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 September 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
November 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 September 30
1997 1996
(In Thousands)
OPERATING REVENUES:
Electric $ 83,842 $ 79,291
Gas 5,015 4,191
88,857 83,482
OPERATING EXPENSES:
Operation:
Fuel for electric generation 16,320 14,344
Power purchased 15,520 16,483
Cost of gas sold 3,863 3,958
Other operating expenses 15,428 14,597
Maintenance 4,090 3,961
Depreciation 7,957 8,061
Income Taxes:
Federal currently payable 5,062 3,536
State currently payable 1,516 1,070
Deferred taxes-net 955 1,544
Investment tax credit amortization (257) (257)
Property and other taxes 4,260 3,423
Total operating expenses 74,714 70,720
OPERATING INCOME 14,143 12,762
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 0 3
Interest income 57 58
Income taxes (443) (730)
Other-net 1,019 1,715
Total other income and deductions 633 1,046
INCOME BEFORE INTEREST CHARGES 14,776 13,808
INTEREST CHARGES:
Long-term debt 3,383 3,647
Other interest charges 494 410
Allowance for borrowed funds used during construction (49) (70)
Total interest charges 3,828 3,987
NET INCOME 10,948 9,821
PREFERRED STOCK DIVIDENDS 617 616
NET INCOME AVAILABLE FOR COMMON STOCK $ 10,331 $ 9,205
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,751 9,602
EARNINGS PER COMMON SHARE OUTSTANDING $ 1.05 $ .95
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)
Nine Months
Ended September 30
1997 1996
(In Thousands)
OPERATING REVENUES:
Electric $210,526 $212,227
Gas 38,415 34,602
248,941 246,829
OPERATING EXPENSES:
Operation:
Fuel for electric generation 41,841 43,285
Power purchased 42,532 47,462
Cost of gas sold 22,730 20,543
Other operating expenses 43,766 40,016
Maintenance 12,621 12,394
Depreciation 23,687 23,236
Income Taxes:
Federal currently payable 9,760 8,490
State currently payable 2,933 2,560
Deferred taxes-net 2,692 4,001
Investment tax credit amortization (771) (771)
Property and other taxes 12,708 12,061
Total operating expenses 214,499 213,277
OPERATING INCOME 34,442 33,552
OTHER INCOME AND DEDUCTIONS:
Allowance for equity funds used during construction 16 6
Interest income 183 202
Income taxes (1,106) (1,227)
Other-net 2,505 2,778
Total other income and deductions 1,598 1,759
INCOME BEFORE INTEREST CHARGES 36,040 35,311
INTEREST CHARGES:
Long-term debt 10,498 10,940
Other interest charges 1,253 1,254
Allowance for borrowed funds used during construction (110) (172)
Total interest charges 11,641 12,022
NET INCOME 24,399 23,289
PREFERRED STOCK DIVIDENDS 1,851 1,847
NET INCOME AVAILABLE FOR COMMON STOCK $ 22,548 $ 21,442
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 9,716 9,578
EARNINGS PER COMMON SHARE OUTSTANDING $ 2.32 $ 2.23
DIVIDENDS PAID PER COMMON SHARE $ 1.56 $ 1.56
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
BALANCE SHEETS
ASSETS
(Unaudited)
Sept.30 Dec. 31
1997 1996
(In Thousands)
UTILITY PLANT (at original cost)
Electric $863,251 $852,416
Gas 69,378 68,047
932,629 920,463
Less accumulated provision for depreciation 445,523 426,471
487,106 493,992
Held for future use 591 591
Construction work in progress 5,146 3,129
Utility plant - net 492,843 497,712
OTHER PROPERTY AND INVESTMENTS 448 453
CURRENT ASSETS:
Cash and cash equivalents 2,335 3,072
Accounts receivable less reserve 26,213 28,227
Inventories - at average cost:
Fuel 19,932 16,623
Materials and supplies 6,664 6,214
Prepaid pension cost 3,883 3,331
Prepaid income tax 9,773 9,483
Other prepayments and current assets 1,640 683
Total current assets 70,440 67,633
DEFERRED DEBITS:
Regulatory assets 8,845 10,346
Regulatory assets for deferred income taxes 26,898 26,583
Deferred energy efficiency costs 32,250 29,857
Unamortized debt expense 5,555 5,710
Other 1,838 906
Total deferred debits 75,386 73,402
TOTAL $639,117 $639,200
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
CAPITALIZATION AND LIABILITIES
(Unaudited)
Sept.30 Dec. 31
1997 1996
(In Thousands)
CAPITALIZATION:
Common stock, par value $3.50 per share;
Authorized - 30,000,000 shares; issued
and outstanding - 9,751,076 in 1997
and 9,670,866 in 1996 $ 34,129 $ 33,848
Additional paid-in capital 107,994 105,959
Retained earnings 73,645 66,251
Total common equity 215,768 206,058
Preferred stock, par value $50 per share 35,055 34,966
Total stockholders' equity 250,823 241,024
Long-term debt 171,786 171,731
Total capitalization 422,609 412,755
CURRENT LIABILITIES:
Commercial paper payable 34,300 28,700
Long-term debt maturing within one year 0 17,000
Accounts payable 13,795 14,013
Payrolls accrued 3,465 3,291
Taxes accrued 13,713 16,953
Interest accrued 3,871 2,817
FERC Order 636 transition costs 1,400 2,200
Other 4,345 3,477
Total current liabilities 74,889 88,451
DEFERRED CREDITS AND OTHER NON-CURRENT LIABILITIES:
Accumulated deferred income taxes 102,732 99,303
Accumulated deferred investment tax credits 16,242 17,013
Deferred pension cost 4,999 4,999
Accrued postretirement benefit cost 910 1,311
Environmental clean-up costs 6,234 7,234
Other 10,502 8,134
Total deferred credits and other non-current
liabilities 141,619 137,994
TOTAL $639,117 $639,200
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months
Ended Sept. 30
1997 1996
(In Thousands)
RECONCILIATION OF NET INCOME TO CASH FLOWS
FROM OPERATING ACTIVITIES:
Net income $24,399 $23,289
Adjustment for non-cash items:
Depreciation 23,687 23,236
Deferred income taxes 3,115 4,151
Investment tax credit amortization (771) (771)
Allowance for equity funds used during construction (16) (6)
Changes in assets and liabilities:
Accounts receivable - net 2,014 2,214
Fuel (3,303) 954
Materials and supplies (451) (242)
Accounts payable and other current liabilities (345) 910
Accrued and prepaid taxes (3,529) (3,043)
Interest accrued 1,054 1,492
Other prepayments and current assets (1,610) (1,880)
Rate refund payable 0 (256)
Deferred energy conservation costs (2,393) (5,248)
Regulatory assets 1,186 729
Other operating activities 1,803 3,198
Cash flows from operating activities 44,840 48,727
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to utility plant (18,960) (22,475)
Allowance for borrowed funds used during construction (110) (172)
Other (507) (342)
Cash flows from investing activities (19,577) (22,989)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 2,350 2,098
Retirement of long-term debt (17,000) 0
Dividends on common and preferred stock (16,950) (16,734)
Sale of commercial paper - net 5,600 (10,200)
Cash flows from financing activities (26,000) (24,836)
NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS: $ (737) $ 902
CASH AND CASH EQUIVALENTS:
Beginning of period $ 3,072 $ 1,537
End of period $ 2,335 $ 2,439
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $10,518 $10,206
Income taxes $14,090 $12,779
The accompanying Notes to Financial Statements are an integral part of
these statements.
INTERSTATE POWER COMPANY
Summarized Financial Information
The September 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 third quarter of 1997 were $1.05 compared to
$0.95 for the third quarter of 1996. Net income for the third quarter of
1997 was $10.9 million, compared to $9.8 million for the third quarter of
1996.
The ELECTRIC MARGIN (revenue less certain other costs, primarily fuel and
purchased power) was $49.8 million for the third quarter of 1997 compared
to $47.4 million for the third quarter of 1996.
Three Months Ended September 30
ELECTRIC SALES (Mwh) 1997 1996 % Change
Residential 292,251 286,191 2.1
Commercial 191,408 190,307 0.6
Industrial 905,127 849,002 6.6
Other 13,881 14,272 (2.7)
Subtotal 1,402,667 1,339,772 4.7
Interchange 20,850 75,670 N/A
Sales for Resale 37,136 47,919 (22.5)
Total Electric Sales 1,460,653 1,463,361 (0.2)
The increased electric residential sales and weather-sensitive commercial
sales are primarily a result of air-conditioning resulting from warmer
temperatures in July. Industrial sales increased mainly as a result of
higher sales to two of our largest customers, a food manufacturer and a
fertilizer manufacturer. Sales for resale decreased as a result of six of
the company's firm municipal electric wholesale customers purchasing their
requirements from other utilities.
Three Months Ended September 30
ELECTRIC REVENUES (000's) 1997 1996 % Change
Residential $24,959 $23,132 7.9
Commercial 14,617 14,106 3.6
Industrial 38,134 35,803 6.5
Other 3,793 2,825 34.3
Subtotal 81,503 75,866 7.4
Interchange 644 1,084 N/A
Sales for Resale 1,695 2,341 (27.6)
Total Electric Revenues $83,842 $79,291 5.7
The increased revenues for the third quarter of 1997 were primarily
attributable to increased residential, commercial and industrial 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. In addition, increased revenues in the third quarter of 1997
included recoveries of demand side management (DSM) costs, including those
that became effective in May 1997.
The GAS MARGIN (revenue less certain other costs, primarily purchased gas)
for the third quarter of 1997 was $0.8 million compared to $0.1 million for
the same period in 1996. The improved gas margin is primarily due to a
Minnesota gas rate increase in an annual amount of $2.1 million which was
implemented in September 1996.
Three Months Ended September 30
GAS DELIVERIES (MMcf) 1997 1996 % Change
Residential 271 282 (3.9)
Commercial 188 190 (1.1)
Industrial 199 151 31.8
Other 13 7 N/A
Total Gas Sales 671 630 6.5
Gas Transportation 7,379 5,815 26.9
Total Gas Deliveries 8,050 6,445 24.9
Although residential and commercial sales decreased 3.9% and 1.1%,
respectively, during the third quarter of 1997 compared to 1996, overall
deliveries increased 24.9% primarily due to the 26.9% increase in
transportation deliveries. The increase in transportation deliveries was
mainly attributable to a 32.0% aggregate increase in deliveries to the
three largest industrial customers.
Three Months Ended September 30
GAS REVENUES $ (000's) 1997 1996 % Change
Residential $2,387 $ 2,083 14.6
Commercial 1,081 888 21.7
Industrial 790 538 46.8
Other 71 33 N/A
Total Gas Sales Revenues 4,329 3,542 22.2
Gas Transportation 686 649 5.7
Total Gas Revenues $5,015 $4,191 19.7
The increase in gas revenues for the third quarter of 1997 compared to the
same period in 1996 was primarily due to the Minnesota gas rate increase as
discussed above. In addition, increased revenues in the third quarter of
1997 included recoveries of demand side management (DSM) costs, including
those that became effective in May 1997.
FUEL FOR ELECTRIC GENERATION increased $2.0 million or 13.8%, during the
third quarter of 1997 compared to the same period in 1996. The increase
was mainly due to a 6.5% increase in kilowatt-hours generated by the
company and a 14.3% increase in the cost of coal.
PURCHASED POWER EXPENSE decreased $1.0 million during the third quarter of
1997 compared to 1996. This decrease was primarily a result of the 12.2%
decrease in kilowatt-hours purchased. Capacity charges included in
purchased power expense were $7.6 million for both the third quarter of
1997 and the third quarter of 1996.
OTHER OPERATING EXPENSE included $65,000 of transmission services expenses
compared to $27,000 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 $757,000 during the third quarter of 1997 compared to $132,000
in 1996.
DEPRECIATION EXPENSE decreased by $104,000 or 1.3% for the third quarter of
1997 compared to the third quarter of 1996. This was mainly due to an
annual one-time adjustment to expense of $37,000 in September 1997 compared
to the $359,000 adjustment in September 1996. Partially offsetting that
were increased depreciation rates which were implemented in September 1996.
Total INCOME TAX EXPENSE was $7.7 million for the third quarter of 1997
compared to $6.6 million for the third quarter of 1996. The increase was
primarily due to higher pre-tax book income and quarterly adjustments to
the 1997 estimated tax liability.
OTHER INCOME included $1.2 million of income relating to a return on demand
side management (DSM) programs. Continued expenditures for DSM increased
the total deferred amounts to $32.2 million at September 30, 1997 compared
to $28.4 million at September 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. Cost recovery of the DSM costs for 1996 and
through September 1997 began in October 1997 in an annual amount of $3.8
million being recovered over each of the next four years. Effective
October 1997, DSM costs for the period of October 1997 through September
1998 will be recovered as they are incurred.
FUEL INVENTORIES were $19.9 million at September 30, 1997, compared to
$15.5 million at June 30, 1997 and $18.4 million at September 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 third quarter of 1997 totaled $8.1
million compared to $8.9 million in 1996. Major projects included three
69 KV transmission line rebuilds and two pole replacement jobs.
Construction work in progress as of September 30, 1997 totalled $5.1
million compared to $6.9 million at September 30, 1996. The 1997 and 1998
construction programs are estimated to be $36 million and $45 million,
respectively.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
EARNINGS PER SHARE for the nine months ended September 30, 1997 were $2.32
compared to $2.23 for the corresponding period in 1996. The increase in
earnings was primarily due to higher earnings per share in the third
quarter of 1997 compared to the third quarter of 1996.
The year-to-date ELECTRIC MARGIN increased to $121.3 million from $118.6
million in 1996. The higher 1997 margin was boosted by increased
residential, commercial and industrial sales in the third quarter of 1997.
ELECTRIC SALES during the nine months ended September 30, 1997 were 4.8%
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. Other factors in the reduced electric sales were the
decreased sales for resale and interchange sales.
ELECTRIC REVENUES decreased 0.8% during the nine months ended September 30,
1997 compared to the same period of 1996. This was primarily due to the
reduced commercial, resale and interchange sales volumes as discussed
above.
The year-to-date GAS MARGIN has increased to $14.8 million in 1997 from
$13.7 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.
Offsetting that were reduced residential and commercial gas sales in the
second quarter of 1997 compared to 1996 as well as the reconciliation of
purchases to the billing cycle.
GAS DELIVERIES increased 9.5% during the nine months ended September 30,
1997 compared to the same period in 1996. While residential sales and
commercial sales were down 5.4% and 1.7%, respectively, industrial sales
increased 15.1% and transportation deliveries increased 13.3%.
The 11.0% increase in GAS REVENUES during the nine months ended September
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 $44.8 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.
In September 1997 the company filed with the Iowa Utilities Board a
settlement agreement reached with the Office of Consumer Advocate which
reflected reduced electric rate levels. The rate reduction, in an annual
amount of $3.2 million, was implemented effective October 1997.
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 third 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.
The company utilizes software and related technologies throughout its
business that will be affected by the date change in the year 2000. An
internal study is currently underway to determine the scope of necessary
changes and the amount of related costs. The company will begin to incur
expenses in 1997 to resolve this issue. These expenses may or may not be
significant depending on the results of the study.
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.
[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.
[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.
No submission of matters to a vote of security holders.
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 engineering, energy services and
affordable housing. 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
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, the Illinois Commerce Commission
(ICC) issued an order approving the proposed merger. On
September 26, 1997, the Iowa Utilities Board (IUB) issued its
order granting final approval of the proposed merger. The order
included a four-year rate freeze for Iowa customers. On
November 4, 1997, the Public Service Commission of Wisconsin
(PSCW) granted approval of the proposed merger. The approval
included a number of conditions, including a four-year rate
freeze. The Federal Energy Regulatory Commission (FERC) approved
the merger on November 12, 1997. The Securities and Exchange
Commission (SEC) comment period ended November 5, 1996. Approval
by the SEC is still pending. An impact review of the merger on
market power, which is required by the Hart-Scott-Rodino
Antitrust Improvements Act, was completed by the Department of
Justice (DOJ) in 1997. All requirements of this review were
satisfied.
The companies expect to receive final decisions on all
outstanding regulatory approvals relating to the merger by the
end 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
3.(ii) By-Laws of Interstate Power Company as adopted
April 20, 1925 and as amended April 17, 1997
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 November 13, 1997 /s/ W. C. Troy
W. C. Troy, Controller
(Duly Authorized Officer and
Principal Accounting Officer)
INDEX OF EXHIBITS FILED HEREWITH:
EX-3.(ii) By-Laws of Interstate Power Company as adopted April 20, 1925
and as amended April 17, 1997
EX-27 Financial Data Schedule (required for electronic filing only
in accordance with Item 601[c][1] of Regulation S-K).