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WIEG’s 2005 Spring Energy Conference Wisconsin’s Competitive Position

Wisconsin Industrial Energy Group. A Business Partnership for A Reliable and Cost Competitive Energy Environment. WIEG’s 2005 Spring Energy Conference Wisconsin’s Competitive Position. A.J. (Nino) Amato President, WIEG, Inc. April 27, 2005. WI’s Competitive position – 1997-2004.

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WIEG’s 2005 Spring Energy Conference Wisconsin’s Competitive Position

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  1. Wisconsin Industrial Energy Group A Business Partnership for A Reliable and Cost Competitive Energy Environment WIEG’s 2005 Spring Energy Conference Wisconsin’s Competitive Position A.J. (Nino) Amato President, WIEG, Inc. April 27, 2005

  2. WI’s Competitive position – 1997-2004 • 8 State Regional Comparison • Factors behind $767 Million in rate increases in Wisconsin: 1998-2003 • Rates of Return Comparison

  3. Industrial Rates (cents/kWh) Up 9% 6.00 Up 32% 2004 Up 11% 1997 Up 6% 5.29 5.00 4.97 4.91 4.91 4.74 4.73 4.7 4.46 4.39 4.39 4.33 4.00 4.16 4.14 3.95 3.91 3.72 cents/kWh 3.00 2.00 1.00 0.00 Michigan Wisconsin Ohio Illinois Minnesota Iowa Missouri Indiana Eight Regional States Source: U.S EIA Electric Sales & Revenue, Electric Power Monthly

  4. Industrial Rates:Percent Change 1997 - 2004

  5. Up 29% 9.00 2004 Up 3% 1997 8.00 Up 1% Up 4% 7.93 7.84 7.73 7.66 7.67 7.51 7.00 7.22 6.80 6.61 6.00 6.32 6.29 6.23 6.04 6.00 5.86 5.60 Cents/kWh 5.00 4.00 3.00 2.00 1.00 0.00 Michigan Ohio Illinois Wisconsin Iowa Minnesota Indiana Missouri Commercial Rates (cents/kWh) Eight Regional States Source: U.S EIA Electric Sales & Revenue, Electric Power Monthly

  6. 35% 29% 30% 25% 20% 15% Percent Change 1997-2004 10% 4% 5% 3% 1% 0.1% 0% Missouri Michigan Ohio Illinois Wisconsin Iowa Minnesota Indiana -1% -2% -5% -5% Commercial Rates:Percent Change 1997 - 2004 -10%

  7. Up 32% 12.00 2004 Up 10% 1997 Up 11% 10.43 10.00 Up 5% 9.1 9.06 8.63 8.57 8.55 8.51 8.47 8.00 8.21 8.06 Cents/kWh 7.32 7.23 7.06 7.09 6.94 6.88 6.00 4.00 2.00 0.00 Wisconsin Iowa Michigan Illinois Ohio Minnesota Indiana Missouri Eight Regional States Residential Rates (cents/kWh) Source: U.S EIA Electric Sales & Revenue, Electric Power Monthly

  8. 40% 32% 30% 20% 11% 10% 10% 5% Percent Change 1997 - 2004 -0.2% 0% Wisconsin Iowa Michigan Illinois Ohio Minnesota Indiana Missouri -0.4% -2% -10% -20% -18% -30% Residential Rates:Percent Change 1997 - 2004

  9. Conservation Depreciation 1% 3% NOX Reliability Employee Benefits 2% 3% 1% Y2K 3% O&M 3% Nuclear 6% Fuel 48% ATC 13% Indeterminate 18% Factors Behind $767 Million in Rate Increases 1998-2003 Source:Public Service Commission of Wisconsin

  10. Survey of Rates of Return • According to the Public Utilities Fortnightly (2004), a survey conducted of 26 states regarding rates of return indicated that Public Service Commissions approved highest returns on investment for these states since 1998 excluding Alabama

  11. Electric Utility Industry Average MG&E WEPCO WPL WPS Year Return on Equity (ROE) ROE ROE ROE 2004 10.70% 11.50% 11.50% 2003 11.00% 12.00% 12.7%(*) 12.00% 12.00% 2002 11.20% 12.30% 12.00% 11.50% 2001 11.10% 12.30% 12.30% 2000 11.40% 12.90% 12.10% 1999 10.80% 12.20% 1998 11.70% 12.20% 12.10% 1997 11.40% 12.20% Average 1997- 2004 11.16% 12.18% 12.37% 12.10% 11.92% (*)WEPCO under a rate freeze; ROE in 2003 associated with two new coal plants Rate of Return Comparison – Wisconsin Utilities Source:Major Rate Decisions, Jan 1990 – Dec 2004

  12. Changes in WPL Bills Since 1995 Source: PSCW Commission, 2005

  13. Residential Bills for Various Utilities to date WPL 2005= current; WPL Proposed = Rate case filed with PSCW Source: PSCW Commission, 2005

  14. Commercial Bills for Various Utilities Source: PSCW Commission, 2005

  15. Industrial Bills for Various Utilities Source: PSCW Commission, 2005

  16. Governor Doyle’s Grow Wisconsin Plan, September 2003 Focus on four key areas: • Create a Competitive Business Climate • Invest in People • Invest in Wisconsin Businesses • Reform Regulations and Make Government Responsive

  17. Governor Doyle’s Grow Wisconsin Plan – September 2003 • Safeguard reliable, low cost energy and the environment • A low cost, reliable, environmentally sound energy policy is the cornerstone of economic growth and job creation in Wisconsin • That policy must balance the need for additional investment in our infrastructure with the need to protect our competitive rate structure, while enhancing conservation and renewables efforts

  18. Need for Regulatory & Legislative Reforms • Strengthen the Ethical Standards and Regulatory Procedures of the PSCW • Strengthening PSCW Regulatory Oversight as Wisconsin’s consumer protection agency • Improving Economic Retention for Wisconsin Industry

  19. Wisconsin Industrial Energy Group Energy Ratepayers Bill of Rights

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