ML20073J917

Annual Financial Rept,1982

ML20073J917
Person / Time
Site:	Point Beach
Issue date:	04/13/1983
From:	WISCONSIN ELECTRIC POWER CO.
To:
Shared Package
ML20073J903	List: ML20073J899 ML20073J917
References
NUDOCS 8304190454
Download: ML20073J917 (32)

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Volume 60. Number 11 November 1982 E ectric Light & Power THE NEWS MAGAZINE OF ELECTRIC UTILITY MANAGEMENT AND TECHNOLOGY WEPCo named Electric Utiity of Year

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lt A R R I N s,1 t ' N 11

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. t rui t o.n f u nd req u re s edr hudgeting pr.o e du re t na 4

.4-bee r. <ho en I, lei t ric l'tiht) of ' he er utihtie* are capable mi nt s. a nd 69 pe rce r.t. f t. t a apit a rat e nerea +- to begir. w a t t6 t art l ear fo r 19-2

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- that " Wisconsin Business isP: port...o. f, leader.s' in 1ndustry? 1..iWisconsin Electric actMty; $.,.. ?...y 4

inaRneState."Theprogramld..laborandgovemment.Many; M The ;3e'conomicidevelop..; > ' q i

.1 serviceareaexecutiveshave%.riientcampaignstfesses,theY 9 odtlined at_ meetings. ithQ[j?

w positive changes made Ing volunteered to become "am-p(Wisconsin's tax laws in th commurilty leadets in key Dassadors"todiscussWiscon-Q service area cities, focuses l

on efforts to attract new In-(sirtbusiness conditions with $%1970s, creating a business cil-M isting business tp expand' V states.11tlevision, newspaper \\/ westemstates.Th dustry and to encourage exA thbir counterparts in other ' $ mate superior to other Mid-

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The Wisconsin Electr$ pro-and business magazine edi-also higl311ghts Wisconsin's "

s gram has received the Sup-torialshavecommendedthe higher-than-average labor : $..

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Wisconsin Electric Power Company System 1

Highlights Per Cent 1982 1981 <oISe*a's$

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Earnings per Share of Common Stock *

$ 3.60 52.93 22.9 Dividends per Sh'are of Common Stock *

$1.902 51.76 8.1 Total Operating Revenues

$1,302,910,000

$1,152,383,000 13.1 Earnings Available for Common Stockholders

$ 116,558,000 5

90,415,000 28.9 Average Nilmber of Common Shares Outstanding

• 32,402,000 30,894.000 4.9 Electnc Sales to Retail, Municipal and Cooperative Customers (thousand KWH) 17.059,317 17.399.450 (2.0)

Gas Sales (thousand therms) 632,326 652,171 (3 0)

Retail, Municipal and Cooperative Customers (year-end)

Electric 818,843 812.834 0.7 Cas 217,983 215.520 1.1

• Ad;usted for July 1982 3-for-2 common stock split Earnings per Share of Com. Stock Dividends per Share of Com. Stock Adjusted for 5 for 2 stock Spt.t Ahuered for 5 for 2 stock Scht

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w, 2 00 1 00 1978 1379 1980 1981 1982 1978 1979 1')80 1M1 1992 LnnuS1 Meeting

.~a wn:n-he annual meeting of Wisconsin CN THE COVER - The medallion commemorates the selection cf the cemeany as "Etectric Utility of the lectnc Power Co. stockholders will War" tN Electric Light & Power magazine The auct& ton is from an article in EL&P's Novemter 1982 issue e held at 2 p m cn May 10.1983 at he Red Carpet Hotel,4747 S. Howell ave, Milwaukee, Wis in order to nsure your partic:patinn in the

nnual meeting. we encourage you a vote. sign and return your proxy romptly

2 Rap 3rt to StockhDidars Theyear1982 was one of achieve-However, we have not been hesi-menton many fronts forWisconsin tant to seek rate increases when Electric, highlighted by a solid in-those increases were necessary to crease in earnings and selection of offset rising expenses, and we have the company as electric utility of been successful in reducing "regu-the year.

latorylag" by a system oflong-term Revenues for the year increased budgeting and early filing of rate 15 percentover1981,and earnings increase requests.

per share of common stock im-The company's good perform-proved from S2.93 a share in 1981 ance in 1982 came despite the reces-to $3.60 a sharein1982,after being sion ar'd unusually warm weather adjusted for the three-for-two stock in the fourth quarter,which caused split completed in July.

declines in both electric and gas Common stockdividend payments sales, compared to the previous year.

were increased from $1.76 a share Rate increases contributed $66 mil-

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in 1981 to 51.90 a share in 1982, lion to revenues during the year, also adjusted for the stock split. It and electric and gas increases ap-g~h was the 22nd consecutive year in proved in late 1982 are expected to charles McNeer and Russell Britt.

Which dividend payments have risen.

increase 1983 revenues by approxi-The company's sound perform-mately 553 million.

ance in 1982, coupled with better The industrial character of the stock market conditions, contributed company's service area remains basi-to a substantialimprovementin the cally strong, although production l

price of Wisconsin Electric common cutbacks and layoffswere common stock. The market price of WE com-in Wisconsin asin other partsof the mon stock increased more than 25 nation. The manufacturing base of percent during the year.

the service area is well diversified We believe that Wisconsin Elec-and includes many firms which are tric's 1982 performance, achieved industry leaders. The operations at in a year of considerable economic many of these concerns are illus-difficulty, says something importa nt trated on the followirig pages.

about the fundamental strengths Trw company believes, however, of the company.

that a major effort is needed to Our efficient system operation support and stimulate future eco-and carefulcontrolof expenses have nomic activity in Wisconsin. We are l

kept our electric rates among the working closely with business, gov-lowest of the nation's largest metro-ernment and labor leaders in a coor-politan areas. Gas rates have risen dinated effort to improve the state's at a faster pace because of higher economic base.The program seeks prices from our pipeline supp!ier, to attract new business firms aswell but only two increases have been as encourage modernization and needed in the pastsixyears tocover expansion of existing industries. The other gas operating costs.

first success in this effort came in early1983,with the announcement that a major robotics manufacturer is moving its national headquarters to the Milwaukee area.

5 As reported in previous annual gas used only at times of peak de-to be actively involved in the gov-reports, the company is financially mand.We expectto continueto rely ernmental process. To do less is strong and well-positioned to meet on this favorable fuel mix for the to ignore our responsibilities as the future energy requirements of remainder of the century.

citizens.

our service territory.

Ample natural gas supplies are Many important decisions that A program to control peak de-availableto meetpresentand future could affect future business pros-mand for electricity, established in customer needs of our subsidiary, pects will be decided et the federal the mid-1970s, has been highly Wisconsin NaturalGas Co. As natural and state levels during the coming effective. Wisconsin Electric was one gas prices continue to rise,we fore-months.We will keep you informed of the pioneersin effortsto control see increased competition from oil on issues as they dewlop and urge peak demand, establishing innova-for some customer applications.

you, as stocknolders, to make your tive rates and developing aggres-Accordingly, Wisconsin Natural is views known to your elected officials.

sive load management and conser-encouraging installation of high-We also will report to you any varion strategies.

efficiency gas appliances as part of development in our plans for diver-Thesuccessof these programs has a major load retention activity.

sificatioa into new business areas.

led to leveling off in the peak de-Over the years we have worked These plans have been delayed mand for electricity, and has allowed aggressively to improve efficiency pending a Public Service Commis-the companyto significantly reduce and productivity because we believe sion of Wisconsin decision regard-future construction expenditures.

these efforts are a measure of ing itsjurisdiction over the proposed The manageable size of our con-management perfurmance which corporate restructuring.

struction program is one of the fac-benefits both stockholders and cus-While there are uncertainties tors which sets Wisconsin Electric tomers. Those efforts have been ahead, we believe the positive fac-apart from most of the nation's utili-successsful in the past and will be tors in this letter point to great op-ties and enhances the company's pursued with vigor in the future.

portunities and a promising future future prospects. At present, con-We are gratified that the per-for Wisconsin Electric. Perhaps the struction continues on Unit 2 of formance of our employes and our quote from the Electric Light &

the coal-fired Pleasant Prairie Power managementteamwas recognized Power article naming the company Plant, scheduled to begin operation in 1982 with the company's selec-utility of the year says it best "The in 1984. We also own 25 percent tion as electric utility of the year.

view, for Wisconsin Electric and for interest in a coal plant being built But, despite the outstanding per-its customers, shareholders and by another utility, planned for1985 formance recorded in this report employes, is indeed bright."

operation.No other plantsareinthe and a promising forecast,thefuture planning stages, and we do not ex-is not without challenge.

pect to need additional generating We live in a world of rapid politi-O.

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s capacity until at least the mid-1990s.

caland economictransition, and all Charles S. McNeer Becauseof the moderatesizeofour around us decisions are being made cnarrnan er tne e:ard and construction program, we plan to in legislatures and agencies of the Ch:ef Executive OfMer raise 75 percent of our capital re-government that will be crucial to quirements from internal sources our business operations. Our expe-3 during the next four years.

rience continues to confirm that A, ""

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Last year 96 percent of the elec-future success depends notonlyon Russell W. Britt tricity generated by the company doing our jobs well, but also in

[ng,7,tfng cmcer 8"

came from coal and nuclear plants, helping formulate public policies March 17,1983 with higher priced oil and natural that permit us to do so.

Particu'arly in these times of tighter governmental budgets it is important for us-both as corpo-rate citizens and as individual stock-holders,employes and customers-

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l The Y2ar in R3vl3w Innovation Continues Strong in the mid-1970s,theeconomicsof innovation has long been a tra-the electric utility business changed.

dition at Wisconsin Electric.

The company realized that new ini-The concept of burning pulver-tiativeswould be needed to operate ized coal as boiler fuel, a step that successfully in the last quarter of revolutionized the electric industry, the 20th century was proven at a Wisconsin Electric So, a major change in corporate power plant.Theworld'sfirst power strategy evolved.

plant to operate exclusively on put.

Wisconsin Electric moved aggres-verized coal was built by the com-sively to controlthe growth in peak pany, and a later plant held the electric demand, encourage con-world generating efficiency record servation and develop new pricing for 13 consecutive years.

policies to more accurately reflect Thecompanywas an earlyleader the cost of producing electric ener-in the use of nuclear power, and gy This load control program con-innovations built into the Point Beach tinues today.

Nuclear Plant have helped it consis.

Holding down demand for elec-tently rank among the nation's most tricity is important in today's busi-efficient and dependable nuclear ness climate because lower peak facilities.

load growth delays the need for One of the first liquefied natural more expensive new power plants gas storage plants was built by our and extends the time we have to gas subsidiary finance and put these facilities into These innovations have benefited service.

both stockholders and customers, An important part of our strate-allowing us to provide dependable gy is a load management system energy services at reasonable costs.

which permits the company to se-Today, the tradition of innova-lectively and remotely turn off cus-tion continues strong as we seek tomers' electric water heaters for new ideas to help our customers shorttimes during periods of heaw use energy more effectively This demand. We have been a pioneer spirit of innovation says that the in this activity, and the company's old ways may not always be the programisoneof thelargestinthe best, and recognizes that new meth-nation.

ods will be needed to reflect the Almost 85,000 water heater con-changing realities of a changing tro! units have been installed and society eventually we expect to have more

-___m m=m than 100,000 water heaters con-bove) Miller Electric Mfg. Co. of n

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cbadon acturer of eie'ctricIrc wefd ng in the program is voluntary and utoment.

those who do take part receive a eft) ceneral Electric Medical monthly credit on their elcctric bills.

Nsha)i.$s one f tneoids gest manufacturers of high-ethnology medical diagnostic aging equipment.

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l A number of rate changes, im-maintain the financial strength of plemented to more accurately re-thecompany and improve earnings flect the cost of providing service, potential. Customers benefit be-have also contributed to a leveling cause rates can be held at levels off in the peak demand for elec-lower than would be necessary if tricity. By providing a " price signal" the additional capacity had to be to customers, time-of-use and sea-built.

sonal rates have encouraged shifting Plant Construction Progresses of energy use to off-peak times.

About 50 percent of the electric.

Although our long-term construc-itysold bythecompanyin1982 Was tion program has been sharply billed on time-of-use rates which reduced, construction continued prict electricity higher on weekdays throughout 1982 on the second and lower at night, on weekends 580,000-kilowatt generating unit at and holidays. Time-of-use rates now the coal-fired Pleasant Prairie Power apph to all the company's indus.

Plant near Kenosha. This new facility, trial and major commercial custom-which burns low-sulfur coal, will dou-ers, as well as our larger residential ble the size of the plant when com-customers. Time-of-use rates are pleted in 1984. The first Pleasant also available to other residential Prairie unit began operation in 1980.

customers on a voluntary basis.

The only other capacity addition These innovative load control scheduled in the 1980s will come

,M programs, combined with overall from the company's one-quarter 4

customer conservation, have been share of the 380,000-kilowatt coal-highly successful. As a result, we will fired power plant being built by Wis-not need to build as many power consin Power and Light Co. That plants in this decade as originally unit is scheduled for completion in planned. This has allowed us to 1985. No additional generating reduce ourconstruction budgetfor facilities will be needed until at least the 1980s by 51.5 billion.

the mid-1990s.

By deferring the costs of financ.

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begin operation, more than 50 per-

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E ating plants, significant benefits have cent of the company's generating been realized by both stockholders capability will be less than 15 years and customers. Stockholders bene.

old. East Wells Power Plant, the fit generally because lower costs company's oldest generating plant, was retired in1982 after 92 years of

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plant.is scheduled to close in 1983.

onnson controls, ciendale, wis.,

s the largest producer of auto-The company is planning to re-0 eft Robo s anbo i s\\ stems place the steam generators in Unit 1 of the Point Beach Nutiear Plant

-re produced in ASEA ~S New terlin, wis. facliity-in 1983 and installsleeving in some

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9 steam generator tubes in Unit 2.

on a new computerized customer The Point Beach repairs are nec-billing and information system for essary becauseof corrosioninsome Wisconsin Electric.The new system of thesteam generatortubes.While allows customer service representa-this corrosion is not a safety concern, tives to greatly speed up handling it has reduced the capacity of Unit of service orders and customer in-1.The repairsareintendedto return quiries. Wisconsin Natural is devel-Unit 1 to maximum capability and oping a similar system by adding reduce maintenance costs for both to its present information retrieval units.

methods.

Also producing electricityforour The company has an active Con-customers are new " power plants" sumer Advisory Council composed fueled by the wind and sun, as part of members representing a broad of our continuing program to study spectrum of customer groups.The alternate energy sources. Three council meets monthly and makes wind generators and two photovol-recommendations to the company taic systems, consisting of a series on various phases of operation.The of cells capable of producing elec-dialogue between the company and tricity directly from sunlight, are now consumers was expanded during in operation. A third photovoltaic 1982 with the establishment of con-array and another wind generator sumer advisory committees in sev-will be installed in 1985.

eral of our operating divisions.These While these experimental wind committees operate much li'Ke our and solar units are small in size, system-widecounciland have played 4ik they reflect the company's commit-an important role in resolving con-ment to conduct research in alter-sumer questions on the local level.

nate energy sources. Information Separate committees composed of obtained from these installations rentersandlandlordsalso have been will be shared with customers and established to help resolve prob-utility research groups.

lems unique to these customers.

The company also maintains con-Customer Services Improved tactwith various community groups Both Wisconsin Electric and Wis-through the developing Wisconsin consin Natural took major steps in Energy and Older Adult Network, 1982 to improve services to cus-and targeted newsletterswhich are tomers. Installation was completed sent quarterly to consumer leaders, older adults, educators and com-5'b M eT Eo'rh ] q."" " "

munity leaders interested in eco-nomiC development.

actures transformers, switches no ses at its waukesha, wis.-

In early 1983, the company an-nounced establishment of a custom-eft)The Renault Alliance, Motor end magazine's 1983 car of the er assistance fund designed to help in KeIosha low income and elderly customers s

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11 who have trouble paying their ener-munity presentations and at exhib-gy bills. The company is contributing its at fairs and energy shows. Con-5100,000 to establish this " Good servation messages are available on Neighbor Energy Fund," and em-the company's Energy Facts Phone, ployes and customers are being which provides customerswith quick asked to donate S1 a month to the access to a tape library of energy fund. Distributions from the fund information.

will be made by a designated com-Weatherization assistance pro-munity organization.

f Energy Conservation Stressed low income gas and electric cus-tomers.TheWNprogramisdesigned Efforts to encourage energy con.

servation by customers continued primarily to aid elderly customers who heatwith naturalgas,while the at an accelerated paceduring1982.

Home energy checkups, conduct-WE program assistslowincome cus-tomers who have electric water ed by employe specialists at Wiscon.

sin Electric and Wisconsin Natural heaters, heat with electricity or oil, or need air conditioning for health Gas, play an important role in help.

reasons. All electric water heating ing customers use our services most effectively. WE and WN energy audi.

customers are eligible for a " Wrap-tors performed a record 29,000 up, Seal-up" program which allows home energy checkups in 1982, them to purchase weatherization services at discount prices.

bringing to 74,000 the number of y

home surveys since the program improving Effectiveness was established by our gas subsidi-Po s to imease e@e ary five years ago. The companies effectiveness have been ongoing at planto conductan additional 26,000 Wisconsin Electric for many years home energy checkups in 1985.

and are continuing to make improve-Energy auditors make recommen-g dations on insulation, storm win-tivity and efficiency.

dows and doors, weatherstripping, A new Ouality Circles" program caulking, thermostat settings, tim-was started during the year. This ing devices and appliance efficiency.

program consists of small groups i

Wisconsin Electnc and Wisconsin of employes who voluntarily meet Natural Gas also actively promote regularly on company time to iden-energyconservation through media tify and analyze areas for improve-advertising, "how to" booklets, com-ment, recommend changes to man-agement and,upon approval, carry

" " * * " ~ ~ * "

(Above) Rolls of paper are con-out. implementation. Enthusiasm for Verted into facial tissue and other products at Kimberly Clark'S mill the program has been high and Ief[Pr additional Quality Circles will be ut designers work with computer.alded deugn facilities organized in 1985.

at Allen Bradley Co., Milwaukee, a Refinement of the Management leading producer of factonf auto-mation control systems.

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13 By Objectives program was contin-New Officers Named ued during 1982. This program, by Charles S. McNeer was elected its very nature, aims at improvin9 chairman of the board and chief the effectiveness of the work force.

executive officer of Wisconsin Elec-Under the program allmanagement tric by the board of directors fol-employes determinegoalsand work lowing the annual stockholders meet-toward their attainment.

ing in May. Russell W. Britt was 1

The company also maintains a named president and chief operat-wage incentive system, for certain ing officer.

types of employes, known as mutual McNeer had been president and gainsharing. This system rewards chief executive officer and Britt an superior work output by paying an executive vice president of Wiscon-incentive bonus. Another produc-sin Electric since 1975.

tivity-oriented program is the com-In October, John W. Boston was patible units system which applies elected a senior vice president of to our outside electrical construction Wisconsin Electric, with responsibil-crews.This system ties together the ity for the Engineering and Con-layout of facilities, procurement of struction Department and System equipment and materials, perform-Operations Department.

ance of the work and related ac-Boston came to WE from the counting requirements.

Power Authority of the State of in the power plant area, a mainte-New York, where he was executive nance management system utilizes vice president-procedures and per-g ** f ' b %

labor standards for planning, sched-formance. He also served as execu-y uling and measuring work output.

tive vice president and director of j

f The system is now operating at the power operations at PASNY.

Pleasant Prairie Power Plant and is Carlyle W. Fay and Kenneth E.

',?

being instituted at our Oak Creek Wolters were elected vice presidents

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facility of thecompanyin December 1982.

s

'y Results of employe surveys show Fay was named vice president-

• 1 that employes are interested in nuclear power. He had joined the g

. g' improved productivity and efficiencV company in 1966 and was appoint-

.e y

We look forward to our employes' ed an assistant vice president a continued active support in the fur-year ago.

ther improvement of our overall Wolters was promoted to vice effectiveness.

president-system operations, suc-g 3

E ceeding Philip G. Sikes who retired AbovediaNey-Davidson, head.

Jan.1,1985 after 31 years of sen/ ice.

quartered in Milwaukee,is the Wolters was employed in 1950 and only motorcycle manufacturer in had been named assistant director-2he United states.

Ref0 Johnson Wax in Racine Wis.,

system operations eariier in 1982.

65Oneof thewortd'sleadingmanu-Oatturers of chemical specialty

@roducts for home, auto and personal care.

Wisconsin Electric Power Company System 14 Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and cent long-term debt,11 percent pre-Capital Resources ferred stock and 46 percent com-Wisconsin Electric Power Cols mon equity. The company's short-capital requirements for the three term indebtedness at that date years ended Dec. 31,1982 totaled consisted of SS million of notes 5876 million. Sixty-seven percent payable. Leased nuclear fuel and of this amount was for construc.

short-term debt was less than 4 per-tion of new or improved facilities, cent and 1 percent, respectively, of 14 percent for the reduction of capitalization. The company also, short-term debt,9 percent for acqui-on that data, had $8 million of short-sition of nuclear fuel,9 percent for term investments available, which retirement of long-term debt, and could be used to finance a portion 1 percent for increases in working of the company's anticipated capi-capital.The companyacquired $490 tal requirements, as well as 5103 million, or 56 percent, of its capital million in lines of bank credit.

requirements during this period The company has a nuclear fuel Total operating Revenues through internal sources of cash.

lease with a trust which issues com-Such internal sources of cash con.

mercia! paper backed by a line of sisted principally of depreciation revolving bank credit of $75 million.

"C accruals, normalization of invest.

The line of revolving bank credit

(

ment tax credits and retained earn.

would generally be available to m

ings The remaining 5386 million of finance the trust's ownership of the

.-D d"

the company's capital requirements nuclear fuel for a period of three Y

g during the period was supplied yearsif the trustwere unable to sell 4

through the issue of 5156 million its commercial paper.The company of additional long-term debt, sale is in effect the ultimate guarantor and leaseback of 5117 million of of the commercial paper and the

)

nuclear fuel, 577 million of addi.

revolving bank credit. At Dec. 31, y,,,,,,,,,,

, g tional common stock,525 million 1982, the trust had $65 million of of additional preferred stock, and commercial paper outstanding.

511 million from contributions and The company estimates that for advances in aid of construction. All the four years 1983 through 1986

$*,'$ C""*M'((",[

sales of common stock during the its capital requirements will aggre-

"" '#~e period were made through either gate 51 billion of which 75 percent the company's Automatic Dividend

~

y ad_

Reinvestment and Stock Purchase j

h N

h Plan or its Tax Reduction Act Stock d

f F

Ownership Plan.

At Dec. 31,1982, the company's canitalization consisted of 43 per-7s nas ma n%

q, e

c

- ~ c :-

-,-.-___.--,,,-,.,---e-

+ - _,_

_,--,,,.__m-

15 will be required for construction percent of its capital requirements expenditures. Estimated construc-during this period from internal tion expenditures for new power sources. The remaining 25 percent plants during this period include of the company's capital require-581 million for completion of the ments during this period are expect-580-megawatt Unit 2 at Pleasant ed to be met principally through a Prairle Power Plant and 536 million combination of thesaleofcommon for the company's 25 percent undi-stock through the company's stock vided interest in the 380 megawatt plans and the sale oflong-term debt.

Edgewater Unit 5 which is being Market conditions will influence constructed byWisconsin Power and the timing and amount of any se-Light Co. The other estimated con-curity issue. No public offerings of struction expenditures are prima-common stock other than through rily for improvements to existing the company's stock plans are antici-power plants, for additions to and pated during these four years. The Construction Expenditures t eplacements of portions of the dis-company's financing plan for these

~

tribuNon and transmission system, four years contemplates a capitali-ums mys for newservicecentersand forother zation structure consisting of 40-g-

a buildings and equipment. The bal-45 percent long-term debt 10 per-3.) '

g ' d.y o -

ing this period is principally for sink-cent common equity. Short-term ance of capital requirements dur-cent preferred stock and 45-50 per-ng,z 4M

$<Q ing funds and maturities of long-debt and leased nuclear fuel are

(

term debt.

expected to aggregate approxi-w L?

[

The company believes that it will mately 5 percent of capitalization

[l be able to obtain capital in suffi-during this period.

3b cient amounts to meet its capital The company's embedded cost ff requirements over the four years of long-term debt outstanding at im n u n eo eu ei~ ef es ending Dec. 31,1986 provided that Dec. 31,1979 was 7.02 percent and m. m - ~,

adequaterate relief can be obtained had climbed to 8.10 percent at Dec.

from regulatory authonties to per-31,1982, reflecting primarily the C ts mit the company to maintain its substantially higher interest rates on gsgdentiagElegr cl credit worthiness during the period.

the aggregate $150 million princi-

' '19s7 me. = 200 um e s < <m,- m e m,..

The company expects to provide 75 pal amount of debt issued in 1980.

summ m-o c"*

This intermediate-term debt is sched-r uled to be retired through sinking

~

I fund provisions, beginning in 1984 m-and extending through 1987. As a w

result, the company believes its m

J" embedded cost of debt will remain S

r M,y, yg stable through this period.

f 1357 1%2 1M7 N 72 1977 IB2

-e..

7

Management's Discus'slon Continued Results of Operations General rate increases accounted Earnings per share of common for approximately90 percentof the stock increased to $3.60 in 1982 increase in electric revenues dur-from $2.93 in 1981, due principally ing this period. The balance reflects to increased revenue and contin.

principally the recovery of increases ued close control of operating ex-in fuel and purchased power costs penses. Rateincreases totaling $89 through fuel adjustment clausesin million, on an annual basis, were the company's tariffs.

granted in 1982. The company esti-Over the same three-year period, mates that of this amount approxi.

gas therm sales decreased 10.4 per-mately 75 percent, or 566 million, cent,while thecostcfgas purchased wasincludedin1982 revenues.This for resale grew at a compound high percentage reflects the fact annual rate of 20.7 percent. Other that, in the company's principal gas operating expenses, excluding jurisdiction, rate orders have been income taxes, increased at a rate of granted by the Public Service Com-12.1 percent. The rapid increase in unit costs of Fuel mission of Wisconsin near the begin-thecostof gas purchased for resale ning of the test year, substantially reflects primarily higher cost of nat-reducing regulatorylag.Theimpact ural gas received from the com-

"gg.] '

of the higher rates on earningswas pany's pipeline supplier. Virtually all f f;H

%[E W f[$.

~?'~

6) offset slightly by lower unit sales.

of the increase in the cost of gas

_.g Electric sales to retail and muni-purchased for resalewas recovered 4d cipai customers declined by 2.0 per-through purchased gas adjustment p d *$p' Qg cent in 1982 from 1981, and gas clauses and accounted for approxi-s therm salesdeclined by 3.0 percent mately 85 percent of the increase 2

from 1981 levels, reflecting the in gas revenues during the period.

p- ~ ~.7 g depressed economic activity in the The balance reflects primarily rate company's service area. Electric kil-relief granted in the third quarter

'a",'g my owatt-hour and gas therm sales to of1981 and, to a lesser extent, rate large commercial and industrial cus-relief granted in 1982.

tomers declined 5.6 percent and The rapid escalation in the cost Home Energy checkups 14.2 percent, respectively, in 1982 of natural gas and recent declines

,,,mo m from 1981.

in the cost of fuel oil may result in For the three years ended Dec.

erosion of sales to large commer-y 31,1982, sales of electricity de-m: mf creased 2.2 percent, while the cost jh ed of fuel and purchased power grew at a compound annual rate of 5.9

? '.! M ' '~

percent. Other electric operating li expenses, excluding income taxes, increased at a rate of 15.5 percent.

7; 1371/78 1973 1980 M81 1982 w.t

-,: m I

17 cial and industrial customers if cer-Information Available tain of those customers with dual-Stock Held in Street Name fuel capacity switch to fuel oil. A The company maintains a direct special rate has been approved by mailing list to ensure that share-the PSCW for these customers in holderswhosestockis heldin broker orderto attemptto retain suchlarge accounts may receive information volume customers-on a timely basis. If you would like Assuming an improvementin the your name added to thislist, please economy, the company anticipates sendyour request to thecompany's that sales of electricity will grow at Transfer Agent at:

f a compound annual rate of 2.8 per-231 W. Michigan St.

cent over the four years ending Dec.

P.O. Box 2046 31,1986. That rate assumes con-Milwaukee, WI 53201 tinued conservation by customers, a practice endorsed bythe company.

Shareholder Inquiries sources of ElectrlC Energy The company expects little change Inquiriesconcerning the transfer in sales of natural gas over the next of shares, lost certificates, dividends, four years.

dividend reinvestment and change

' Wigg[95%@$M Costs of operations and capital of address should be made by writ-f; t areexpected tocontinuetoincrease ing to the Transfer Agent at the 3

Il.

but at a more moderate rate be-above listed address or by calling

. h ?[ [.[ i.f.);

3

.s cause of a reduction in the rate of the Stockholder Hotline.

inflation. The financial viability of

-r a a

~,

Form 10-X

.$ A. C the campany will be dependent

,. ;, c 7 4, g upon regulatory bodies granting The company will provide with-out charge to any stockholder

~

wD prompt rateincreases from time to Of record or beneficial owner dM time to meet rising costs for mate.

of the company's stock, upon w kcnn[ b b, cs rials, taxes, wages and capital, and on the company continuing to re.

Written request, a copy of the t cu 6-c

-=-- :

cover costs of fuel, purchased power company's annualreportforthe Year 1982 to the Securities and Total Electric Fuel and purchased gas. For supplemen.

""Nc"h*I*

tary information concerning the Exchange Commission on Form l

effects of inflation, see Note N to 10-K. Such requests should be directed to the company's Sec-6 the Financial Statements.

retary, 231 W. Michigan St., P.O.

l 7, h} % Qi M N 1 gp ff:

Box 2046, Milwaukee, WI 53201.

2

'j ^

~

P lj ;.-

10-Year Statistical Report A copy of Wisconsin Electric's J,,

1 :

. A.4

('. mE 198210-year Statistical Report also

, h,% j ;, * ' f is available by wr. ting the company's 3.

Secretary at the above address.

3

7. ; ;

5Ik$# $J ki 1975 74 75 76 77 ;'8 79 80 81 82 em vs.mntevammwssweremarmy

Wisconsin Electric Power Company System 18 income Statement

• Year ended December 31 Ghousands of Dollars) 1982 1981 1980 Operating itevenues Electric

$ 974,788 5 869,977 5 761,051 Cas 317,225 273,065 237,932 Steam 10,897 9,341 8,162 10tal Operating itevenues 1,302,910 1,152,383 1,007,145 Operating Expenses Fuel (Note A) 261,992 256,045 215,604 Purchased power 37,310 30,509 63,203 Cas purchased for resale 253,070 224.651 190,598 Other operation expenses (Note B) 200,091 172,120 158,426 Maintenance 103,805 78,095

~

Taxes other than income taxes 49,099

+,576 35,249 Depreciation (Note C)

Straight line 85,010 78,600 68,849 Deferred income taxes (Note D) 17,027 29,192 22,081 Federal income tax (Note D) 72,464 33,676 1,316 Investment tax credit adjustments-net (Note D) 10,557 15,581 32,024 State income tax (Note D) 15,404 9.601 2,623 Tetal Operating Expenses 1,105,829 980,215 868,068 Operating income 197,081 172.168 139,077 Other income and Deductions Interest income 9,305 7,156 3,897 Allowance for other funds used during construction (Note E) 4,588 3,155 5,330 Miscellaneous-net (Note M)

(7,196)

(151)

(190)

Federal income tax (Note D)

(811)

(2,852)

(2,274)

State income tax (Note D)

(208)

(515)

(378)

Tbtal Other income and Deductions 5,678 6.793 6,385 Income Before Interest Charges 202,759 178.961 145,462 Interest Charges Long term debt 64,341 65,344 52.304 Allowance for borrowed funds used during construction (Note E)

(2,81 2)

(3,557)

(3,338)

Other 9,585 11,672 19,008 TOtalInterest Charges 71,114 73,459 62,974 Net income 131,645 105,502 82,488 Preferred Stock Dividend Requirement 15,087 15,087 13.520 Earnings Available for Common Stockholders

$ 116,553 5 90,415 5

68,968 Average Number of Shares of Common Stock Outstanding (Thousands)*

32,402 30,894 29,314 Earnings Per Share of Common Stock *

$ 3.60 52.93 52.35

• The amounts for 1981 and 1980 have been restated to reflect the July 1982 5-for 2 common stock spht.

The notes on pages 24 through 29 are an integral part of the financial statements.

19 Wisconsin Electric Power Company System Statement of Changes in Financial Position

• Year ended December 31 crhousands of Dollars) 1982 1981 1980 FinancialItesources Provided Operations Net income

$131,645 5105,502 5 82,488 Depreciation-straight line 85,01C 78,600 68,849

-deferred income taxes 17,027 29,192 22,081 Accumulated deferred investment tax credits 8,442 12,954 27,331 Nuclear fuel expanse 11,165 7,573 8,431 Amortization of precMfication expenditures 9,137 8,358 5,906 Wnte-off of additional construction costs 5,000 Allowance for funds used during construction (7,400)

(6,712)

(13,668)

Total from operations 260,026 235,467 201,418 Common stock 30,152 25,260 21,767 24,906 Preferred stock Long ter m debt 6,904 148,970 Sale of nuclear fuel 27,112 23,042 66,501 Release of construction funds held by trustees 1,641 2,578 20,633 Normalization of income taxes-precertification expenditures (3,363)

(4,141) 9,939 Contributions and advances in aid of construction 3,741 3,282 4,369 Deferred charges / credits and other 1,41 6 (8.197) 4,638

$327,629 5277,291 5503.141 Financialitesources Used Cortruction expenditures

$139,621 5154,814 5294,102 huetear fuel 22,617 32,813 31,260 Dividends 76,521 69,262 61,763 Retirement oflong term debt 60,425 3,675 15,107 Reduction of short term borrowings 14,983 55,062 58,978 Construction funds held by trustees 6,923 Increase (decrease) in working capital (other than snort term borrowings and 6,539 (38,335) 41,931 long term debt due currently)

$327,629 5277,291 5503,141 increase (Decrease)in Components of Working Capital Cash and temporary cash investments S (28,894) 5 39,027 5(10.877)

Accounts receivable and accrued utility revenues 1,588 14,078 22,482 Fossil fuel 21,626 (16,283) 40,550

)

(

Accounts payable and accrued liabilities 10,439 (70,892)

(19,630)

Other 1,780 (4,265) 9,406

$ 6,539 5(38,335) 5 41,931 The notes on pages 24 through 29 are an integral part of the financal statements.

-. Wisconsin Electric Power Company System 20 Balance Sheet

• December 31 (Thousands of Dollars)

Assets 1982 1981 Utility Plant Electric

$ 2,155,979 S2.114,435 Cas 219,091 206.838 Steam 19,259__ _ __

18,483 2,394,329 2,339,756 Accumulated provision for depreciation (1,001,367)

(913,402) 1,392,462 1,426.354 Construction work in progress 332,271 266,546 l

Nuclear fuel (Note A) 46,976 Net Utility Plant 46,300_ ___ __

1,771,033 1,739,876 Nonutility Property 8,999 7,899 Accumulated provision for depreciation (2,037)

(1,006)

Net Nonutility Property 6,962 6,893 Construction Funds Held by Trustees 6,976 1,694 Current Assets Cash 7,21 0 5,374 Temporary cash investments 8,170 38,900 Accounts receivable (Note F) 54,533 52,443 Accrued utility revenues 106,845 107,347 Fossil fuel (at average cost) 105,072 83,446 Materials and supplies (at average cost) 42,001 40,349 Prepayments and other assets 5,700 5,572 Total Current Assets 329,531 333,431 Deferred Charges and Other Assets 16,796 34,176

$ 2,131,298 52.'1T6,U7U

~

The notes on pages 24 through 29 are an integral part of the

~

finanaal statements.

l

. _ _ 21 l

(Thousands of Dollars)

Liabilities 1982 1981

~

~~

Capitalization (See Capitalization Statement)

Common Stock Equity (Note G)

$ 775,173 5 690,186 Preferred Stock-Redemption Not Required (Note H) 160,451 160451 Preferred Stock-Redemption Required (Note 1) 25,000 25,000 Long Term Debt (Note J) 737,720 732,631 letal Capitalization 1,698,344 1,608.268 Current Liablittles 59,119 Long term debt due currently (Note J)

Notes payable to banks (Note K) 4,999 19,982 Accounts payable 93,390 98,366 Payroli and vacation accrued 15,977 13,410 Taxes accrued-income and other 74,252 72,176 Interest accrued 24,398 19,195 Other 7,524 22.833 Tbtal Current Liabilities 220,540 305,081 Deferred Credits and Other Liabilities Accumulated deferred investment tax credits 122,281 113,839 Nuclear fuel costs accrued 30,891 30 578 Unamortized accrued utility revenues 16,889 21.111 Other 7,139 5,656 Total Deferred Credits and Other Liabilities 177,200 171,184 Contributions in Aid of Construction 35,214 31,537 Commitments and Contingencies (Note M)

^~

$ 2,131,298

$2,116,070 The notes on pages 24 through 29 are an integral part of the finanaal statements.

1

Wisconsin Electric Power Company System 22 Capitalization Statement

• December 31 (ThAusands of Dol {ars) 1982 1981 Common Stock Equity * (Note G)

Common Stock (510 par value; authorized 41,000.000 sharew 33.216,164 and 31.732,460 shares issued)

S 332,162 5 317,325 Premium on Capital Stock 79,914 64,599 Retained Earnings _ _

363,097 308,262 TDtal Common Stock Equity ___ _ _ __

775,173 690,186 Preferred Stock-Wisconsin Electric Power Company. Cumulative Six Per Cent Preferred Stock-5100 par value; authorized 45,000 shares 44.508 shares issued 4,451 4.451 l

Senal Preferred Stock-525 par value; authorized 5.000.000 shares; unissued Senal Preferred Stock-5100 par value; authorized 2.360.000 shares 3.60% Series-260,000 shares issued 26,000 26.000 8.90% Series-400.000 shares issued 40,000 40.000 7 75% Series-300,000 shares issued 30,000 30,000 8_80% Series-600,000 shares issued _ _ _

_ 60,000 _ _ _

60,000 TDtal N Stock 7 eden!pt{onMRequjred(Note H)

R

• 0.875% Series-250,000 shares issued. redeernable at par

_.160,451 160.451

_ 25,000 25.000 TDtal N Stock-Iledemption llequired (Note 1) 25,000 __

_.000 25 Long Term Debt (Note J)

First Mortgage Bonds Series Due 1982 1981 Series Due 1982 1981 Wisconsin Electric Power Company 3% % - 1982 S

5 9.119 6% % - 1998 8 9,822 5 9,832 10 20% - 1982 50.000 6 % % - 1998 33,621 33,698 3% % - 1984 16,848 17,177 6.10% - 1999-2008 25,000 25.000 3%"o-1986 21,207 21.420 6 25% - 1999-2008 1,000 1,000 13% % - 1986 80,000 80.000 7% % - 1999 38,973 38,986 11 40% - 1987 70,000 70,000 8 % % - 1999 39,537 39.550 4% % - 1988 22,191 22.426 8% % - 1999 11,729 11,756 5% - 1990 26,701 26.701 6.45% - 2004 12,000 12.000 4% % - 1991 3,620 3.620 8 % % - 2006 59,990 60.000 4% % - 1993 5.01 6 5.049 6.45% - 2006 4,000 4.000 5 % % - 1996 37,188 37.255 6.50% - 2007-2009 10,000 10.000 6% % - 1997 11,507 11.512 8 % % - 2008 80,000 80,000 6% % - 1997 37,790 37.907 657,740 718,008 Wisconsin Natural Gas Company 4% % - 1986 3,631 3,631 6 % % - 1992 9,31 2 9.324 4% % - 1987 4,478 4,479 8% % - 1994 9,598 9.611 4% % --1990 6,488 6,513 8% % - 1996 9,738 9.776 43,245 43,334 700,985 761,342 Debentures (Unsecured)

Wisconsin Electric Power Ccmpany-7% Series due 1993 31,165 31,942 Note (Unsecured)

Wrsconsin Electoc Power Company-7%% due 1985 7,000 Unamortized Discount-net (1,430)

(1.534) long Term Debt Due Currently (59.119) 1Dtal Long Term Debt 737,720 732.631 1ttal Capitalization

$1,698,344

$1.608,268

-nan nmm

'The amounts for 1991 have been restated to reflect the July 1982 3-for 2 common stock split The notes on pages 24 through 29 are an integral part of the financial statements

23 Wisconsin Electric Power Company Sys'em Itetained Earnings Statement a War ended December 31 rrhousands of Dollars) 1982 1981 1980 Balance, January 1

$ 308,262 5272.043 5251,488 Additions Net income 131,645 105,502 82,488 439,907 377,545 333,976 Deductions Dividends-Cash Preferred stock 15,087 15,087 13,294 Common stock-51.902,51.76 and 54,175 48,469

$1.657 per share

• 61,434 76,521 69,262 61,763 Cost of issuing capital stock 289 21 170 76,810 69.283 61,933

$ 363,097

$308,262 5272,043 Balance, December 31 m-----

• The amounts for 1981 and 1980 have been restated to reflect the July 1982 3-for-2 common stock split.

The notes on pages 24 through 29 are an integral part of the financial staterrents.

)

1 1

Wisconsin Electric Power Company System 24 Notes to Financial Statements Summary of Significant Accounting Policies income Taxes General Deferred income tax accounting is practiced in respect to The accounting records of the company and its utility significant timing differences. The federal investment tax subsidiary are kept as prescribed by the Federal Energy credit is accounted for on the deferred basis and is reflected Regulatory Commission, modified for requirements of the in income ratably over the life of the related property Public Service Commission of Wisconsin (PSCW). The consol-idated finant al statements include the accounts of the com-Detzt Premium Discount and Expense pany and its subsidiaries, Wisconsin Natural Gas Company Long term debt premium or discount and expense of and Badger Service Company.

issuance are amortized by the straight line method over the ves of the debt issues. Unamortized amounts pertaining to Revenues debt reacquired for sinking fund purposes are written off Meters are read and accounts are billed monthly Since currently January 1,1977 utility revenues have been recognized on the accrual basis and include estimated amounts for service

- --- - - - ~

rendered but not billed. Accrued utility revenue of $52 A

• Rental Expense million at December 31,1976 is being reccrded as revenue Total rental expense was $39,895,000 in 1982, 533,092,000 in1981, and $27.800,000 in 1980. This includes charges of in equal amounts over a ten year period as prescribed by the PSCW'

$ 36,948,000 in 1982,530,442,000 in 1981, and $25,551,000 in 1980 relating to the company's nuclear fuel leasing Puel arrangement with Wisconsin Electric Fuel Trust (Trust). The The cost of fossil and nuclear fuel is expensed in the nuclear fuel is leased for a period of 60 months or until the period consumed.

removal of the fuel from the reactor, if earlier. Lease payments Nuclear fuel expense includes an estimate for offsite include charges for the cost of fuel burned, financing costs storage of spent nuclear fuel after removal from the reactor.

and a management fee. In the event the company or the No salvage value is recognized for spent nuclear fuel.

Trust terminates the lease, the Trust would recover its unamortized cost of nuclear fuel from the company. Under Cas Purchased for Resale the lease terms, the company is in effect the ultimate The cost of purchased gas sold is expensed in the period guarantor of the Trust's commercial paper and line of the gas is received from the pipeline supplier.

credit borrowings financing the investment in nuclear fuel.

The nuclear fuel lease has been treated as an operating Property lease in the financial statements and by the PSCW in Electric and gas utility property is recorded at original determining revenue requirements. The value of the leased cost, and steam utility and nonutility property is recorded at fuel is not included in the company's rate base. Had the cost. Additions to utility property and significant replacements lease been accounted for as a capital lease, an asset and are charged to utility plant at cost. Cost includes material, corresponding liability equal to the unamortized cost of the labor and allowance for funds used during construction leased nuclear fuel would have been i ecorded at December (see Note E). Replacements of minor items of property are 31 in the amounts of 553,036,000 in 1982, and $53,241,000 charged to maintenance expense. The cost of depreciable in 1981.

property, together with removal cost less salvage, is charged to accumulated provision for depreciation when property is j

retired 1

25 B$ Pension Plans D

• Income Tax Expense Several noncontributory pension plans cover all eligible Below is a summary of income tax expense and a rec-employes. Normal employe pension cost is accrued and onciliation of total income tax expense with the tax expected funded currently Unfunded poor service liability is amortized at the federal statutory rate.

over periods from ten to thirty years. Pension expense was

$15,115,000 in 1982, 511.414,000 in 1981, and 59,015,000 (Thousand of DcIlars: 1982 1981 1980 cornparison of accumulated plan benefits and plan net Ment taxNt assets available for benefits is shown below.

adjustments-net 10.557 15.581 32.024 Deferred taxes charged to December 31 depreciation expense 17.027 29,192 22.081 iThousanos of Dollars) 1982 1981 1980 Total tax expense 5116.471 5 91,417 5 60.696 Actuanal present value of accumulated plan benefits.

Income before income taxes $248.116 5196.919 5145.184 vested benefits

$150.067 5135.817 5120.307 Nonvested benefits 10.050 7,554 5.567 Expected tax at federal statutorv rate 5114.133 5 90.583 5 65.865 5160.117 5143.371 5125.874 Allowance for funds used during construction (3.404)

(3.088)

(6,287) m m,

u. --.v==

Net plan assets

$182.083 5137,037 5131.088 State income tax net of

.--.m.~~^

federal tax reduction 10.800 7,785 4.894 r

(5.5611 (4.952)

(3.9401 The weighted average rate of return used in determining

@Qg5pstored o

the actuarial present value of accumulated plan benefits expected tax) 503 1,089 164 was 70%

Total tax expense 5116.471 5 91.417 5 60.696 The aggregate amount of deferred income taxes included Depreciation expense is accrued at straight line rates in the accumulated provision for depreciation at December certifieo by the PSCW. Depreciation rates include estimates 31 was $223,265,000 in 1982 and 5199,314,000 in 1981.

of salvage and plant removal costs. Nuclear plant depreciation rates provide for an amount to cover estimated plant E Allowance for Funds Used During Constructlen decommissioning costs.

(APDC)

Additional depreciation is accrued, in accordance with AFDC is included in utility plant accounts and represents the PSCW requirements, which is equal to the tax effects of the cost of borrowed funds used during plant construction timing differences related to property and nuclear fuel and a rate of return on stockholders' capital used for including pnnapally the use for tax purposes of accelerated construction purposes. On the income statement the cost depreaation methods (see Note D).

of borrowed funds (before income taxes) is a reduction of Straight line deprea,atior as a percent of average nterest expense and the return on stockholders' capital is depreaable utility plant was 3.8% in 1982 and 3.6% in 1981 an item of noncash other income.

and 1980.

The company has been limited by the PSCW to capi-talizing AFDC only on construction work in progress exceed-ing 12.5% of its net investment rate base in 1982 and 10%

3 of its net investment rate base in 1981 and 1980. Revenues granted by the PSCW in rate orders include the equivalent of a return on investment in construction work in progress below this limit. AFDC was capitalized in 1982,1981 and 1980 at a rate of 7% approved by the PSCW.

Wisconsin Electric Pcwer Company System 26 140tes to Financial Statements continued _ _ _ _ _ _ _ _____________

P

• Accounts Receivable I a Preferred Stock-Redemption itequired Accounts receivable are shown on the tsolance sheet in 1980 the company issued 250,000 shares of Serial after deducting an accumulated provision for doubtful Prefer %d Stock,10.875% Series. The redemption at $100 accounts in the amount of $2,571,000 for 1982 and par value of 6.250 shares is required annually on each 51.683,000 for 1981. U ncollectibie account write-offs net of September 1, from 1990 through 2009, with redemption recoveries were 55,281,000 in 1982, 53.451.000 in 1981, of the remaining shares required on September 1,2010. In and $2.897,000 in 1980.

addition to the mandatory redemption, the company may at its option redeem the stock at 5110.13 to September 1, C = Common Stock and Premium on Capital Stock 1983 and at declining amounts thereafter to $100 after In July 1982 the company executed a 3-for-2 stock split September 1,2009. In the event of default in the payment and issued 10.808.826 additional common shares pursuant of dividends or in the mandatory redemption requirements, thereto The par value of the common stock was not changed no dividends or other distribution shall be declared on jun-as a result of the stock split, and accordingly common stock ior stock. In addition, no dividend shall be declared on any was increased and premium on common stock was decreased preferred stock class and series except ratably on all pre-

$108.088,000. In addition, 5131,000 was paid to stockholders ferred shares according to their respective dividend rates.

in lieu of fractional shares equivalent to 6,192 full shares.

Sales of common stock under the company's Automatic J ' Long 'ftrm Debt Dividend Reinvestment and Stock Purchase Plan (ADRSPP)

The n'aturities and sinking fund requirements through and Tax Reduction Act Stock Ownership Plan (TRASOP) are 1987 for the aggregate amount of long term debt cut-summarized below.

standing at December 31,1982 are shown below. Of the annual sinking fund requirements, 53,990,000 may be Shares issued (restated for 3-for 2 stock spl;t) 1983 s 6.190.000 ADRsPP 1.291.058 1257.908 1,090.614 1984 49.571.000 TRASoP

. _ 98.838 __.~ - - - 382.475 1985 55.960.000 1

372.883

--~

1986 79.926.000 Proceeds from sales 1987 33.432.000 ADRSPP s25.819.000 s19.199.000 s15.551.000 TRAS0P s 4.333.000 s 6.061.000 s 6.216.000 Future sinking fund requirements have been anticipated Proceeds from sales over the 510 par value of common by advance purchases of bonds to the extent of 52.404,000 stock sold are reflected as premium on capital stock.

and certification of property in the amount of $3,990,000.

Sinking fund requirements for 1983 have been satisfied.

H = Preferred Stock-Redemption Not Required Substantially all utility plant and nonutility property is The Serial Preferred Stock is redeemable in whole or in subject to the lien of the applicable mortgage.

part at the option of the company at the following re-demption prices plus any accrued dividends.

K

• Notes Payable and Commercial Paper senes Redemption Price Per Share Unused lines of credit for short term borrowing amounted to $103,350,000 at December 31,1982. In support of 9

1 to December 1.1985 and s101 thereafter various informal lines of credit from banks, the companies 7 75% s104 to Nowmber 1.1986 and s101 thereafter have agreed to maintain unrestricted compensating balances.

8 80b s iC8 80 to January 1.1984, s105 87 to January 1,1989.

With the exception of funds required for daily operations, 5102 94 to January 1.1994 and s101 thereafter the cash balance shown on the balance sheet at December

~

~

' ~ ~~

31,1982 as well as $350,000 of non-interest bearing cer-tificates of deposit included in temporary cash investments 1

represent compensating balances.

l

27 h*!

pSegqW_Mness Tnousano_s of coparsi Year Ended December 31 1982 1981 1980 Electric Operations Revenue from unaffiliated customers S 974,788 5 869,977 5 761,051 12 Interseg entsa Operating income before income taxes 285,690 244,166 181.138 Depreciation-straightline 76,225 70,239 60,992 Construction expenditures 121,471 140,899 276,929 Cas Operations Revenue from unafbliated customers 317,225 275,065 237,932 Intersegment sales 10,476 11,878 21,588 Operating revenues 327,701 284,943 259,520 Operating income before income taxes 24,268 14,272 14,794 Depreciation-straight line 8,207 7,802 7,311 Construction expenditures 16,713 13,250 16.240 Steam Operations Operating revenues (unaffiliated) 10,897 9,341 8,162 Operating income before income taxes 2,575 1,780 1,189 Depreciation-straight line 578 559 546 Construction expenditures 1,405 665 760 Consolidated Operating revenues (excluding intersegment sales eliminated in consolidation) 1,302,910 1,152,383 1,007.145 Operating income before income taxes 312,533 260.218 197.121 Depreciation-straight line 85,010 78,600 68.849 139,621 154,814 294 102 Construction expenditures (including nonutility)

At December 31 Net Identifiable Assets ElectGc

$1,906,446 51,899,843 51,820,679 Gas 204,763 196,843 190,555 Steam and nonutility 20,089 19,384 19,007

$2,131,298 52,116.070

$2,030,241 Total Consolidated Assets _ _ _ _

Intersegment sales consist principally of gas sold by Wisconsin Natural to the company at rates approved by the PSCW.

DCommitments and Contingencies' In April 1982 American Can Company (American Can)

Plans for the construction and financing of future additions commenced an action against the company in U.S. District to utility plant can be found elsewhere in this report in Court seeking unspecified damages for alleged breaches by

" Management's Discussion and Analysis of Financial Condition the company of an Agreement dated January 16,1975, and Results of Operatic:,s." At December 31,1982, con-providing for the purchase and use by the comriany of a struction work in progress includes $41,136,000 of company-fuel derived from refuse. The complaint was amended on financed expenditures relating to the company's 25% share May 5,1982 to specify damages of $41,500,000. On May in the 380 megawatt Edgewater Unit 5 coal-fired generating 18,1982 the company filed a counterclaim against American station which is being constructed by Wisconsin Power and Can for damages in excess of $20,000,000. Although the Ught Co.

result of litigation cannot be predicted with certainty, the

Wisconsin Electric Power Company System 28 Notes to Financial Statements continued i

company does not believe the ultimate outcome of this plant and was detehmined by indexing the original cost of litigation wi!! have a material adverse impact on the compary/s plant by the Handy-Whitman Index of Public Utility Con-financial statements.

struction Costs.

In January 1982 the PSCW issued an order directing the The provisions for depreciation stated in general price company to write off 55,000,000 of its investment in Pleasant level and current cost were determined by applying the Prairie Power Plant Unit 1, representing certain additior;al company's certified depreciation rates to the average indexed construction costs incurred to place Unit 1 in operation oy plant amounts. Fuel expense has not been restated because June 30,1980. The PSCW deemed this expenditure impru-rate regulation allows the recovery of actual costs through dently incurred and directed a refund to customers of fuel adjustment tariffs on a current basis. Income tax expense approximately 5900,000 of related revenues previously held has not been adjusted because the effects of inflation are subject to refund. The PSCW denied the company's request not recognized for tax purposes. Other items of expense for a rehearing on this matter and in March 1982 tqe have not been restated in accordance with FASB Statement company wrote off the 55,000,000 of construction costs No.33.

and mado provision for the ordered refund of revent.es.

Subseauently, the Milwaukee County Circuit Court dismissed Statement of income Adjusted for Changing Prices year Enced oecernder si

~ ~ ' ~l982~~

~~

the company's petition for review and reversal of the PSCW

~

order in this matter. An appeal of the Circuit Court's orcer

_ Averaw 1982 ponars has been filed and in July the Circuit Court granted the Amusted Aausted company's motion to relieve it from the refund obligation NnaScYa!

ceIe'ral cuIent pending outcome of the appeal. Management believes the mens of Dollars)

Statements Pnce Level Cost additional construction costs incurred were prudent and operating Revenues 51,503 51.505

$1.503 should be recognized for rate-making purposes.

operating Expenses In 1979 the company wrote off its share ($2.3 million Depreaation-Stalght line 85 195 223 after income tax effect) of certain capitalized expenditu'es

[o*rne tSa 6

6 related to the discontinued Koshkonong nuclear plant proj ect.

In late 1979 the Brown County Circuit Court found that such Total Operating Expenses 1.106 1.216 1,244 expenditures were prudently made and were not to be operating income 197 87 59 charged to the stockholders and, therefore, reversed and Other income and Deductions 6

6 6

remanded the order to the PSCW for modification. The Interest Charges and Preferred Circuit Court order, which had been reversed by a 1981 Stock Dividends (86)

(86)

(86)

Wisconsin Court of Appeals decision, has b an upheld by a Earnings Ross) Available November 1982 decision of the Wisconsin Supreme Court.

for Common Stockholders The company has not restored the write-off to income (excluding adjustment of plant pending an order from the PSCW.

investment to net recoverable costi tNote) 5 117 5

7 5 (21)

N* Supplementary Information Concerning the

- - ~ -

Effects of Changing Prices (Unaudited)

Earnings Ross) Per Share of Common Stock 5 360 5 0.22 5 (0 65)

The following supplementary information provides certain data about the effects of changing prices in accordance The current cost of net utlhty plant at December 31,1982 was 54 2 with Financial Accounting Standards Board (FASB) require-bilhon The increase in the current cost of property and the ad-ments. This information should be viewed as estimates of justment to net recoverable cost was $248 milhon and (528) milkon in s2.

the possible effects of inflation rather than as precise measures Note-Earnings (loss) after adjustment of net utikty plant to net Amounts adjusted for general price level represent

[u$te enIra$r eles historical costs stated in terms of dollars of equal our-chasing power through use c,f the Consumer Price Index Under the ratemaking prescribed by the re9ulatory com-for All Urban Consumers. Current cost amounts represent missions to which the company is subject.,only historical changes in specific prices and differ from amounts adjusted cost of plant is recoverable in rates. The impact of this for general price level to the extent that specific prices have ratemaking is mitigated to the extent that plant is financed increased more or less rapidly than prices in general Current with debt which can be repaid with dollars of reduced cost represents an estimated cost of replacing existing purchasing power.

29

~ _ _. _ _ _ _ _ _

Selected Supplementary Mnancial Data Adjusted for Effects of Changing Prices Year Ended December 31 in amounts are stated in acage 1982 doitarsi anons of detiars except for per share amounts) 1982 1981 1980 1979 1978 General Price LevelInformation Earnings (loss) available for common stockholders (Note a) 7 (5)

(12) 15 Earnings (loss) per share of common stock (Notes a & b) 50.22

$(0.17) 5(0.40) 50.52 Current Cost Information Earnings (loss) available for common stockholders (Note a)

(21)

(32)

(41)

(4 71 Earnings (loss) per share of common stock (Notes a & b)

$(0.65) 5(1.05) 5(1.39) 5(1.66)

Increase in general price level over (under) increase in current cost of property after adjustment to net recoverable cost (63) 46 121 118 General Information Unrealized gain from decline in purchasing pover of debt and preferred stock 47 114 159 164 Common stock equity at year-end 766 709 703 737 Operating revenues 1,303*

1,223 1,180 1,154 1,114 Cash dividends per share of common stock (Note b) 51.90*

$1.87 51.94 52.08 52.18 Market price per share of common stock at year-end (Note b) 522.49 518.66 516.60

$19.18 524.70 289.1 272.4 246.8 217.4 1954 Consumer Price Index-average for year _

%ctual1982 dollars.

Note a-Excluding adjustment to net recoverable cost Note b-Adjusted for July 1982 3-for 2 common stock spht Iteport of Independent Accountants To the Board of Directors and the Stockholders of Wisconsin Electric Power Company in our opinion, the accompanying consolidated balance sheet and statement of capitalization and the related consolidated statements of income, retained earnings, and changes in financial position present fairly the financial position of Wisconsin Electric Power Company and its subsidiarics at December 31,1982 and 1981, and the results of their operations and the changes in their financial position for each of the three years in the period ended December 31,1982, in conformity with generally accepted accounting principles consistently applied.

Our examinations of these statements were made in accordance with generally accepted auditing standards and accordingly included such tests of the accounting records and such other au

.gp cedures as w considered necessary in the circumstances.

/.A 44E f

&d ' -

Milwaukee, Wisconsin January 27,1983

Wuonsin Elec^Jic Power Company System 30 Selected Financial Data (Thousande of dollars except for per share amounts) 1982 1981 1980 1979 1978 Netincome 131,645 105,502 82.488 82.532 71,605 Preferred stock drvidend reauirernent __ _

(15.087)__ (15,087)

(13,520)

(12J68).

_ 337)

(7, Earnings available for common stock 116,558 90,415 68,968 70,164 64,268 Earnings per share of common Stock (5)*

3.60 2.93 2.35 2.50 2.33 Dividends declared per share of common stock (5)*

1.902 1.76 1.657 1.563 1.473 Operating revenues:

Electnc 974,788 869,977 761,051 667,757 583,162 Gas 317,225 273,065 237,932 191,238 161,177 Total erating reMues ~ ~'

~ ~ ~ ~ i,~30,

7,~~5 8

500 86 6 7

5

~

~~

~

1 Total assets 2,131,298 2,116.070 2,030,241 1,830,664 1,565,171 Long term debt and preferred stock-redemption required 762,720 757,631 818,905 649,227 589,576 Sales and Customers Electric Megawatt-hours sold 17,279,680 17,792,080 17,729,184 17,670,612 17,469,673 Customers (End of year) 818,850 812,841 806,329 795,670 782,851 Cas Therms (thousands) sold 632,326 652,171 693.675 706,101 680,759 Customers (End of year) 217,983 215,5'i0 212,279 206,032 197,603 Steam Pounds (millions) sold 2,041 1,924 1,941 2,188 2,352 Customers (End of year) 543 549 561 585 6i

• Adjusted for July 1982 3-for 2 common stock split

__ _ _ "J Quarterly FinancialData (Thousands of dollars except for per share amoui ts)

Three Months Ended March June

_ _ _ _ September December 1982 1931 1982 1981 1982 1981 1982 1981 revenues

$ 389,670 5300,161 $288,365 5254,190 $286,433 5275,100 $338,442 5322,932 Operating income 61,109 40,670 41,408 38,133 50,881 49,349 43,683 44,016 Net income 42,097 21,563 25,825 20.032 35,639 34,095 28,084 29,812 Earnings per share of common stock *

$1.20 50.59

$0.69 50.53

$0.98 50.98

$0.74 50.85 Because of seasonal factors which affect the utility business and differences between summer and mnter electnc rates. tne cuarterly results of operations are not directly comparable.

• Adju>ted for July 1982 3 for 2 ccmmon stock split

31 Wrsconsin Electric Power Company System _

Stock and Dividend information StockWansferAgents Number of Common Stockholders Common Stock, six Per Cent Preferred Stock and $100 Par Value As of Dec. 31,1982, there were 51,103 Common Stock-Serial Preferred,3 60% Series. 8.90% Series. 7.75% Series.

holders, based on the number of stockholder accounts.

8 80% Senes and 10.875% Series Peter Sirko Dividend Restrictions on Common Stock 231 West Michigan Street Wisconsiq Electric has from time to time in issuing B

its securities entered into dividend restrictions. Those aufee /sconsin 53201 relating to various series of Bonds, in general, prohibit Common Stock and $100 Par Value Serial Preferred Stock, cash dividends and certain other distributions on, and 8.90% Senes,7.75% Series and 8 80% Series Manufacturers Hanover Trust Company certain acquisitions of, Common Stock during or after the Post Office Box 24935 year of issuance of the particular series, except to the Church Street Station extent of retained earnings at the beginning of each New York, New York 10249 year plus net income thereafter, as defined. A covenant relating to the Debentures provides, in general, that if Stock mgestrars consolidated shareholders' equity is less than one-third Common Stock or one-quarter of consolidated capitalization, then First Wisconsin Trust Company dividends, distributions and acquisitions of such nature 777 East Wisconsin Avenue may not exceed three-quarters or one-half, respectively, Milwaukee. Wisconsin 53202 of consolidated net income available for Common Stock Manufacturers Hanover Trust Company for a preceding 12-month period. Simili.r or less restrictive Post Office Box 24935 covenants relate to other o*tanding securities. (These Church Street Station restrictions do not currently, and it is not anticipated that New York, New York 10249 they will in the future, impair Wisconsin Electnc's ability Six Per Cent Preferred Stock to maintain its consistent record of dividend payments Mal Marshall & lisley Bank on its Preferred and Common Stock.)

770 North Water Street Milwaukee, Wisconsin 53202 5100 Par Value Serial Preferred Stock,3.60% Series First Wisconsin Trust Company 777 East Wisconsin Avenue Milwaukee, Wisconsin 53202 5100 Par Value Serial Preferred Stock,8 90% Series, 7.75% Series and 8 80% Series

$tock Listing and Wading M&l Marshall & lisley Bank Common Stock and $100 Par Value Serial Preferred Stock, 770 North Water Street 8.90% Series and 7.75% Senes are listed and traded on the Milwaukee, Wisconsin 53202 New Yor t k xcha ge.

a r rs Han r Trust Company pg Off ce x

Preferred Stock and $100 Par Value Scrial e

rk, ork 0249 Preferred Stock,3 60% Series and 8.80% Series are traded on an

$100 Par Value Serial Preferred Stock,10.875% Series over the-counter basis.

Mal Marshall & lisley Bank 5100 Par Value Senal Preferred Stock,10 875% Series was 770 North Water Street sold through a private placement and is not registered for Milwaukee, Wisconsin 55202 public trading.

Mc!0grarmc cretts Cover 1. Reger *es Ccte' 2 Steve JeMen Cover 3. uncer leR. Date CJdan iceer lef* and center Creater Waaukee Convert >cn and Vetors Bsreau r@t Ocn Everach Cover 4 uprer ans icwer le't Da:e CWdan urrer ret Den Emmer,ch center Creater Wwaukee CorNention and V's<t0's breau. ret Paal Da'Wh Pa)e 2 Paul Dam'en Pages 4 9 and Q W#Sc0190 Busiries5 JCurral Page 5. waer Ele-toc Page 6. Stae Jensen Pacas 7 an.18. Don Emench Pa?e 11 E ff"t@V Cla'k Page 12. JCMPSCn Wat PaJe 13 N3ney C avdsOn 'rsde ta:k c0 vet k't utrer and M center D0n Err nertch. ICAer left uCg er r99 and ICaer rft Stese Jemen 1

52 Directors O ONicers DIRECTORS Frederick M. Belmore Donald K. Mundt Corporate Director and Consultant.

Executive Vice President, Formerly Chairman of the Board of Directors, The Northwestern Mutual Life Insurante Co.

Will Ross. Inc. (manufacturer and distributor of hospital and laboratory supplies and John P. m equipment), Subsidiary of G. D. Searle & Co.

Retired. Formerly President and Chief andVice President G.D Searle & Co' Executive Officer. Appleton Papers (manufacturer of pulo, paper and coated Russell W. Britt papers), then a Division of NCR Corp., and President and Chief Operating Officer Vice President, NCR Corp.

of theCompany Morris W. Reid Sol Burstein Independent management consultant.

Executive Vice President of the Company.

Chairman of the Board of Versa RfChard L h Technologies, Inc. and Corporate Director.

Formerly Chairman of the Board cf Chairman of the Board of the Menasha Corp.

Directors of J. L Case Co. (manufacturer (manufacturer of paperboard, corrugated of construction and farm m.chinery),

containers and plastic products and subsidiary of Tenneco Corp.

manager of timber).

Charles S. McNeer n ai rofessor of Business.

Chairman of the Board and Chief Executive the University of Wisconsin in Madison, Officer of the Company and Chairman of the Board of Directors of Federal Home Loan Bank of Chicago.

OFFlCERS Charles S. McNeer (56;32)

Huberto R. Matz (55;16)

Chairman of the Board and Vice President-Engineering and Chief Executive Officer Construction Russell W. Britt (56;34)

Richard E. Skogg (54;30)

President and Chief Operating Officer Vice President-Operating Services Sol Burstein (60;17)

John E. Speaker (51;6)

Executive Vice President Vice President-Communications John W. Boston (49;1)

Kenneth E. Wolters (57;32)

Senior Vice President Vice President-System Operations Thomas J. Cassidy(57;36)

John H. Goetsch (49;24)

Senior Vice President Secretary j

Nicholas A.Ricci(58;35)

Jerry G. Remmel(51;27)

Senior Vice Presiderit Treasurer Robert H. Gorske (50;18)

Richard R. Pittz(42;17)

Vice President and General Counsel Controller Richard A. Abdoo(38;7)

John W. Fleissner (58;12)

Vice Presidert-Corporate Planning Assistant Secretary Carlyle W. Fay (56;16)

Gordon A. Willis (44;21)

Vice President-Nuclear Power Assistant Treasurer John H. McLean (58;29)

George W. Bomier (58;28)

Vice President-Customer Relations Vice President and General Manager Wisconsin Natural Gas Company Russell A.Niles(59;34)

Vice President-Division Operations Members of the Executive Committee are Figures in parentheses indicate age and directors McNeer, Mundt, Reeve. Reid and years of service.

Udell All other directors are alternate members.

Members of the Audit Committee are directors Belmore, Johnson, Mundt, Reeve, Reid and Udell Members of the Compensation Committee are directors Belmore. Johnson, Mundt, Reeve. Reid and Udell Members of the Nominating Committee are directors Belmore, Mundt, Peid and Udell

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