Wisconsin Energy Corporation

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Wisconsin Energy Corporation (NYSE: WEC) is a company based in Milwaukee, Wisconsin that provides electricity and natural gas throughout Wisconsin and the Upper Peninsula of Michigan. The company also has several non-regulated, non-utility branches.

The company is also referred to as We Energies, which is the trade-name of Wisconsin Electric Power Company (or WEPCO) and Wisconsin Gas Company, the primary utility subsidiaries of Wisconsin Energy Corporation. We Energies corporate headquarters are located at 231 W. Michigan Street in Milwaukee.

Contents

[edit] Utility companies

[edit] Wisconsin Electric Power Company

Wisconsin Electric Power Company, which does business as We Energies, provides electrical service for over one million customers, primarily located in southeastern and eastern Wisconsin as well as the Upper Peninsula of Michigan. We Energies also supplies nearly one million natural gas customers located throughout the state of Wisconsin.

The majority of We Energies' electricity is generated by its coal-fired power plants, mainly from its power plants in Oak Creek and Pleasant Prairie. A sizeable portion of We Energies' generation capacity also comes from the Point Beach Nuclear Generating Station north of Manitowoc, Wisconsin. We Energies also operates numerous natural gas-fired "peaking" plants which are used to produce electricity during periods of peak demand. A relatively small amount of hydroelectric power is generated by several dams located on rivers in northeast Wisconsin. We Energies transmission line voltages are 345,000 volts, 230,000 and 138,000 volts. Its subtransmission voltages are 40,000 volts and 69,000 volts. We Energies distribution voltages are 14,500 volts and 4,800 volts. We Energies transmission system interconnects with Commonwealth Edison in northern Illinois, Wisconsin Public Service in northeast and north central Wisconsin and Xcel Energy in western Wisconsin and most of Minnesota and Upper Peninsula Power Company in Michigan's Upper Peninsula.

[edit] History

Wisconsin Electric Power Company was formed in 1896 as The Milwaukee Electric Railway and Light Company, a subsidiary of the North American Company. By 1929, it operated within North American Company along with Wisconsin Electric Power Company, (org chart) which became the consolidated name of the two operating companies in 1938. In 1941, the company purchased Wisconsin Gas & Electric Company and Wisconsin Michigan Power Company, which also had been under the North American Company pyramid by 1929.

By 1940, Wisconsin Electric Power Company had become one of four major direct operating company subsidiaries, out of a group of ten major direct subsidiaries, that were controlled by North American Company. In eight of the ten direct subisidaries, North American owned at least 79% stake. By 1940 North American was a US$2.3 billion holding company heading up a pyramid of by then 80 companies.[1]

North American's stock had once been one of the twelve component stocks of the May 1896 original Dow Jones Industrial Average.[2] North American Company was broken up by the Securities and Exchange Commission, following the United States Supreme Court decision of April 1, 1946.[1]

[edit] Wisconsin Gas, LLC

Wisconsin Gas, LLC is a natural gas distribution utility, and does business as We Energies. Wisconsin Energy acquired Wisconsin Gas in 2000, when it purchased its parent company, Wicor, Inc., for about $1.2 billion.[3] The company's historic headquarters are still known as the Wisconsin Gas Building, though We Energies no longer owns the building.[4]

Wisconsin Energy first got into the natural gas business with Wisconsin Electric's purchase of Wisconsin Gas & Electric in 1941. Wisconsin Energy also purchased Wisconsin Southern Gas Company in 1994.[5]

[edit] Edison Sault Electric Company

Edison Sault Electric Company is a public utility that provides electricity to the eastern portion of Michigan's Upper Peninsula. Its service area covers four counties (Chippewa, Mackinac, Schoolcraft and Delta). The company was founded in 1892 in Sault Ste. Marie.

Edison Sault's only generating station is the Hydro facility in downtown Sault Ste. Marie located on the St. Marys River. During the night when demand is low, the company will sell power to larger companies such as Upper Peninsula Power Company and Consumers Energy. Edison Sault's transmission system voltage is 138,000 volts. The subtransmission system voltage is 69,000 volts. The distribution system voltage is 13,200 volts.

Edison Sault has four 138 kV interconnections with other utilities. Two are with Consumers Energy/METC in lower Michigan (Mackinaw-Straits #1 and Mackinaw-Straits #2); these two lines are submerged under the Straits of Mackinac. Edison Sault has two interconnections with sister company Wisconsin Electric (Arnold-Indian Lake #1 and Arnold-Indian Lake #2).

Edison Sault has interconnections with Cloverland Electric Co-op and Upper Peninsula Power Company on its 69 kV subtransmission system.

Wisconsin Energy Corporation acquired the Edison Sault Electric Company with its purchase of its parent company, ESELCO in 1998.[5]

[edit] Non-utility companies

[edit] Minergy Corporation

Minergy Corporation is a corporation specializing in vitrifying waste materials into glass. It operates plants in Neenah and Winneconne that processes sludge created by paper mills and is building a new plant in Zion, Illinois.[6] Wisconsin Energy also profits from energy generated from the steam produced in this process.

[edit] We Power, LLC

We Power, LLC is a company set up by Wisconsin Energy Corporation to design and build power plants for We Energies. In order to take full advantage of new Wisconsin laws passed in 2001, We Power has been involved with a number of new projects[7]

[edit] Wispark, LLC

Wispark, LLC is a commercial and industrial real estate development company. It was first set up in 1987 in order to develop an industrial park to get approval of the Pleasant Prairie Power Plant near Kenosha and has since had the dual focus of generating money for its parent corporation as well as reap goodwill through development of brownfield land in the areas it serves.[8]

[edit] Wisvest Corporation

Wisvest Corporation was formed in 1987 to develop, own and operate power plants for its corporate parent. Due to regulatory and tax concerns, Wisconsin Energy Corporation has been divesting Wisvest's holdings for the past few years.[9]

[edit] Primergy merger

On May 3, 1995, Wisconsin Energy Corporation and Northern States Power Company (NYSE: NSP) each filed a Securities and Exchange Commission Form 8-K to combine in a merger-of-equals transaction to form Primergy Corporation, which would be a registered public utility holding company, and to be the new parent of both NSP and of the operating subsidiaries of WEC. It would be the tenth largest investor-owned electric and gas utility company in the United States, based on market capitalization at that time of about US$6.0 billion, and with 1994 combined revenues of US$4.2 billion and with total assets of more than US$10.0 billion. Shareholders of NSP common stock would own 1.626 shares of stock of Primergy for each share of NSP stock they owned, and WEC shareholders were to receive one-for-one shares of Primergy.[10] [11]

At that time, Richard A. Abdoo, served as Chairman, President and Chief Executive Officer of Wisconsin Energy. James J. Howard served in the same positions with Northern States Power. With the new Primergy Corporation, Howard would become Chairman and CEO, and Abdoo would serve as Vice Chairman, President and Chief Operating Officer. Further, with Howard scheduled to retire in July 2000, Abdoo would then succeed him as Chairman of Primergy.[10]

Wisconsin Energy's two then-existing utility subsidiaries, Wisconsin Electric Power Company (WEPCO) and Wisconsin Natural Gas Company (WNG) were to be consolidated under a new subsidiary name, Wisconsin Energy Company. Under that name, it and Northern States Power Company would continue to operate as the two principal subsidiaries of Primergy Corp. Also, NSP-Wisconsin would merge into the operating subsidiary Wisconsin Energy Company. The headquarters of the two utilities would remain distinct and separate in their existing respective state locations, in Milwaukee, Wisconsin and NSP's in Minneapolis, Minnesota. Primergy headquarters were to be incorporated in Wisconsin, but located in Minneapolis. The Primergy board of directors were to be equally split, composed of six from each company. The merger deal was expected to be completed in the fourth quarter of 1996.[10]

At the time of the planned merger, Wisconsin Energy's non-regulated subsidiaries consisted of Wispark Corp., Witech Corp., Wisvest Corp., Badger Service Co., and Wisconsin Michigan Investment Corp.[10]

Northern States Power served the states of Minnesota, Wisconsin, North Dakota, South Dakota and Michigan. Its subsidiary NSP-Minnesota operated in Minnesota, North Dakota and South Dakota. And its other wholly-owned subsidiary NSP-Wisconsin operated in Wisconsin and the Upper Peninsula of Michigan.[10]

Throughout the merger process, Wisconsin Energy's stock price climbed 25%, from a low of 25½ in the first quarter of 2005, to peak at 32 in the first quarter of 2006, before falling back by the end of 2006 to almost as low as where it had begun nearly two years earlier.[12]

By 1997, approvals had been granted by the state regulatory commissions in Michigan and North Dakota, but not by the commissions in Minnesota and Wisconsin. Approvals from the Securities & Exchange Commission and the U.S. Department of Justice were still pending.[13]

On May 16, 1997 both CEOs announced that the boards of directors of both companies had voted that day to terminate the merger plan. Howard stated that the problem was that the regulatory agencies were changing their merger policies as they were considering the companies' filing. In particular, Howard blamed the Federal Energy Regulatory Commission, which had issued a decision earlier in the week remanding the case back to the companies, for further negotiation among themselves. "There is simply no end to this process in sight," stated Howard. Abdoo said the decision to end the merger factored in that after two years of already waiting, the further likely wait of at least six months of delay would significantly reduce the benefits of the Primergy transaction.[13]

The delay had put the merger five months behind schedule and had reduced earnings for both utilities by a total of US$58 million to that point, costs which had not been passed on to consumers. Adding to the discomfort was a growing gap between the performance of the two companies by early 1997. Wisconsin Energy's stock had by then fallen about 13% since early 1995 when the deal had been announced, due to other ongoing problems that had developed within the company, including issues with its Point Beach Nuclear Generating Station in Manitowoc County, Wisconsin. But Northern States Power's stock had risen by 6%. The case was considered to be a bellwether in the utilities industry, putting an end to the rapid pace of mergers and acquisitions that had been ongoing up to then.[14]

[edit] References

  1. ^ a b U.S. Supreme Court decision, NORTH AMERICAN CO. v. SECURITIES AND EXCHANGE COM'N, 327 U.S. 686 (1946), Decided April 1, 1946, FindLaw.com
  2. ^ Jeremy J. Siegel, Stocks for the Long Run, McGraw-Hill, Second Edition, 1998, ISBN 0-07-058043-X
  3. ^ Wisconsin Gas, bizjournals.com, Sept. 10, 2001
  4. ^ Daykco, jsonline.com, April 2001
  5. ^ a b Wisconsin Energy History, wisconsinenergy.com
  6. ^ Minergy Corporation, minergy.com
  7. ^ We Power Oak Creek, powerthefuture.com cache
  8. ^ Wispark, LLC, powerpoint cache
  9. ^ Wisconsin Energy, Executive Summary (pdf), wisconsinenergy.com
  10. ^ a b c d e Wisconsin Energy Corp. Form 8-K, SEC Info, Filed On 5/3/95, SEC File 1-09057, Accession Number 107815-95-8
  11. ^ Xcel Energy Inc. Form 8-K, Filed On 5/3/95, SEC File 1-03034, Accession Number 898822-95-46
  12. ^ WISCONSIN ENERGY CORP Form:10-K405, Edgar Online, SEC Filing Date:3/28/1997
  13. ^ a b Wisconsin Energy Corp., Northern States Power Co. Agree to Terminate Merger Proceedings, PRNewswire, May 16
  14. ^ Primergy too strong for regulators' taste, Google cache, Milwaukee Journal Sentinel, by LEE BERGQUIST, May 18, 1997

[edit] External links