-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CrSV0XpKg3vkTkICDBsqPnFKnu4ld16LOo3WYK9Ux5//AI3qN4I1DXBBWd0mykR/ 5sWuxOulh/34FKMOghUpjQ== 0000072909-99-000005.txt : 19990517 0000072909-99-000005.hdr.sgml : 19990517 ACCESSION NUMBER: 0000072909-99-000005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990514 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHERN STATES POWER CO /WI/ CENTRAL INDEX KEY: 0000072909 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 390508315 STATE OF INCORPORATION: WI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-03140 FILM NUMBER: 99623602 BUSINESS ADDRESS: STREET 1: 100 N BARSTOW ST CITY: EAU CLAIRE STATE: WI ZIP: 54702 BUSINESS PHONE: 7158392592 MAIL ADDRESS: STREET 1: P O BOX 8 CITY: EAU CLAIRE STATE: WI ZIP: 54702-008 10-Q 1 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q (Mark one) X Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended March 31, 1999 Commission File Number 10-3140 NORTHERN STATES POWER COMPANY, A WISCONSIN CORPORATION, MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION J (1) AND (2) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT. Northern States Power Company (Exact name of registrant as specified in its charter) Wisconsin 39-0508315 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 100 North Barstow Street, Eau Claire, Wisconsin 54703 (Address of principal executive officers) (Zip Code) Registrant's telephone number, including area code (715) 839-1382 NONE - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at May 14, 1999 -------------------------------- --------------------------- Common Stock, $100 par value 862,000 Shares All outstanding common stock is owned beneficially and of record by Northern States Power Company, a Minnesota corporation. PART 1. FINANCIAL INFORMATION Item 1. Financial Statements
Northern States Power Company (Wisconsin) Statements of Income (Unaudited) Three Months Ended March 31 1999 1998 (Thousands of dollars) Operating revenues Electric $102,640 $98,305 Gas 34,936 31,763 Total 137,576 130,068 Operating expenses Purchased and interchange power 46,844 48,117 Fuel for electric generation 1,719 2,180 Gas purchased for resale 23,852 21,746 Other operation 12,654 11,043 Maintenance 4,365 4,159 Administrative and general 5,039 5,070 Conservation and demand side management 1,280 2,234 Depreciation and amortization 10,307 9,314 Taxes: Property and general 3,735 3,671 Current income tax 9,497 6,657 Deferred income tax 151 510 Investment tax credits recognized (210) (215) Total 119,233 114,486 Operating income 18,343 15,582 Other income (expense) Other income and deductions - net of applicable income taxes 2 (14) Allowance for funds used during construction - equity 42 62 Total other income (expense) net 44 48 Income before interest charges 18,387 15,630 Interest charges Interest on long-term debt 4,046 4,071 Other interest and amortization 770 696 Allowance for funds used during construction - debt (156) (73) Total interest charges 4,660 4,694 Net Income $13,727 $10,936 Statements of Retained Earnings (Unaudited) Balance at beginning of period $250,890 $244,171 Net income for period 13,727 10,936 Dividends paid to parent (6,749) (6,551) Balance at end of period $257,868 $248,556 The Notes to Financial Statements are an integral part of the Statements of Income and Retained Earnings.
Northern States Power Company (Wisconsin) Balance Sheets (Unaudited) March 31, December 31, 1999 1998 ASSETS (Thousands of dollars) Utility Plant Electric $979,732 $972,442 Gas 113,509 113,574 Other 82,496 81,040 Total 1,175,737 1,167,056 Accumulated provision for depreciation (464,322) (457,272) Net utility plant 711,415 709,784 Current Assets Cash 1,291 51 Accounts receivable - net 36,937 34,748 Unbilled utility revenues 14,033 21,011 Fuel inventories - at average cost 6,921 12,406 Other materials and supplies inventories - at average cost 6,561 6,609 Prepayments and other 9,124 13,472 Total current assets 74,867 88,297 Other Assets Regulatory assets 41,926 42,467 Other investments 7,719 7,823 Nonutility property - net of accumulated depreciation 2,729 2,803 Unamortized debt expense 1,645 1,668 Long-term prepayments and deferred charges 11,558 10,869 Total other assets 65,577 65,630 TOTAL ASSETS $851,859 $863,711 LIABILITIES AND EQUITY Capitalization Common stock-authorized 1,000,000 shares of $100 par value, issued shares: 1999 and 1998, 862,000 $86,200 $86,200 Premium on common stock 10,541 10,541 Retained earnings 257,868 250,890 Total common stock equity 354,609 347,631 Long-term debt 231,885 231,863 Total capitalization 586,494 579,494 Current Liabilities Notes payable - parent company 34,000 55,900 Accounts payable 9,918 14,301 Payable to affiliate companies (principally parent) 15,299 16,596 Salaries, wages, and vacation pay accrued 4,904 5,910 Taxes accrued 8,909 3,418 Interest accrued 4,166 4,184 Other 8,755 4,310 Total current liabilities 85,951 104,619 Other Liabilities Accumulated deferred income taxes 111,053 110,831 Accumulated deferred investment tax credits 17,912 18,122 Regulatory liabilities 21,515 21,947 Customer advances 9,504 9,458 Benefit obligations and other 19,430 19,240 Total other liabilities 179,414 179,598 Commitments and Contingent Liabilities (see Note 3) TOTAL LIABILITIES AND EQUITY $851,859 $863,711 The Notes to Financial Statements are an integral part of the Balance Sheets.
Northern States Power Company (Wisconsin) Statements of Cash Flows (Unaudited) Three Months Ended March 31 1999 1998 (Thousands of dollars) Cash Flows from Operating Activities: Net Income $13,727 $10,936 Adjustments to reconcile net income to cash from operating activities: Depreciation and amortization 10,535 9,546 Deferred income taxes 147 507 Deferred investment tax credits recognized (210) (215) Allowance for funds used during construction - equity (42) (62) Cash provided by changes in working capital 19,043 22,797 Cash used for changes in other assets and liabilities (415) (415) Net cash provided by operating activities 42,785 43,094 Cash Flows from Investing Activities: Capital expenditures (11,887) (10,523) Decrease in construction payables (1,154) (381) Allowance for funds used during construction - equity 42 62 Other 103 (307) Net cash used for investing activities (12,896) (11,149) Cash Flows from Financing Activities: Repayment of notes payable to parent - net (21,900) (23,100) Dividends paid to parent (6,749) (6,551) Net cash used for financing activities (28,649) (29,651) Net increase in cash and cash equivalents 1,240 2,294 Cash and cash equivalents at beginning of period 51 31 Cash and cash equivalents at end of period $1,291 $2,325 The Notes to Financial Statements are an integral part of the Statements of Cash Flows.
NORTHERN STATES POWER COMPANY (WISCONSIN) NOTES TO FINANCIAL STATEMENTS -------------------------------- Northern States Power Company, a Wisconsin corporation (NSP-Wisconsin) is a wholly owned subsidiary of Northern States Power Company, a Minnesota corporation (NSP-Minnesota). The term NSP refers to NSP-Wisconsin combined with NSP-Minnesota and its other subsidiaries. In the opinion of management, the accompanying unaudited financial statements contain all adjustments necessary to present fairly the financial position of NSP-Wisconsin as of March 31, 1999 and Dec. 31, 1998, the results of its operations for the three months ended March 31, 1999 and 1998 and its cash flows for the three months ended March 31, 1999 and 1998. Due to the seasonality of NSP-Wisconsin's electric and gas sales, operating results on a quarterly and year-to-date basis are not necessarily an appropriate base from which to project annual results. The accounting policies followed by NSP-Wisconsin are set forth in Note 1 to NSP-Wisconsin's financial statements in its Annual Report on Form 10-K for the year ended Dec. 31, 1998 (1998 Form 10-K). The following notes should be read in conjunction with such policies and other disclosures in the Form 10-K. 1. BUSINESS DEVELOPMENTS - ------------------------------ PROPOSED MERGER - As reported in NSP-Wisconsin's 1998 Form 10-K, NSP and New Century Energies, Inc. (NCE), a utility based in Denver, Colo., have agreed to merge. It is expected that NSP-Wisconsin will continue to exist as an operating subsidiary of the merged company. UNION CONTRACT EXTENSION - In March 1999, NSP management and union business managers reached agreement on a five year extension of the collective bargaining agreement, subject to ratification by the union membership. On April 12, 1999, the five International Brotherhood of Electrical Workers local unions representing NSP employees notified NSP that the membership had ratified the terms and conditions of settlement for the contract extension, which will begin on Jan. 1, 2000. LONG TERM DEBT - The board of directors of NSP-Wisconsin authorized the issuance of up to $80 million of long-term debt in 1999 or 2000. NSP-Wisconsin currently expects to issue approximately $50 million of unsecured long-term debt in the second half of 1999, primarily to reduce short-term debt levels. LOSS OF CUSTOMER - One of NSP-Wisconsin's five largest combined retail electric and gas customers, Heileman Brewing of LaCrosse, is expected to close its brewery at the end of July, 1999. It purchases approximately $2.8 million of utility services from NSP-Wisconsin annually. Heileman employs 550. - ------ 2. REGULATION AND RATE MATTERS - -- ------------------------------ ELECTRIC TRANSMISSION - In April 1998, NSP announced its intention to transfer its electric transmission business to an independent company (an Independent Transmission Company or ITC) not affiliated with the rest of NSP's utility operations. Several developments have occurred since this commitment was made: - - On April 28, 1998, Wisconsin Act 204, "the Reliability Act" became law. It includes provisions which allow the Public Service Commission of Wisconsin (PSCW) to order a public utility that owns transmission facilities in Wisconsin to transfer control of its transmission facilities to an ISO (an independent nonprofit organization which would operate, but not own, the electric transmission system) or divest the public utility's interest in its transmission facilities to an ITO (an independent entity that would own and operate the electric transmission system) if the public utility has not already transferred control to an ISO or divested to an ITO by June 30, 2000. Under certain circumstances, the PSCW has authority to waive imposition of such an order on June 30, 2000. At March 31, 1999, the net book value of NSP-Wisconsin's transmission assets was approximately $150 million. - - As originally proposed, NSP anticipated divesting its transmission assets as part of the formation of the ITC. In light of the proposed merger with NCE, divestiture of transmission assets does not seem feasible as it would appear to trigger adverse tax and accounting consequences. Therefore, NSP is evaluating alternatives to divestiture of its transmission assets, which may or may not include an ITC at this time. There is no guarantee that NSP will be successful in forming an ITC. If NSP is not successful in forming an ITC, the Reliability Act currently would require the transfer of control of NSP-Wisconsin's transmission assets to an ISO, unless a waiver is granted. TRANSMISSION RATE CASE - As discussed in NSP-Wisconsin's 1998 Form 10-K, in the first quarter of 1998, NSP filed wholesale electric point-to-point and network integration transmission service (or NTS - relating to the costs of operating and maintaining the regional electric transmission network that NSP shares with other qualifying regional utilities) rate cases with the FERC. In March 1999, NSP filed an offer of settlement which would resolve virtually all issues in the two cases. The offer of settlement provides an approximate two percent reduction in point-to-point rates which, combined with anticipated reductions in non-firm discounting, is expected to have little or no impact on annual revenues. In addition, the settlement calls for increases in existing ancillary service rates and, in some cases, initial service rates, resulting in an annual increase of approximately $1 million in ancillary service revenues. More importantly, the settlement provides for a cap on NSP's annual NTS payment liabilities to its five NTS customers at $10 million per year. Rates are all effective Oct. 1, 1998. The offer also provides a two or three year moratorium period on future transmission rate changes. The length of the moratorium is based on whether NSP forms an ITC or is ordered to join an ISO (two years), or voluntarily joins an ISO (three years). All parties filed written comments generally recommending FERC approval of the offer. NSP expects FERC approval later in 1999. - ------ 3. COMMITMENTS AND CONTINGENT LIABILITIES - -- ----------------------------------------- LEGAL CONTINGENCIES - In the normal course of business, various lawsuits and claims have arisen against NSP. Management, after consultation with legal counsel, has recorded an estimate of the probable cost of settlement or other disposition of such matters. ENVIRONMENTAL CONTINGENCIES - As discussed in Note 8 to the Financial Statements in the 1998 Form 10-K, NSP-Wisconsin had been named as one of three potentially responsible parties in connection with environmental contamination at a site in Ashland, Wis. and the Wisconsin Department of Natural Resources was evaluating proposed methods of remediating the contamination. NSP-Wisconsin now expects a final decision on the remedial strategy to be used at the site will be made in the fourth quarter of 1999. In September 1998 the United States Environmental Protection Agency (EPA) released nitrogen oxide (NOx) emission regulations affecting 22 states, including Wisconsin. The goal of the new regulations is to reduce NOx emissions by 85 percent by May 1, 2003. Two of NSP-Wisconsin's boilers and eight of its combustion turbines may be subject to this action. If retrofit technology to control NOx emissions is installed on the two boilers and eight combustion turbines, the worst case compliance cost estimates are up to $62.3 million for capital improvements and up to $13.6 million for additional annual operation and maintenance expenses. These estimates were required to be developed by the PSCW in order to determine the potential scope of financial impacts associated with retrofit alternatives. It should not be construed, however, that retrofitting the two boilers and eight combustion turbines will be the compliance alternative of choice. If the rules are finalized in their most stringent form, other alternatives for these older units may be deemed more cost effective than retrofitting. The final form of the WDNR's regulations and their applicability to NSP-Wisconsin is still uncertain. NSP-Wisconsin has joined with two other Wisconsin-based utilities as well as the Wisconsin Paper Council and Wisconsin Manufacturers and Commerce industrial organizations to request a judicial review of the EPA's final NOx rules. NSP-Wisconsin believes that the EPA improperly included Wisconsin in the scope of the regulatory action, and it improperly calculated potential emissions of NOx reducing the allowable emission limits for the state. 4. Segment Information NSP-Wisconsin has two reportable segments: Electric Utility and Gas Utility. Segment information for the first quarter of 1999 and 1998 is as follows: Business Segments Operating Revenues 3 Mos. Ended 3/31/99 from External Intersegment Segment Net (Thousands of dollars) Customers Revenues Income/(Loss) Electric Utility $102,610 $ 30 $10,264 Gas Utility 34,051 885 3,463 ------ --- ----- Consolidated Total $136,661 $915 $13,727 Operating Revenues 3 Mos. Ended 3/31/98 from External Intersegment Segment Net (Thousands of dollars) Customers Revenues Income/(Loss) Electric Utility $ 98,268 $ 37 $ 8,264 Gas Utility 31,129 634 2,672 ------ --- ----- Consolidated Total $129,397 $671 $10,936 Item 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------------ CONDITION AND RESULTS OF OPERATIONS --------------------------------------- Discussion of financial condition and liquidity is omitted per conditions set forth in general instructions J (1) and (2) of Form 10-Q for wholly-owned subsidiaries (reduced disclosure format). Except for the historical statements contained herein, the matters discussed in the following discussion and analysis are forward-looking statements that are subject to certain risks, uncertainties and assumptions. Such forward-looking statements are intended to be identified in this document by the words "anticipate", "estimate", "expect", "objective", "possible", "potential" and similar expressions. Actual results may vary materially. Factors that could cause actual results to differ materially include, but are not limited to: general economic conditions, including their impact on capital expenditures; business conditions in the energy industry; competitive factors; unusual weather; changes in federal or state legislation; issues relating to year 2000 remediation efforts; and the other risk factors listed from time to time by NSP-Wisconsin in reports filed with the SEC, including Exhibit 99.01 to this report on Form 10-Q for the quarter ended March 31, 1999. On March 24, 1999, NSP and NCE entered into an Agreement and Plan of Merger, providing for a strategic business combination of NSP and NCE. The following discussion and analysis is based on the financial condition and operations of NSP-Wisconsin and does not reflect the potential effects of the combination between NSP and NCE. First Quarter 1999 Compared with First Quarter 1998 - ---------------------------------------------------------- ELECTRIC REVENUES increased $4.3 million in total in the first quarter of 1999 compared with the first quarter of 1998. Revenues from sales to customers increased $3.7 million or 4.6 percent largely due to more favorable weather in 1999 as compared to 1998 and a 2.5 percent increase in retail electric rates that was approved by the PSCW in September of 1998. Weather-adjusted sales decreased 0.4 percent comparing first quarter 1999 with first quarter 1998. The remaining increase in electric revenues of $0.7 million relates to higher Interchange Agreement billings to NSP-Minnesota, which reflects increases in NSP-Wisconsin's fuel and transmission expenses. GAS REVENUES increased $3.2 million or 10.0 percent due primarily to higher sales volumes. Total gas volumes increased 12.9 percent in first quarter 1999 compared with the same period in 1998. The sales increase was partially offset by a 2.2 percent decrease in retail gas rates effective Sept. 16, 1998 and lower gas costs per unit. Lower purchased gas costs per unit, as discussed below, are reflected in rates through the purchased gas adjustment clause mechanism. PURCHASED AND INTERCHANGE POWER and FUEL FOR ELECTRIC GENERATION together decreased $1.7 million. This decrease was caused by lower purchases and lower generation expenses necessary to support lower sales levels. In addition, fixed expenses billed from NSP-Minnesota were lower in the first quarter of 1999 than the first quarter of 1998. GAS PURCHASED FOR RESALE expenses increased $2.1 million or 9.7 percent. The cost of additional purchases required to support 12.9 percent higher gas sales volumes was partially offset by lower gas costs per unit. OTHER OPERATION, MAINTENANCE, ADMINISTRATIVE AND GENERAL AND CONSERVATION AND DEMAND SIDE MANAGEMENT expenses together increased $0.8 million or 3.7 percent in the first quarter of 1999 compared to the first quarter of 1998. Higher generating and transmission expenses in 1999 were partially offset by lower customer service expenses, conservation demand side management, and distribution line clearance expenses. Transmission operating expenses increased primarily due to the amortization of $1.1 million of deferred Network Transmission Service (NTS) costs in the first quarter of 1999. In the first quarter of 1998, NTS costs were deferred as authorized by the PSCW. DEPRECIATION AND AMORTIZATION increased $1 million due to increases in the company's plant in service. YEAR 2000 (Y2K) READINESS - To the extent allowed, the information in the --------------------------- following section is designated as a "Year 2000 Readiness Disclosure." NSP is incurring significant costs to modify or replace existing technology, including computer software, for uninterrupted operation in the year 2000 and beyond as discussed in NSP's 1998 Form 10-K. NSP is on schedule for completion of its Y2K project. - - On March 31, 1999, 91 percent of NSP's mission-critical systems and processes were Y2K ready. - - By June 30, 1999, NSP expects to complete all Y2K efforts on mission-critical systems and processes and to finalize contingency planning. - - By Dec. 31, 1999, NSP expects to complete remediation of low-priority applications and complete all Y2K testing and implementation. Since the Y2K project started in 1996 and through March 31, 1999, NSP has spent approximately $16.3 million for Y2K efforts, which primarily is expensed as incurred. The additional development and remediation costs necessary for NSP to prepare for Y2K is estimated to be approximately $8 million. Through March 31, 1999 NSP-Wisconsin had spent approximately $1 million for year 2000 remediation. The additional development and remediation costs necessary for NSP-Wisconsin to prepare for Y2K is estimated to be approximately $200,000. - ------ Item 6. Exhibits and Reports on Form 8-K - ------------------------------------------------- (A) EXHIBITS The following exhibits are filed with this report: 27.01 Financial Data Schedule for the three months ended March 31, 1999. 99.01 Statement pursuant to Private Securities Litigation Reform Act of 1995. (B) REPORTS ON FORM 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NORTHERN STATES POWER COMPANY (WISCONSIN) (Registrant) /s/ Roger D. Sandeen Vice President, Treasurer and Controller (Principal Financial and Accounting Officer) Date: May 14, 1999 -------------- EX-27 2
UT EXHIBIT 27.01 This schedule contains summary financial information extracted from the Statements of Income and Retained Earnings, Balance Sheets and Statements of Cash Flows and is qualified in its entirety by reference to such financial statements. 1,000 3-MOS DEC-31-1998 MAR-31-1999 PER-BOOK 711,415 10,448 74,867 55,129 0 851,859 86,200 10,541 257,868 354,609 0 0 231,885 34,000 0 0 0 0 0 0 231,365 851,859 137,576 9,438 109,795 119,233 18,343 44 18,387 4,660 13,727 0 13,727 6,749 4,046 42,785 15.92 15.92
EX-99 3 - ------ EXHIBIT 99.01 - -------------- Northern States Power Company Cautionary Factors The Private Securities Litigation Reform Act of 1995 (the Act) provides a new "safe harbor" for forward-looking statements to encourage such disclosures without the threat of litigation providing those statements are identified as forward-looking and are accompanied by meaningful, cautionary statements identifying important factors that could cause the actual results to differ materially from those projected in the statement. Forward-looking statements have been and will be made in written documents and oral presentations of Northern States Power Company, a Wisconsin Corporation (NSP-Wisconsin). Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. When used in NSP-Wisconsin's documents or oral presentations, the words "anticipate", "estimate", "expect", "objective", "possible", "potential" and similar expressions are intended to identify forward-looking statements. In addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements, factors that could cause NSP-Wisconsin's actual results to differ materially from those contemplated in any forward-looking statements include, among others, the following: - - Economic conditions including inflation rates and monetary fluctuations; - - Trade, monetary, fiscal, taxation, and environmental policies of governments, agencies and similar organizations in geographic areas where NSP-Wisconsin has a financial interest; - - Customer business conditions including demand for their products or services and supply of labor and materials used in creating their products and services; - - Financial or regulatory accounting principles or policies imposed by the Financial Accounting Standards Board, the Securities and Exchange Commission, the Federal Energy Regulatory Commission and similar entities with regulatory oversight; - - Availability or cost of capital such as changes in: interest rates; market perceptions of the utility industry, or NSP-Wisconsin; or security ratings; - - Factors affecting operations such as unusual weather conditions; catastrophic weather-related damage; unscheduled generation outages, maintenance or repairs; unanticipated changes to fossil fuel or gas supply costs or availability due to higher demand, shortages, transportation problems or other developments; environmental incidents; or electric transmission or gas pipeline system constraints; - - Employee work force factors including loss or retirement of key executives, collective bargaining agreements with union employees, or work stoppages; - - Increased competition in the utility industry, including: industry restructuring initiatives; transmission system operation and/or administration initiatives; recovery of investments made under traditional regulation; nature of competitors entering the industry; retail wheeling; a new pricing structure; and former customers entering the generation market; - - Rate-setting policies or procedures of regulatory entities, including environmental externalities, which are values established by regulators assigning environmental costs to each method of electricity generation when evaluating generation resource options; - - Social attitudes regarding the utility and power industries; - - Cost and other effects of legal and administrative proceedings, settlements, investigations and claims; - - Technological developments that result in competitive disadvantages and create the potential for impairment of existing assets; - - Other business or investment considerations that may be disclosed from time to time in NSP-Wisconsin's Securities and Exchange Commission filings or in other publicly disseminated written documents. - - Factors associated with Y2K compliance that might cause material differences from the expectations disclosed include, but are not limited to, the availability of key Y2K personnel, NSP's ability to locate and correct all relevant computer codes, the readiness of third parties, and NSP's ability to respond to unforeseen Y2K complications. Such material differences could result in, among other things, business disruptions, operational problems, financial loss, legal liability, and similar risks. - - Regulatory delays or conditions imposed by regulatory agencies in approving the proposed merger with NCE. NSP-Wisconsin undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review factors pursuant to the Act should not be construed as exhaustive or as any admission regarding the adequacy of disclosures made by NSP-Wisconsin prior to the effective date of the Act. -----END PRIVACY-ENHANCED MESSAGE-----