) v asurani secretary vemeets of tre Nom.nanng Comm ces are a,rectus seme ucNeer ano meeve DAWN L. FREITAG (28:3) assistant Secretcy GORDON A. WILLIS (41:18) as+ stet treasurer GEORGE W. BOMIER (56:25) vee P e.eene and cenes veage wscons.n Naturai Gas Company l

F gures *1 parem

• eses escate age and years of serwce 1

l 31

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