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