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
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 1-3632
INTERSTATE POWER COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 42-0329500
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1000 Main Street, P.O. Box 769, Dubuque, Iowa 52004-0769
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 319-582-5421
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 shorter
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 issuers
classes of common stock.
Shares Outstanding
August 1, 1997
Common Stock Par Value $3.50 Per Share 9,751,076 Shares
INTERSTATE POWER COMPANY
FORM 10-Q
Table of Contents
Part I - Financial Information
Item 1. Statements of Income - Three Months Ended . . . . . . . . .1
Statements of Income - Six Months Ended . . . . . . . . . .2
Balance Sheets - Assets . . . . . . . . . . . . . . . . . .3
Balance Sheets - Capitalization and Liabilities . . . . . .4
Statements of Cash Flows. . . . . . . . . . . . . . . . . .5
Summarized Financial Information. . . . . . . . . . . . . .6
Item 2. Management's Discussion and Analysis. . . . . . . . . . . .7
Part II - Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . 11
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . 11
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . . 11
Item 4. Submission of Matters to a Vote of Security Holders . . . 11
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 13
INTERSTATE POWER COMPANY
STATEMENTS OF INCOME
(Unaudited)
Three Months
Ended June 30
1997 1996
(In Thousands)
OPERATING REVENUES:
Electric $ 62,403 $ 67,021
Gas 8,808 9,277
71,211 76,298
OPERATING EXPENSES:
Operation:
Fuel for electric generation 10,522 14,167
Power purchased 15,290 16,787
Cost of gas sold 5,476 5,112
Other operating expenses 13,769 13,706
Maintenance 4,829 4,740
Depreciation 7,878 7,599
Income Taxes:
Federal currently payable 636 993
State currently payable 203 304
Deferred taxes-net 1,246 1,410
Investment tax credit amortization (257) (257)
Property and other taxes 4,236 4,088
Total operating expenses 63,828 68,649
OPERATING INCOME 7,383 7,649
OTHER INCOME AND DEDUCTIONS 617 236
INCOME BEFORE INTEREST CHARGES 8,000 7,885
INTEREST CHARGES:
Long-term debt 3,470 3,647
Other interest charges 457 369
Allowance for borrowed funds used during construction (46) (58)
Total interest charges 3,881 3,958
NET INCOME 4,119 3,927
PREFERRED STOCK DIVIDENDS 617 616
NET INCOME AVAILABLE FOR COMMON STOCK $ 3,502 $ 3,311
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,717 9,568
EARNINGS PER COMMON SHARE OUTSTANDING $ .36 $ .34
DIVIDENDS PAID PER COMMON SHARE $ .52 $ .52
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
STATEMENTS OF INCOME
(Unaudited)
Six Months
Ended June 30
1997 1996
(In Thousands)
OPERATING REVENUES:
Electric $126,683 $132,936
Gas 33,400 30,411
160,083 163,347
OPERATING EXPENSES:
Operation:
Fuel for electric generation 25,521 28,941
Power purchased 27,012 30,980
Cost of gas sold 18,867 16,585
Other operating expenses 28,337 25,418
Maintenance 8,531 8,433
Depreciation 15,730 15,175
Income Taxes:
Federal currently payable 4,698 4,954
State currently payable 1,416 1,490
Deferred taxes-net 1,738 2,457
Investment tax credit amortization (514) (514)
Property and other taxes 8,448 8,638
Total operating expenses 139,784 142,557
OPERATING INCOME 20,299 20,790
OTHER INCOME AND DEDUCTIONS 964 713
INCOME BEFORE INTEREST CHARGES 21,263 21,503
INTEREST CHARGES:
Long-term debt 7,115 7,293
Other interest charges 758 844
Allowance for borrowed funds used during construction (60) (102)
Total interest charges 7,813 8,035
NET INCOME 13,450 13,468
PREFERRED STOCK DIVIDENDS 1,234 1,231
NET INCOME AVAILABLE FOR COMMON STOCK $ 12,216 $ 12,237
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,698 9,566
EARNINGS PER COMMON SHARE OUTSTANDING $ 1.25 $ 1.28
DIVIDENDS PAID PER COMMON SHARE $ 1.04 $ 1.04
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
ASSETS
(Unaudited)
June 30 Dec. 31
1997 1996
(In Thousands)
UTILITY PLANT (at original cost) $931,934 $924,183
Less accumulated provision for depreciation 439,136 426,471
Utility plant - net 492,798 497,712
OTHER PROPERTY AND INVESTMENTS 477 453
CURRENT ASSETS:
Cash and cash equivalents 2,307 3,072
Accounts receivable less reserve 24,975 28,227
Inventories - at average cost:
Fuel 15,509 16,623
Materials and supplies 6,989 6,214
Prepaid pension cost 5,082 3,331
Prepaid income tax 9,722 9,483
Other prepayments and current assets 2,071 683
Total current assets 66,655 67,633
DEFERRED DEBITS:
Regulatory assets 9,392 10,346
Regulatory assets for deferred income taxes 26,793 26,583
Deferred energy efficiency costs 31,432 29,857
Unamortized debt expense 5,607 5,710
Other 2,523 906
Total deferred debits 75,747 73,402
TOTAL $635,677 $639,200
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
CAPITALIZATION AND LIABILITIES
(Unaudited)
June 30 Dec. 31
1997 1996
(In Thousands)
CAPITALIZATION:
Common stock, par value $3.50 per share;
Authorized - 30,000,000 shares; issued
and outstanding - 9,748,705 in 1997
and 9,670,866 in 1996 $ 34,120 $ 33,848
Additional paid-in capital 107,943 105,959
Retained earnings 68,385 66,251
Total common equity 210,448 206,058
Preferred stock, par value $50 per share 35,024 34,966
Total stockholders' equity 245,472 241,024
Long-term debt 171,769 171,731
Total capitalization 417,241 412,755
CURRENT LIABILITIES:
Commercial paper payable 38,700 28,700
Long-term debt maturing within one year 0 17,000
Accounts payable 12,388 14,013
Payrolls accrued 3,510 3,291
Taxes accrued 15,570 16,953
Interest accrued 2,647 2,817
FERC Order 636 transition costs 1,700 2,200
Other 2,846 3,477
Total current liabilities 77,361 88,451
DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES:
Accumulated deferred income taxes 101,622 99,303
Accumulated deferred investment tax credits 16,499 17,013
Deferred pension cost 4,999 4,999
Accrued postretirement benefit cost 1,094 1,311
Environmental clean-up costs 6,234 7,234
Other 10,627 8,134
Total deferred credits and other non-current
liabilities 141,075 137,994
TOTAL $635,677 $639,200
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months
Ended June 30
1997 1996
(In Thousands)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income $13,450 $13,468
Adjustment for non-cash items:
Depreciation 15,730 15,175
Deferred income taxes 2,109 2,571
Investment tax credit amortization (514) (514)
Allowance for equity funds used during construction (16) (3)
Changes in assets and liabilities:
Accounts receivable - net 3,252 499
Fuel 1,120 5,412
Materials and supplies (775) (446)
Accounts payable and other current liabilities (2,104) 1,971
Accrued and prepaid taxes (1,621) (1,726)
Interest accrued (170) 5
Other prepayments and current assets (3,239) (1,456)
Rate refund payable 0 (256)
Deferred energy conservation costs (1,575) (2,919)
Regulatory assets 744 420
Other operating activities 154 1,207
Cash flows from operating activities 26,545 33,408
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (10,845) (13,624)
Allowance for borrowed funds used during construction (60) (102)
Other (403) (104)
Cash flows from investing activities (11,308) (13,830)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 2,279 953
Retirement of long-term debt (17,000) 0
Dividends on common and preferred stock (11,281) (11,144)
Sale of commercial paper - net 10,000 (9,600)
Cash flows from financing activities (16,002) (19,791)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: $ (765) $ (213)
CASH AND CASH EQUIVALENTS:
Beginning of period $ 3,072 $ 1,537
End of period $ 2,307 $ 1,324
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 8,056 $ 7,806
Income taxes $ 7,255 $ 7,911
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
Summarized Financial Information
The June 30, 1997 financial statements included herein have been prepared
by the company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. The accounting policies followed by
the company are set forth in Note 1 to the company's financial statements
in the 1996 Form 10-K/A. It is suggested that these financial statements
be read in conjunction with the financial statements and the notes thereto
included in the company's Form 10-K/A for the year ended December 31, 1996.
In the opinion of the company, the financial statements reflect all
adjustments, consisting only of normal recurring accruals, necessary to
fairly state the results of operations.
INTERSTATE POWER COMPANY
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The company's results of operations and financial condition are affected by
numerous factors, including weather, sales, and changes in customer rates.
EARNINGS PER SHARE for the second quarter of 1997 were $0.36 compared to
$0.34 for the second quarter of 1996. Net income for the second quarter of
1997 was $4.1 million, compared to $3.9 million for the second quarter of
1996.
The ELECTRIC MARGIN (revenue less certain other costs, primarily fuel and
purchased power) was $35.1 million for the second quarter of 1997 and 1996.
Three Months Ended June 30
ELECTRIC SALES (Mwh) 1997 1996 % Change
Residential 219,426 228,791 (4.1)
Commercial 161,782 164,200 (1.5)
Industrial 781,322 796,341 (1.9)
Other 13,473 13,713 (1.8)
Subtotal 1,176,003 1,203,045 (2.2)
Interchange 5,939 93,899 N/A
Sales for Resale 22,156 45,857 (51.7)
Total Electric Sales 1,204,098 1,342,801 (10.3)
Residential sales and the weather-sensitive portion of commercial sales
declined due to milder temperatures in the second quarter of 1997 compared
to the same period in 1996. Industrial sales also decreased primarily due
to reduced sales to a major industrial customer. Sales for resale were
down as a result of 9 of the company's 18 firm municipal electric wholesale
customers purchasing their requirements from other utilities.
Three Months Ended June 30
ELECTRIC REVENUES (000's) 1997 1996 % Change
Residential $17,289 $17,922 (3.5)
Commercial 11,119 11,556 (3.8)
Industrial 29,860 31,499 (5.2)
Other 2,967 2,674 11.0
Subtotal 61,235 63,651 (3.8)
Interchange 117 1,334 N/A
Sales for Resale 1,051 2,036 (48.4)
Total Electric Revenues $62,403 $67,021 (6.9)
The decreased revenues for the second quarter of 1997 were primarily
attributable to reduced Mwh sales as discussed above. Although interchange
revenues decreased this quarter, the impact on net income was negligible as
the majority of the margin on interchange sales is returned to customers
through the fuel adjustment clause.
The GAS MARGIN (revenue less certain other costs, primarily purchased gas)
for the second quarter of 1997 was $3.1 million compared to $4.0 million
for the same period in 1996. The decrease was primarily due to decreased
residential and commercial sales. Also contributing to the lower gas
margin was the reconciliation of purchases to the billing cycle and the end
of the heating season.
Three Months Ended June 30
GAS DELIVERIES (MMcf) 1997 1996 % Change
Residential 826 929 (11.1)
Commercial 481 525 (8.4)
Industrial 246 225 9.3
Other 19 11 N/A
Total Gas Sales 1,572 1,690 (7.0)
Gas Transportation 6,436 6,309 2.0
Total Gas Deliveries 8,008 7,999 0.1
The decrease in residential gas sales and the weather-sensitive portion of
commercial sales was primarily a result of 9.0% warmer temperatures during
April and May of 1997 compared to the same time period in 1996. Overall,
gas deliveries were up slightly mainly due to a 9.3% increase in industrial
gas sales and a 2.0% increase in transportation volumes for the second
quarter of 1997 compared to the same period in 1996.
Three Months Ended June 30
GAS REVENUES $ (000's) 1997 1996 % Change
Residential $4,905 $ 5,267 (6.9)
Commercial 2,307 2,461 (6.3)
Industrial 868 853 1.8
Other 82 60 N/A
Total Gas Sales Revenues 8,163 8,641 (5.5)
Gas Transportation 646 636 1.6
Total Gas Revenues $8,808 $9,277 (5.0)
Factors in the second quarter 1997 lower revenues include decreased sales
to residential and commercial customers, as discussed above.
FUEL FOR ELECTRIC GENERATION decreased $3.6 million or 25.7%, during the
second quarter of 1997 compared to the same period in 1996. The decrease
was mainly due to a 12% decrease in the cost per ton of coal and a 3.2%
reduction in kilowatt-hours generated by the company. PURCHASED POWER
EXPENSE decreased $1.5 million during the second quarter of 1997 compared
to 1996. This decrease was primarily a result of the 14.7% decrease in
kilowatt-hours purchased. Capacity charges included in purchased power
expense were $7.0 million for both the second quarter of 1997 and the
second quarter of 1996.
OTHER OPERATING EXPENSE included $358,000 of transmission services expenses
compared to $79,000 during the same period in 1996. These intra-pool
transmission service fees are required by the MAPP Agreement which was
effective May 1, 1995. Under the MAPP Agreement, the company realized
revenues of $446,000 during the second quarter of 1997 compared to $68,000
in 1996.
DEPRECIATION EXPENSE increased by $279,000 or 3.7% for the second quarter
of 1997 compared to the second quarter of 1996. This was primarily due to
increased investment in utility plant and increased depreciation rates
approved by the Minnesota Public Utilities Commission. The change in rates
was implemented in September 1996 and were retroactive to January 1, 1996.
Total INCOME TAX EXPENSE was $2.3 million for the second quarter of 1997
compared to $2.6 million for the second quarter of 1996. The decrease was
due to lower pre-tax book income and quarterly adjustments to the 1997
estimated tax liability.
OTHER INCOME included $0.9 million of income relating to a return on demand
side management (DSM) programs. Continued expenditures for DSM increased
the total deferred amounts to $31.4 million at June 30, 1997 compared to
$26.1 million at June 30, 1996. The 1990, 1991 and 1992 DSM costs are
being recovered over a four year period beginning in October 1994 and the
1993, 1994, and 1995 DSM costs are being recovered over a four year period
beginning in May 1997. The 1996 and 1997 DSM cost recovery is expected to
begin in October 1997.
FUEL INVENTORIES were $15.5 million at June 30, 1997, compared to $11.4
million at March 31, 1997 and $13.9 million at June 30, 1996. The increase
from the last quarter was primarily attributable to normal seasonal build-
up of coal inventory during the summer shipping season.
CONSTRUCTION EXPENDITURES during the second quarter of 1997 totaled $6.4
million compared to $8.9 million in 1996. There were no major individual
construction projects during the second quarter of 1997. Construction work
in progress as of June 30, 1997 totalled $3.9 million compared to $6.3
million at June 30, 1996. The 1997 and 1998 construction programs are
estimated to be $36 million and $45 million, respectively.
COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
EARNINGS PER SHARE for the six months ended June 30, 1997 were $1.25
compared to $1.28 for the corresponding period in 1996. The decrease in
earnings was primarily due to lower earnings per share in the first quarter
of 1997 compared to the first quarter of 1996.
The year-to-date ELECTRIC MARGIN increased to $71.5 million from $71.2
million in 1996.
ELECTRIC SALES during the six months ended June 30, 1997 were 7.3% lower
than the same period a year ago. This was attributable to reduced sales
volumes in residential sales and the weather-sensitive portion of
commercial sales. As well, reduced sales volumes to a major industrial
customer contributed to the decrease. Other factors in the reduced
electric sales were the decreased sales for resale and interchange sales.
ELECTRIC REVENUES decreased 4.7% during the six months ended June 30, 1997
compared to the same period of 1996. This was primarily due to the reduced
sales volumes as discussed above.
The year-to-date GAS MARGIN has increased to $14.0 million in 1997 from
$13.6 million in 1996 primarily due to a Minnesota gas rate increase in an
annual amount of $2.1 million which was implemented in September 1996.
GAS DELIVERIES increased 4.2% during the six months ended June 30, 1997
compared to the same period in 1996. While residential sales and
commercial sales were down 5.5% and 1.8%, respectively, industrial sales
increased 10.9% and transportation deliveries increased 7.3%.
The 9.8% increase in GAS REVENUES during the six months ended June 30,
1997 compared to the same period in 1996 was primarily due to the Minnesota
gas rate increase, as discussed above, as well as the increased industrial
sales and transportation deliveries.
Cash flow from operating activities was $26.5 million, used to fund the
company's construction program, to reduce short-term debt and to pay common
and preferred dividends.
OTHER ITEMS
The company does not anticipate any public offerings for new debt or new
stock in the next two years other than the purchase of newly issued shares
on behalf of the Dividend Reinvestment and Stock Purchase Plan. Current
projections of construction expenditures for the 1997 and 1998 periods do
not indicate any need for permanent external financing.
In May 1995 the company filed an application with the Minnesota Public
Utilities Commission for an increase in gas rates in an annual amount of
$2.4 million. Increased interim rates in an annual amount of $1.5 million
were placed in effect in June 1995. On February 29, 1996 the Commission
issued an order allowing an increase in gas rates of $2.1 million. Rates
reflecting the increase were implemented in September 1996. The Department
of Public Service and the Office of Attorney General appealed the
Commission's decision. The appeal was denied by the Minnesota Court of
Appeals on February 18, 1997. On March 21, 1997, the Department of Public
Service and the Office of Attorney General appealed the decision of the
Court of Appeals (and the Commission) to the Minnesota Supreme Court.
The company's potential liability for coal tar waste at former manufactured
gas plant sites was discussed in the 1996 Annual Report to Stockholders.
Very little activity occurred in the second quarter of 1997 other than
additional investigative processes. Testing and soil sampling are
continuing, but the company is unable to determine what, if any,
remediation will be necessary until a later date. The company is
continuing to pursue recovery of costs from certain of its insurers. The
company is unable at this point to determine what portion, if any, of the
proceeds from the insurance companies will be refunded to its customers.
INTERSTATE POWER COMPANY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the 1996 Form 10-K/A Item 3 for certain
pending legal proceedings. Reference is also made to the
Management Discussion and Analysis included herein. Other than
these items, there are no material pending legal proceedings, or
proceedings known to be contemplated by governmental authorities,
other than ordinary routine litigation incidental to the
business, to which the company is a party or of which any of the
company's property is the subject.
ITEM 2. CHANGES IN SECURITIES
The rights of holders of registered securities have not been
materially modified, limited or qualified.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
No defaults upon senior securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
[a] THE DATE OF THE MEETING AND WHETHER IT WAS AN ANNUAL OR SPECIAL
MEETING.
On May 13, 1997, the Annual Stockholder's Meeting was held.
[b] IF THE MEETING INVOLVED THE ELECTION OF DIRECTORS, THE NAME OF
EACH DIRECTOR ELECTED AT THE MEETING AND THE NAME OF EACH OTHER
DIRECTOR WHOSE TERM OF OFFICE AS A DIRECTOR CONTINUED AFTER THE
MEETING.
The three Class III members of the Board of Directors were re-
elected, to hold office for terms as follows:
Alan B. Arends term expiring in 2000
Michael R. Chase term expiring in 2000
Wayne H. Stoppelmoor term expiring in 2000
Following are the Class I and II members of the Board of
Directors whose terms continued after the meeting:
Alfred D. Cordes term expiring in 1998
Joyce L. Haynes term expiring in 1998
James E. Byrns term expiring in 1999
Gerald L. Kopischke term expiring in 1999
[c] BRIEF DESCRIPTION OF EACH OTHER MATTER VOTED UPON AT THE MEETING
AND STATE THE NUMBER OF VOTES CAST FOR, AGAINST OR WITHHELD, AS
WELL AS THE NUMBER OF ABSTENTIONS AND BROKER NON-VOTES, AS TO
EACH SUCH MATTER, INCLUDING A SEPARATE TABULATION WITH RESPECT TO
EACH NOMINEE FOR OFFICE.
The election of three Class III directors, Alan B. Arends,
Michael R. Chase, and Wayne H. Stoppelmoor, to hold office for a
term of three years expiring at the annual meeting of
stockholders of the company to be held in 2000.
Votes cast were as follows:
For Against Abstain
Alan B. Arends 8,238,699 108,071 77,701
Michael R. Chase 8,251,696 95,075 77,701
Wayne H. Stoppelmoor 8,244,667 102,103 77,701
ITEM 5. OTHER INFORMATION
Proposed Merger
WPL Holdings, Inc. (WPLH), IES Industries Inc. (IES) and
Interstate Power Company (IPC) have entered into an Agreement and
Plan of Merger, as amended, dated November 10, 1995, which
provides for the combination of all three companies. The new
company will be named Interstate Energy Corporation. IES is a
holding company headquartered in Cedar Rapids, Iowa, and is the
parent company of IES Utilities and IES Diversified. IES
Utilities supplies electric and gas service to approximately
336,000 and 176,000 customers, respectively, in Iowa. IES
Diversified and its principal subsidiaries are primarily engaged
in the energy-related, transportation and real estate development
businesses. WPLH is a holding company headquartered in Madison,
Wisconsin, and is the parent company of Wisconsin Power and Light
Company (WP&L) and Heartland Development Corporation (HDC). WP&L
supplies electric and gas service to approximately 385,000 and
150,000 customers, respectively, in south and central Wisconsin.
HDC and its principal subsidiaries are engaged in business in
three major areas: environmental, energy and affordable housing
services. The proposed merger, which will be accounted for as a
pooling of interests, was approved by the respective shareowners
on September 5, 1996. The merger is conditioned on the receipt of
approvals of several federal and state regulatory agencies. The
status of these approvals is as follows: On May 7, 1997, the
Illinois Commerce Commission (ICC) issued an order approving the
proposed merger. On March 24, 1997, the Minnesota Public
Utilities Commission (MPUC) issued an order approving the merger
without hearings, subject to a number of technical conditions that
the parties are willing to meet. Included is a 4-year rate freeze
for IPC's Minnesota customers. On May 7, 1997 WP&L filed
testimony with the Public Service Commission of Wisconsin (PSCW)
proposing a rate freeze from the date of the merger approval
through calendar year 2000. The PSCW completed hearings related
to the merger in June 1997. Hearings regarding the merger were
completed in July 1997 before the Iowa Utilities Board (IUB).
Approval from the PSCW and IUB are still pending. The Federal
Energy Regulatory Commission (FERC) issued an order on January 15,
1997, finding no substantial market-power concerns with the
merger. Some limited issues were set for hearings that began on
April 23, 1997 and ended on May 2, 1997. On July 7, 1997, an
administrative law judge issued a non-binding recommendation that
FERC approve the merger subject to the terms of a stipulation
agreement on competition issues entered into between the companies
and FERC trial staff. Approval from the FERC is still pending.
Given that the merger was not consummated before July 7, 1997, the
merger partners are required to submit new information to the
Department of Justice (DOJ) pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act. The DOJ completed its impact review
of the merger on market power earlier and all requirements of this
review were satisfied. The merger partners do not believe the
resubmission will cause any material delays in finalizing the
merger.
The companies expect to receive final decisions on all outstanding
regulatory approvals relating to the merger in the fourth quarter
of 1997. Additional information regarding the merger is available
in IPC's 1996 Annual Report on Form 10-K/A.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
[a] List of Exhibits filed as a part of this report:
Exhibit
Number Description of Exhibit
27 Financial Data Schedule (required for electronic
filing only in accordance with Item 601[c][1] of
Regulation S-K)
[b] No reports were filed on Form 8-K.
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.
Interstate Power Company
(Registrant)
Date August 13, 1997 /s/ W. C. Troy
W. C. Troy, Controller
(Duly Authorized Officer and
Principal Accounting Officer)
INDEX OF EXHIBITS FILED HEREWITH:
EX-27 Financial Data Schedule (required for electronic filing only in
accordance with Item 601[c][1] of Regulation S-K).