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WPL Regulatory Update

WPL Regulatory Update . Scott R. Smith Director, Regulatory Affairs. Today’s Agenda. WPL 2010 Fuel Case WPL 2011 Rate Case WPL’s Economic Development Rate Proposal. 2010 Fuel Case. Filed WPL’s request on 4/30 Electric retail revenue requirement of $8.8 million 0.9% average increase

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WPL Regulatory Update

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  1. WPL Regulatory Update Scott R. Smith Director, Regulatory Affairs

  2. Today’s Agenda • WPL 2010 Fuel Case • WPL 2011 Rate Case • WPL’s Economic Development Rate Proposal

  3. 2010 Fuel Case • Filed WPL’s request on 4/30 • Electric retail revenue requirement of $8.8 million • 0.9% average increase • Small / residential – 0.7% • Large / industrial – 1.1% • Approximate effective date • Interim rates (subject to refund) – June 2010 • Final rates – before year end

  4. What are the Major Differences in Fuel Costs from Monitoring Levels? • Actual Fuel Costs – January – March $2,077,773 • Delivered Cost of Fuel $4,413,819 • Natural Gas Price ($2,939,725) • Market Energy Price Changes $5,214,457 • Total $8.8

  5. WPL 2010 Fuel Case – Rough Timeline Apr 30 WPL files May Hearing on interim rates Jun Interim rates effective July Audit complete Aug Staff / Intervenors file Sep Hearing <YE Final Order

  6. WPL 2010 Rate Case – Limited Request • Filed WPL’s request on 4/30 • Electric only retail revenue requirement of $35.4 million when compared to current rates • Bent Tree $41.0 • Expiring deferral credits $4.7 • Lower fuel costs $(10.3) Request includes items already approved by the PSCW or for which there is precedent

  7. WPL 2010 Rate Case – Limited Request • Does not suggest changes to: • Return on equity • Sales volumes • UR-117 Furlough Inclusion • No Increase in Natural Gas

  8. Rate Impact • 3.6% average increase when compared to current rates • 2.7% if fuel case approved in total • WPL rate design proposal • Allocate the revenue requirement increase to customer classes based on the percentage increases approved by the Commission in 6680-UR-117 • Approach generally maintains the current revenue allocation relationship to COSS results • Small / residential – 4.2% increase from current • Large / industrial – 2.4% increase from current • Anticipated effective date – 1/1/2011

  9. WPL Rate Case Rough Timeline • Apr 30 WPL files • May-Jun Revenue Requirement audit • Jul Pre-hearing conference • Jul-Aug Rates audit • Sep Staff / Intervenors file • Oct Hearings • Nov Oral decision • Dec Final order • Jan 1 Rates effective

  10. Economic Development Rate - Background • Proposed to Commission in November, 2009 • Economic downturn severely affected WPL service territory through the loss or reduction of energy demand from WPL’s industrial and commercial customers. • Loss of sales increased rates – smaller number of units to spread fixed costs • Increase sales that would not have occurred organically occurred

  11. Rationale • Decreased load has resulted in rate increases by shifting recovery of fixed costs to remaining customers. • Increasing load will spread fixed costs to more customers thereby reducing rate pressures on existing customers. • As long as the incremental load covers more than the marginal incremental costs, existing customers will benefit. • Other states have similar programs. Wisconsin needs this type of program to remain competitive. • Program is designed to provide the most benefit at the “start up” of development thereby aiding the potential for success and then moves the incremental load to full rates to ensure all customers benefit and are treated equitably.

  12. Economic Development Rate – Customer Requirements • Customers must meet several significant requirements. • Must have also received governmental economic development assistance of $500k or more. • Must sign an affidavit that “but for” the economic development rate and governmental assistance the increase (or retention) of load would not have occurred. • Discounts are subject to reimbursement if load drops during discount period.

  13. Economic Development Rate Overview • Rate Rider for CP-1(Industrial at distribution) and CP-2 (Industrial at transmission) • Allows for discounts to a level that maintains rate coverage 105% of WPL’s marginal costs • Temporary and declining discount levels for a maximum of 5 years • Applicable to incremental load • New customers • Expansion • Possible applicability to retain customers, subject to PSCW approval • Requirements to invest in “economically viable” energy efficiency

  14. Example:

  15. Status • Waiting on formal PSCW Order to Implement. • Will likely need to re-file updated tariff sheets with the PSCW to reflect PSCW Order requirements. • Currently anticipate that the tariff will be available on July 1, 2010.

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