Moving Forward – Maximizing Your Energy Management

2009 WPSC Rate Case & Decoupling

Dennis M. DerricksDirector – Electric Regulatory Policy & AnalysisIntegrys Business Support

2

Agenda

Decoupling 2008 Fuel Case 2009 Rate Case Filing 2010 Rate Re-opener Future cost drivers.

3

Rate Stabilization Mechanism (RSM)

Electric Rates Will Be Decoupled With Exception Of CP (Large C&I)

Gas Rates To Be Decoupled Include All Firm Classes, Medium Commercial And Smaller

Any Over/Under Collections Will Be Allocated Between These Rate Classes

WPS Will True-Up Over/Under Collection Annually and Provide PSC With Opportunity For Hearing

4

FOE

WPS Commits To Increase Annual Contribution To FOE .

Year R&C Electric Revenues (%)

R&C Natural Gas Revenues (%)

2009 2.0 2.0

2010 2.5 2.5

2011 3.0 3.0

2011 3.5 3.5

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FOE

Voluntary Contribution Used Exclusively To Fund Energy Efficiency Programs and Services To Residential And Commercial Customers In WPS Service Territory Including Community Pilot If Requirements Go Up During Pilot,

This Voluntary Contribution Qualifies For New Requirement

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Governor’s Task Force

WPS Agrees To Support The Adoption And Implementation Of Specific Recommendations of The Governor’s Task Force on Global Warming Enhanced Conservation Spending And

Conservation Programs Residential And Commercial Energy

Efficient And Green Building Codes State Appliance Efficiency Standards Nonregulated Fuels Efficiency And

Conservation

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Community Based Pilots

3 communities up to 10,000 Electric customers each.

Jointly Developed And Implemented Innovative Electric Rate Offerings Electric Rate Offerings Will Increase

The Opportunities For Customers To Use Energy More Efficiently

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Community Based Pilot Goals

Provide Customers With Information And Education About Alternative Rates, Energy Efficiency And Load Management Options

Improve The Integration Of Improved Rate Designs And Energy Efficiency Initiatives

Obtain Customer Participation In Such Rates And Options At Least Cost

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Fixed Customer Charge Reduction

WPS Shall Reduce Is Fixed Customer Charges for RG and Small C&I Recoverable Fixed Customer Charge

Reduction Non-recoverable Fixed Customer

Charge Reduction $2.1M If Not Approved, WPS May Reinstate To

08 Levels, CUB Shall Not Oppose

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Term

4 Years Effective of the Final Decision Of

6690-UR-119 2009, 2010, 2011, 2012 Duties Of Both Parties Expire On

12/31/2012

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2008 Fuel Increases

No Rate Case Filing for 2008

Fuel Increase: 2.5% increase January 2008

$23M

3.2% increase March 2008 $30M

1.9% increase July 2008 $18M

September 30, 2008 going forward, revenues subject to refund if over collected.

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2009 Rate Case

Rate Request for 2009

Electric $106.8M 11.16% from January

2008 rates $59M, or 6.1%, from

current rates

Gas $11.7M 7.89% from January

2007 rates

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2009 Rate Case - Electric

KNPP Refund (51%) 2006 and 2007 rates

were subsidized using the refund

Proceeds are now exhausted

Weston 4 Costs (17%) Non-Fuel O&M Depreciation Return

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2009 Rate Case - Electric

Emission Compliance Costs (13%) Emission Allowances Hardware installations

Transmission Costs (7%) MISO ATC

Other (12%) Primarily Weston 3 lightning

strike costs

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2009 Rate Case

PSCW Staff Audit for 2009

Electric $100M 10.1% from January

2008 rates $52M, or 5.3% from

current rates.

Gas ($4M) -2.6% from January

2007 rates

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2009 Rate Case – Tentative Time Table

April 1 2008

April-June2008

September 2008 Nov – Dec 2008January

2009

Rate Casefiled at Public

Service Commission

Public Service Commission

Review

Rate Design filed at the Public

Service Commission

Public Service Commission rate

hearings Public Service Commission rules on rate changes 2009 rate changes

go into effect

April 1, 2008 April-June

Sept

Dec. 2008

Jan. 2009

May 15, 2008

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2009 Rate Case – Impacts on Final Rates

Update for current fuel prices – Current market prices

would yield $20-$30M decrease.

Weston 3 Lightning Strike – Filing includes approximately

$12M /year for two years. Potential to increase

amortization.

Return On Equity

Discount Rate for Pensions and Benefits. Discount rate

likely to rise, which reduces revenue requirement.

Bottom line – rate increase likely to be less than

requested and audit adjust.

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WPSC vs IOU’s Total Retail Rates

WPSC VS. IOU'S TOTAL RETAIL RATESYear Ended 06/30/2008

100%

104%

121%

107%

94%

125%

64%

106%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

WP

S

WP

L

MG

E

WE

NS

PW

Co

mm

Ed

Min

n P

wr

De

t E

d

Av

e M

on

thly

Bill

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WPSC vs IOU’s Industrial Rates

WPSC VS. IOUS INDUSTRIAL RATESYear Ended 06/30/2008

100%

121% 121%118%

106%

153%

86%

118%

50%

70%

90%

110%

130%

150%

170%

WP

S

WP

L

MG

E

WE

NS

PW

Com

m E

d

Min

n P

wr

Det

Ed

Ave

Mo

nth

ly B

ill

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WPSC vs IOU’s Commercial Rates

WPSC VS. IOUS COMMERCIAL RATESYear Ended 06/30/2008

100%

111%114%

108%

89%

117%

79%

104%

40%

50%

60%

70%

80%

90%

100%

110%

120%

130%

WP

S

WP

L

MG

E

WE

NS

PW

Com

m E

d

Min

n P

wr

Det

Ed

Ave

Mo

nth

ly B

ill

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WPSC vs IOU’s Residential Rates

WPSC VS. IOUS RESIDENTIAL RATESYear Ended 06/30/2008

100%

93%

115%

92%

82%

91%

63%

89%

40%

50%

60%

70%

80%

90%

100%

110%

120%

WP

S

WP

L

MG

E

WE

NS

PW

Com

m E

d

Min

n P

wr

Det

Ed

Ave

Mo

nth

ly B

ill

Moving Forward – Maximizing Your Energy Management

2009 WPSC Rate Case & Decoupling

Questions?