Why is WPL filing a rate case?

Last Base Case Rates were set January, 2007

Cost of our utility investments must be reflected in prices our customers pay

Rate case process is the only way to recover costs to provide safe, reliable, affordable, and environmentally sound utility service to our customers and communities

Energy demand is growing at 2-3 percent per year and we must invest in new facilities to meet that demand

Need to pursue a greener energy future by increased investment in renewable energy

Supports the expansion of customer energy conservation programs and renewable energy projects

Initial Request to PSCW was to increase retail electric rates by $93 million

Since Initial Request, collecting increased fuel costs $15.6 million

Overall requested change in rates is $77 Commercial & industrial average < 6%

In addition, we are asking for permission to decrease retail natural gas service rates by $814,000 or 1.0 percent

WPL is also proposing the ability to reopen the rate case for the purpose of incorporating costs associated with major infrastructure projects which receive PSCW approval before the end of 2009

How much additional was requested?

For retail electric rates, WPL proposes that rates be set for 2009 based on 2009 revenue requirements, with limited adjustments for 2010 permitted through a limited rate case reopener process

For natural gas rates, WPL proposes that rates be set for 2009 and 2010 using averaged rates over a two-year period, incorporating revenue requirements for both years.

How are rates determined for 2009 and 2010?

Environmental Compliance and Stewardship

Clean Air Interstate Rule CAIR

Clean Air Mercury Rule CAMR

Clean Air Visibility Rule

Renewable Generation – Cedar Ridge Wind Farm

Energy Efficiency and Conservation

New Generation – Nelson Dewey, Neenah Generating Facility

Advanced Metering Infrastructure

Transmission

What are the primary cost drivers?

Continuing WPL’s $40 million Shared Savings program that helps business/ag customers with their energy efficiency and energy conservation

Proposing an initiative that would help to financially support the installation of new customer-owned renewable generation

Proposing to increase our buyback rates for solar, biogas and wind energy

What initiatives are there for Industrial Customers?

Filed the Base Rate Case on February 22, 2008

The approval process is expected to take about 9 months

All rate changes must be approved by the PSCW after a thorough review of the data and extensive public input

WPL is requesting that new gas & electric rates be effective on or about January 1, 2009 with a change in 2010 for impacts approved via a limited re-opener

What is the timeline?

Typical residential electric customers would see a monthly increase of $7.85

Typical residential natural gas customers would see an annual decrease of $7.00

Business customers would see varying cost impacts based on their customer class and usage

Actual amounts will vary depending on the outcome of the case, and the associated rate designs approved by the PSCW

How will this impact customers?

Increased interruptible credits based on the cost of peaking units

Eliminated the customer demand charge which was applied to highest peak in past 12 months

Economic interruption rate option available

Shared Savings to support customer energy efficiency improvements

Enhanced renewable buyback rates for customer owned generation

What is WPL doing to help customers control costs?

Helping customers reduce their energy consumption through energy efficiency and demand-side management programs

Holding the line on O&M expenses

Implementing business unit cost saving activities

Utilizing Lean Six Sigma projects

Shielding against rising fuel costs by using a variety of fuels, multiple transportation options, locking in of prices and storage

What is WPL doing to control costs?

Questions?

NYMEX Natural Gas Prices May 2007 – May 2008

Natural Gas Prices Continue to Climb

AE-WPL Natural Gas Residential Rate Comparison

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