Wisconsin Power and Light will seek base rate change for infrastructure improvements

MADISON, Wis., Aug. 1, 2001 — Alliant Energy-Wisconsin Power and Light (WPL) announced today it is filing for its first base rate change with the Public Service Commission of Wisconsin (PSCW) since base rates were fixed as part of the 1998 merger that ultimately formed Alliant Energy.

The rate change request will apply to WPL's electric ($85.9 million), natural gas ($26.1 million) and water rates ($1.1 million), and focuses on investments in reliability, customer service, technology and environmental upgrades as well as investments in the utility's infrastructure.

"Reliability remains the top priority for our customers and we have been investing heavily in upgrading the utility infrastructure that serves our Wisconsin customers," said Bill Harvey, President of WPL. "While utilities across the country and across the state have received base rate increases to help fund reliability initiatives, merger savings have allowed WPL to hold the line. In order to maintain the level of reliability our customers demand and deserve, we need to request additional revenues in order to continue this level of needed investment."

Harvey points out that cumulative electric rate increases for residential customers from other Wisconsin investor-owned utilities over the period from January 1, 1997 through August 1, 2001, have ranged from 20 percent to 23 percent. Including fuel costs adjustment, WPL residential rates have increased approximately 13 percent in that same timeframe.

"The other Wisconsin investor-owned utilities are well-run organizations that have sought additional revenues to maintain reliability through infrastructure investment," says Harvey. "In granting the other utilities' rate requests, the PSCW has recognized that reliable electric and gas service is a critical component in Wisconsin's economic development."

If approved, the rate change would result in a $7.58 increase in a typical residential customers' monthly electric bill and a $10.92 increase in a typical residential gas bill. Timing of any increase will be set by the PSCW, but the company expects such changes to take effect some time after April 14, 2002. Harvey says the company carefully considered customer impact of a price increase, but also reviewed the case in the context of the negative impact unreliable service has had on California. While the decision to request a rate change is never easy, Harvey says the company's decision to continue making needed investments in reliability and customer service was the most responsible course of action.

"Through PowerPledge™, we've committed to investing $2 billion over a five-year period in our utility infrastructure," says Harvey. "There is a cost to consumers for making this type of investment, but the cost of unreliable service is greater still."

Harvey says a review of general price trends show that WPL has provided an excellent energy value to its customers over a long period of time. "Compared to the 89 percent increase in the Consumer Price Index between 1981 and 2000, the modest 14 percent increase in our residential customers' typical bill in that same 20 year timeframe provides a clear signal that electricity from WPL is a bargain," says Harvey. "Even so, the measure of value for utility service is not just price, it is the right combination of price, customer service, reliability and environmental stewardship. We are seeking to continue to provide the right balance."

Harvey says the company will look to provide more incentives and rewards to customers that use energy wisely and help lower overall costs. "The cost to provide service to our customers varies significantly depending on the time of day and the season of the year," says Harvey. "We expect to propose rate designs that reflect these cost differences which will ultimately reward customers for changing their energy use patterns." Harvey says that expanding time-of-day rates, where customers pay a lower rate for using energy at off-peak periods, and seasonal rates, where customers pay lower general rates during fall, winter and spring, are expected to be part of this effort. "It is impossible for customers to know how their energy use pattern impact our costs if they are not provided with the proper price signals," says Harvey. "In areas currently facing an energy crisis, like California, it has become very clear that customers will conserve and will alter their energy use patterns when provided with information that helps them make informed decisions."

In the request, the company emphasized that the increase was due to a number of specific initiatives targeted to provide significant benefits to customers. About 34 percent of the requested amount would be directed toward reliability improvements and 15 percent toward energy efficiency. Technology, projected increases in coal costs, increases in general business costs and a fair rate of return for investors are also included in the company's request.

"I am very proud of the efforts our WPL employees have made over the past four years to increase efficiency and to hold down costs through our merger process," says Harvey. "We have asked a lot of them, and they have delivered on behalf of our customers. Each of us at WPL takes the job of providing good, safe, reliable and affordable service very seriously and we are committed to doing our best to ensure our customer continue to receive an excellent energy value."

Alliant Energy Corporation (NYSE: LNT - news; http://www.alliantenergy.com ), headquartered in Madison, Wis., is a growing energy-services provider with operations both domestically and internationally. Alliant Energy, through its subsidiaries and partners, provides electric, natural gas, water and steam services to over three million customers worldwide. Wisconsin Power and Light, Alliant Energy's Wisconsin utility subsidiary, provides over 435,000 Wisconsin customers with electric, natural gas and water utility service. Alliant Energy Resources, Inc., home of the company's non-utility businesses, has operations and investments throughout the United States as well as in Australia, Brazil, China, Mexico and New Zealand.