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Earnings Conference Call - Third Quarter 2002

by Larry L. Weyers
Chairman, President, and Chief Executive Officer
and

Joseph P. O'Leary
Senior Vice President and Chief Financial Officer

Good afternoon. Welcome to the third quarter earnings conference call for WPS Resources Corporation. I'm Larry Weyers, Chairman, President, and Chief Executive Officer for WPS Resources Corporation. With me today is Joe O'Leary, our Senior Vice President and Chief Financial Officer.

We are here today to discuss our earnings for the third quarter of 2002 and to discuss what the future has in store for us.

WPS Resources' common stock is traded on the New York Stock Exchange under the ticker symbol WPS. Earlier today we issued a press release containing our earnings information. If you haven't seen the release, you might want to get it. It is also available on our Internet site. Once you are at the site, select Financial Information, select Financial News, select Earnings, and finally select the release from today, October 29.

Before we begin, I need to point out that this presentation contains forward-looking statements within the definition of the Securities and Exchange Commission's safe harbor rules including the realization of projected results for 2002 for WPS Resources and its subsidiaries. Forward-looking statements are beyond the ability of WPS Resources to control and, in many cases, WPS Resources cannot predict what factors would cause actual results to differ materially from those indicated by forward-looking statements. I refer you to the forward-looking statement section of today's press release and to our filed Securities and Exchange Commission disclosure documents for further information.

Now, back to the business at hand.

WPS Resources' consolidated net income increased by almost 9 million dollars during the third quarter of 2002 when compared with 2001. Basic earnings per share were 96 cents for the third quarter in 2002 compared with 76 cents for the same period in 2001. However, the 96-cents for 2002 includes a gain of 19-cents, which was recognized during the quarter for WPS Power Development's sale of part of its interest in its synthetic fuel operation. The sale occurred late in 2001, and we deferred a portion of the related gain until certain contingencies were satisfied.

Consolidated net income increased by almost 40 percent during the third quarter of 2002 when compared with the same period in 2001, largely as a result of a 28 percent or 6.2 million dollar increase in electric utility segment net income and WPS Power Development's 3.5 million dollar increase in net income.

Margins increased for most business segments this quarter. Our utility segments increased their margins by 28 million dollars while our power development company increased its margin by almost 8 million dollars.

Now Joe O'Leary will discuss the details behind these financial results.

The Senior Vice President and Chief Financial Officer speaks.

Thanks, Larry.

Utility segment revenues increased by 32 million dollars, or almost 15 percent, in the third quarter of 2002. Our electric utility segment generated 28.3 million dollars of additional revenue over the third quarter of 2001, and our gas utility segment generated 4.1 million dollars of additional revenue over the third quarter of 2001. This was largely the result of a Public Service Commission of Wisconsin final 2002 rate order, which authorized Wisconsin Public Service to increase retail electric rates by 10.9 percent and retail natural gas rates by 3.9 percent in Wisconsin effective June 22. The 9 percent higher overall electric sales volumes at our Wisconsin utility added to the increased revenues.

WPS Power Development's revenues increased by almost 10 million dollars, or more than 25 percent, during the third quarter of 2002 when compared with 2001 primarily as a result of additional energy-producing assets in New York and Wisconsin in the third quarter of 2002 that were not in operation during the third quarter of 2001.

We were able to improve our margins during the third quarter of 2002 when compared with the same period in 2001. Our utility margin increased by 28 million dollars. In the nonregulated arena, WPS Power Development increased its margin by almost 8 million dollars.

Our consolidated electric utility margin increased by almost 27 million dollars due to the electric rate increase and 9 percent higher overall electric sales volumes at Wisconsin Public Service. While sales volumes increased to most classes of customers, the volume mix continues to impact our ability to recover the margin contemplated in our final 2002 rate order from the Public Service Commission of Wisconsin. Volumes were up 30 percent for lower-margin wholesale customers, but sales to higher-margin residential customers and commercial and industrial customers were up only 7 percent and 3 percent. Our third quarter cooling season was 2 percent warmer than last year and 21 percent warmer than normal, which also had a positive impact on our electric utility margins this quarter.

Our gas utility margin increased by 1.5 million dollars this quarter when compared with the same period in 2001 due to Wisconsin Public Service's higher retail natural gas rates. The higher rates were somewhat offset by a 1 percent decrease in overall natural gas throughput volumes, but we also experienced a net loss of 1.3 million dollars in the third quarters of 2002 and 2001 for our gas utility segment.

Meanwhile, we adopted a new accounting standard that is applicable to WPS Energy Services' trading operations. This was also required for other energy trading companies this quarter. This required us to report revenues net of related cost of sales for all activities classified as energy trading under Emerging Issues Task Force (EITF) Issue 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities," including both physical and financial trading activities. The new accounting standard, EITF 02-03, "Issues Related to Accounting for Contracts Involved in Energy Trading and Risk Management Activities," required this net reporting of WPS Energy Services' revenues with related cost of sales for all periods presented. Previously, generally accepted accounting standards required us to present revenues and cost of sales for WPS Energy Services' energy contracts on a gross, rather than net basis. The resulting reclassification had no effect on net income. Our energy services segment was able to report an increase in net revenues of almost 1 million dollars, or 8.9 percent, during the third quarter of 2002 when compared with the same period in 2001.

WPS Energy Services increased its net gas revenues by 1.5 million dollars, or 42.6 percent, through increased retail sales volume and better management of its retail gas procurement and volume risk processes. However, lower market prices on peak demand reserve power sales decreased its net electric revenues by 500 thousand dollars.

WPS Power Development increased its margin by nearly 8 million dollars mainly due to the operation of new generating assets in upstate New York and Combined Locks, Wisconsin. Also contributing to the increased margin were lower fuel costs at the Sunbury generation plant.

Operating expenses increased nearly 20 million dollars this quarter. Our utility segment was responsible for almost 16 million of the increased expenses that resulted from:

Operating expenses also increased at our nonregulated segments. WPS Power Development reported more than 2 million dollars of increased operating expenses associated with the generation assets obtained in the CH Resources acquisition. WPS Energy Services reported 1.6 million dollars of additional operating expenses, due to business expansion and operation of its gas storage facility, which became commercially operational in the first quarter of this year.

Depreciation expense increased by almost 3 million dollars this quarter when compared with 2001 as a result of Wisconsin Public Service's additional plant assets at the Kewaunee plant—primarily the two new steam generators and our increased ownership in the plant's other assets—and WPS Power Development's additional plant assets including the Combined Locks Energy Center and plants obtained through acquisition in upstate New York.

A pretax tax gain of 10.1 million dollars was recognized in the third quarter of 2002 and relates to WPS Power Development's sale of a partial interest in its synthetic fuel operation in 2001. This was the primary reason for the more than 4 million dollar increase in miscellaneous income in the third quarter of 2002 when compared with 2001. We had deferred a portion of the gain in 2001, pending the satisfaction of certain contingencies. The 10.1 million dollar gain reported in miscellaneous income was partially offset by a change in accounting from consolidation to the equity method as a result of Power Development's decreased ownership interest in its synthetic fuel facility.

Power Development's tax credits decreased by 2.8 million dollars as a result of our lower projected annual taxable income for 2002 compared with 2001. This limited our ability to utilize tax credits from Power Development's synthetic fuel operation.

Now, let's take a look at how we performed during the first nine months of 2002.

WPS Resources' consolidated net income increased by more than 23 million dollars during the first nine months of 2002 when compared with the same period in 2001. This resulted in basic earnings per share in 2002 of $2.53 compared with $2.04 in 2001. The gain from the sale of a partial interest in Power Development's synthetic fuel operation contributed 53 cents of the earnings per share for 2002.

Utility segment revenues increased by more than 9 million dollars, or 1.2 percent, as a result of increased electric and gas rates and the impacts of weather.

Electric utility segment revenue increased by almost 54 million dollars, or more than 10 percent, as a result of rate orders from the Public Service Commission of Wisconsin and a cooling season that was 6 percent warmer than last year and 21 percent warmer than normal. Meanwhile, gas utility segment revenue decreased by more than 44 million dollars, or almost 18 percent, largely due to a lower cost of gas in the first nine months of 2002 coupled with a heating season that was 3.3 percent warmer than last year or 4.9 percent warmer than normal.

Revenues for our nonregulated segments increased by almost 6 million dollars, or more than 4 percent, during the first nine months of 2002 when compared with the same period in 2001.

WPS Energy Services' net revenues increased by almost 11 million dollars, or almost 51 percent, due to better management of its retail gas procurement and volume risk processes during the first nine months of 2002.

WPS Power Development's revenue decreased by almost 5 million dollars, or more than 4 percent, primarily as a result of the sale of a portion of its ownership interest in its synthetic fuel facility, which resulted in a change in accounting from consolidation to the equity method. This was partially offset by increased revenues from new generating assets in New York and Wisconsin.

Our utility margins increased by almost 71 million dollars during the first nine months of 2002 compared with the same period in 2001. Our consolidated electric utility margin increased by more than 57 million dollars as a result of Wisconsin Public Service's retail electric rate increase and a 6 percent higher overall electric sales volume. Public Service's electric sales volumes were up 24 percent for lower-margin wholesale customers while sales to higher-margin residential customers and commercial and industrial customers increased by 3 percent and 2 percent, respectively. Our gas utility margin increased by more than 13 million dollars as a result of Wisconsin Public Service's retail natural gas rate increase and a 13 percent overall increase in natural gas throughput volumes. The increased throughput volumes were the result of Wisconsin Public Service's acquisition of Wisconsin Fuel and Light Company in April of 2001.

WPS Energy Services increased its net gas revenues by almost 13 million dollars during the first nine months of 2002 by better managing its retail gas procurement and volume risk processes. However, Energy Services' net electric revenues decreased by almost 3 million dollars because of lower market prices received from the sale of reserve power and fewer wholesale transactions.

WPS Power Development's margin increased by 17 million dollars largely due to operation of additional generation assets, lower cost fuel purchases at Sunbury as a result of new coal contracts, and lower spot market power purchases.

Consolidated operating expenses increased by more than 59 million dollars in the first nine months of 2002 when compared with the same period in 2001. Utility operating expenses represented more than 50 million dollars of the increased expenditures as the result of:

In the nonregulated arena, operating expenses increased by 9 million dollars. WPS Energy Services was responsible for almost 5 million dollars of the increased operating expenses due to business expansion, higher write-offs of uncollectible accounts, and operation of its gas storage facility. WPS Power Development was responsible for more than 4 million of the increased operating expenses primarily due to costs associated with accelerated maintenance at Sunbury and the operation of its new generating assets in Wisconsin and New York.

Depreciation expense increased by almost 12 million dollars during the first nine months of 2002 when compared with 2001 due to additional plant assets at Wisconsin Public Service and WPS Power Development.

During the first nine months of 2002 there was a 28 million dollar pretax gain related to WPS Power Development's 2001 sale of a portion of its synthetic fuel facility. This was partially offset by a change from consolidation accounting to the equity method of accounting for this facility as a result of the decrease in our ownership percentage. These items contributed to a net increase in consolidated miscellaneous income of almost 21 million dollars.

WPS Power Development also saw a more than 3 million dollar decrease in tax credits that we could book as a result of lower projected annual taxable income for 2002 compared with 2001. This limited our ability to utilize tax credits from Power Development's synthetic fuel operation.

The weighted average number of common stock shares outstanding increased during the first nine months of 2002 by 3.8 million shares primarily as a result of:

Now I'll turn the conference call over to Larry Weyers.

The Chairman, President, and Chief Executive Officer speaks.

Thanks, Joe. That gives you some background on our earnings story for the third quarter and the first nine months. Now I'll discuss how our operating segments fared and what you can expect in the future. I'll begin with our regulated utilities.

Wisconsin Public Service operated under an interim rate order from the Public Service Commission of Wisconsin that was granted in December 2001 for the year 2002 until June 22, 2002 when the final rate order became effective. The final rate order granted a 10.9 percent, or 58.6 million dollar, annualized increase in retail electric rates and a 3.9 percent, or 10.6 million dollar, annualized increase in retail natural gas rates. The order also granted a 12.3 percent return on equity and allowed 55 percent equity in our capital structure. Because the final retail natural gas rates were less than those granted under the interim order, Wisconsin Public Service was required to refund about 420 thousand dollars to customers who were charged the higher rate since January. Even with this rate increase, Wisconsin Public Service's rates remain among the lowest in Wisconsin and the nation.

On March 28 of this year, Wisconsin Public Service filed a request to modify electric and natural gas rates for its Wisconsin customers in 2003. This rate filing is necessary under a Wisconsin regulatory requirement that calls for biennial filing for rates. Our request included an 8.3 percent increase in electric rates and a 2.7 percent increase in natural gas rates for 2003. We hope to receive a Wisconsin rate order on our 2003 rate request in December to be effective January 1, 2003.

The measures Public Service is taking to ensure reliable energy are a primary reason for the requested rate relief.

Wisconsin Public Service strives to remain one of the lowest-priced energy service providers in the Midwest. Even with these proposed increases, Public Service's rates will compare favorably with those of other utilities in the Midwest.

Upper Peninsula Power, our electric utility in Michigan, had its last rate increase in 1994 which was followed by a rate reduction in 1995. Upper Peninsula Power needs to increase its rates to cover the increased costs of its operations since the early 1990s and enable it to earn a reasonable return on equity. As a result, in August we filed for a 9.9 million dollar, or 18.5 percent, rate increase for electric retail customers. We hope to receive an interim order that would be effective January 1 and to receive the final order in the first half of 2003.

Public Service has a definitive agreement to purchase Calpine's 180-megawatt De Pere Energy Center located in De Pere, Wisconsin for about 120 million dollars. The agreement includes termination of the existing power purchase agreement. We expect to pay 72 million dollars at close and about 48 million dollars near year-end 2003. We anticipate receiving approval of this agreement from the Public Service Commission of Wisconsin in the near future. As part of the purchase of the De Pere Energy Center, Public Service also agreed to purchase up to 235 megawatts of capacity and energy for 10 years, beginning in 2005, from Calpine's proposed Sherry Energy Center, which will be located near Marshfield, Wisconsin. The cost of the capacity purchase will be approximately 250 million dollars, and Public Service will be responsible for supplying the fuel for the energy it receives from the Sherry Energy Center.

This is a good deal for Public Service and its customers because it will give us a better mix of resources and will mean lower rates for our customers. By terminating the existing power purchase agreement, Public Service will be able to take advantage of changes in technology to provide lower-cost options for meeting the increasing demands of its customers.

In September, Public Service announced plans to build a 500-megawatt coal-fired electric generator near Wausau, Wisconsin. We expect to submit a Certificate of Public Convenience and Necessity application to the Wisconsin Commission in late 2003 with the hope of receiving an order in 2004, which would allow construction to proceed later in 2004. With projected costs between 650 million dollars and 700 million dollars, the project is expected to be complete in 2008. This plant is intended to meet the growing electrical demand of Public Service's customers. Studies have indicated that Public Service's customers are increasing their electric demand by approximately two to three percent per year. Not only is the population increasing, but individual customers are demanding more electricity. The average electric use by residential customers has risen about 20 percent in the last 10 years.

Public Service is also moving forward with preliminary work on the proposed 220-mile Wausau, Wisconsin, to Duluth, Minnesota, transmission line. This project is needed in Wisconsin to provide adequate power to the north central portion of the state.

Now let me bring you up-to-date on the operations of our two nonregulated subsidiaries. I'll begin with WPS Power Development.

We own 503 megawatts of generation capacity in Pennsylvania, which consists of 473 megawatts from our Sunbury and 30 megawatts from our Westwood facilities. These plants supply the Pennsylvania, New Jersey, and Maryland energy marketplace. A significant portion of the output from these facilities is under off-take contracts that we've hedged for the next two years. Going forward, we plan to operate Sunbury as a merchant plant. We are also considering other alternatives to optimize the contribution to future earnings from this plant.

We also own 69 megawatts of generation in Maine and New Brunswick, Canada. Unfortunately, these hydro facilities have suffered for the last two years from lack of rain and snow-unusual occurrences in that part of the country. The drought conditions-the worst in 106 years-persisted through the spring. Rain in late June and early July helped temporarily, but rainfall was well short of normal in the latter part of July and all of August and September. We have done a good job of managing our operating expenses, but the lower production as a result of low river flows from the drought conditions has resulted in lower revenues. By the way, all of the generation from this facility is under contract.

In June, we completed our purchase of CH Resources, Inc. whose primary assets are three upstate New York power plants. The plants have a combined capacity of 257 megawatts. The generation from these plants is not under contract, but is instead sold in the open market. The gas units have been running well, but we encountered some unexpected maintenance on the 50-megawatt coal plant. We are now in the time period where we are not dispatching as much, which was expected. The power prices in New York have been lower than previous years, similar to other areas of the country. Consequently, the financial performance of the plants has dropped a little below expectations.

WPS Power Development is continuing to work on its plan to construct a 250-megawatt, coal-fueled electric generating power facility in western Wisconsin, if a contract is in place for the capacity. The facility will be constructed as a redevelopment project of the existing 53-megawatt Stoneman Power Plant that was purchased in 1996. The plan calls for construction of an additional 250 megawatts of electrical capacity integrated with the existing 53-megawatt Stoneman Plant. We expect to complete this redevelopment project around 2006. We own two-thirds of the Stoneman Power Plant.

WPS Power Development completed construction of a 50-megawatt simple cycle combustion turbine facility in Combined Locks, Wisconsin, in November of 2001 and completed construction of the cogeneration phase in the second quarter of 2002. The facility is now operational and all of its capacity is under contract. Overall, the facility's operation has been acceptable. However, we have had some operational concerns and decided to take the facility out of service as we fine tune control systems to better meet permit requirements. We expect to return the plant to service in mid-December or early January.

Our synthetic fuel operation in Kentucky has been operating well. We continue to maintain a one-third share in the facility, after selling a portion of our interest in the facility last November. We recorded 1.2 million dollars of the deferred gain in the first quarter of 2002. In April, the Internal Revenue Service issued a favorable Private Letter Ruling relating to the facility. As a result of receiving the Private Letter Ruling, we recognized a one time pretax gain of 16.7 million dollars in the second quarter of 2002. We also recognized a 10.1 million dollar one-time pretax gain in the third quarter of 2002. The rest of the gain, about 10 million dollars, will be recognized during the fourth quarter of 2002 and possibly into 2003 as the remaining contingencies are satisfied.

WPS Power Development currently has 932 megawatts of generating capacity. Additional acquisition and development projects continue to be evaluated.

WPS Power Development has been facing bearish market conditions. Even though PJM load has reached system peak levels, energy pricing has not spiked to extremely high prices, nor has it shown sustained high prices. In addition, the current pricing for capacity is low, reflecting the high reserve margins and low demand for capacity that exists. Naturally, this lower pricing has resulted in lower revenues for Power Development. With significantly depressed power prices when compared with previous years, we are no longer expecting to generate the improved margins we had anticipated. Sunbury's change in operational strategy has been helpful in mitigating the effects of the weak market. Sunbury's availability has improved since completing our maintenance schedules, and we are continuing to look for ways to maximize the value of this asset. Coordination between WPS Energy Services and WPS Power Development to optimize trading revenues associated with the plant has been beneficial and has resulted in additional revenues that are helping to mitigate the effects of the weak market.

In late 2000, we announced an agreement to purchase the Tracy Pinon power station in Nevada from Sierra Pacific Resources. In 2001, Nevada's legislature put a hold on the sale of all power plants until 2003. Our original asset sale agreement expired on October 25. As a result, we have written off our investment in the acquisition of these facilities.

WPS Power Development is an important part of our earnings growth projections. In addition to expecting profitable operations from its existing diversified asset portfolio, we're targeting new investments of about 150 to 200 million dollars per year on an average annualized basis with a return that is commensurate with the assessed risks.

Now, let's take a closer look at WPS Energy Services' operations.

We have enjoyed tremendous growth at Energy Services over the last 6 years, and we expect to continue expanding in the northeastern quadrant of the United States and adjacent portions of Canada. We are continuing to maintain a balance of retail and wholesale gas and electric business, utilizing WPS Power Development's assets where applicable.

We participate in the electric and gas markets where our sales commitments generally have back-to-back transactions that allow us to effectively manage risk. Where possible, the transactions are backed by WPS Power Development's generation assets or by assets that we control through contract. The general decline in market activity and lower volatility in electric markets has reduced the opportunity to capture value by trading around Power Development's assets. But there is still an active near-term physical market with adequate liquidity to effectively market Power Development's production. The location of Power Development's assets in the PJM and New York ISO markets is a benefit because the liquidity is better there than any other part of the country.

Margins from sales of electricity have generally been better than the margins on natural gas sales, and we are continuing to grow our electric business. We have also made changes in the way this business manages its retail gas procurement and volume risk processes. The improvement in our retail natural gas segment has been a primary driver of our net revenue growth.

WPS Energy Services has been successful in building a diverse base of electric service customers through both regulatory standard offer contracts and municipal aggregation. Our current contract portfolio includes:

WPS Energy Services owns a 3 billion cubic foot gas storage field in Michigan, which became operational in February. The storage field allows for increased reliability and greater flexibility in meeting customers' peak day energy requirements. During this first year of operation, the storage field has performed better than expected—both financially and operationally. During 2003, the capacity of the field will be ramped up to full capacity.

WPS Energy Services' traders are incented to produce margin and profit—not volume or revenues. WPS Energy Services does not use internally generated price curves but uses external sources in its mark-to-market evaluation. Further protection is provided through our WPS Resources corporate Risk Administration area, which monitors trading activities at Energy Services on a daily basis and assures that they are appropriately hedged.

In the wake of many market participants' declining credit quality, Energy Services continues to be diligent in its evaluation of credit risk and monitoring of counter party credit exposure. Our strategy has not been altered significantly because our focus has not been on building a trading company, but rather on developing and delivering structured energy products to wholesale and retail energy customers. Those customers are eager to find credit-worthy suppliers like WPS Energy Services. With the reduction in the number of market participants, customers are now more than ever focusing on the quality of their supplier. WPS Energy Services has consistently been regarded as a quality and reliable supplier, and those characteristics are more important than ever to customers. This has contributed to Energy Services' customer growth.

Finally, I'll turn to WPS Resources.

In December, we announced the initiation of our asset management strategy. Our strategy calls for the disposition of assets that are no longer required for operations in a manner that allows recognition of profits over the next 5 to 7 years. Land, buildings, and other facilities at our subsidiaries are a part of this strategy. We are expecting an average annualized impact of 15 to 25 cents per share through 2007 from our asset management strategy, although we are not expecting to receive a significant gain from asset management sales in 2002.

We expect that our utility, Wisconsin Public Service, will require debt financing in the fourth quarter and expect it to be in the form of fading lien notes in the amount of 125 to 175 million dollars. The financing is needed relative to our acquisition of the De Pere Energy Center and to retire 50 million dollars of debt that came due in October.

We expect WPS Resources to require debt financing in the fourth quarter of this year and expect it to be in the form of unsecured senior notes in the amount of 75 to 125 million dollars. The funds will be used to meet the capital needs of our subsidiaries.

We are continuing to work hard to maintain our quality credit ratings that give us access to the capital markets at reasonable rates.

We may also issue common stock sometime next year. A common stock issue is contingent on the level of future investment activity by our subsidiaries.

In July we announced a dividend increase on our common stock. We are proud to say that this is the 44th consecutive year we have increased our dividends. The 53-1/2 cent dividend was paid on September 20 to shareholders of record on August 30.

As for earnings guidance for 2002, we had expected to discuss that with you today. However, last Friday, the Emerging Issues Task Force rescinded the accounting requirements of Issue 98-10, "Accounting for Contracts Involved in Energy Trading and Risk Management Activities." The change in accounting standard is effective for all contracts entered into on or after October 25, 2002. New contracts are required to be evaluated under Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities." We anticipate further discussions and guidance from the Financial Accounting Standards Board related to these required changes during the fourth quarter. The changes are anticipated to primarily affect the timing of the recognition of income or loss in earnings and not change the underlying economics or cash flows of transactions entered into by WPS Energy Services. We have not yet determined the impact that this decision will have on WPS Energy Services' net income for 2002. As a result, we are not changing our total earnings per share guidance of $2.99 to $3.29 for 2002 earnings at this time, but recognize that there may be some impact due to the required accounting standard change. We will issue guidance once the full impact of the required accounting standard change has been evaluated.

In the meantime, assuming normal weather, availability of our generating units, a pick-up in the recovery of the economy, improvement in the market price for energy, and successful execution of cost control initiatives, we expect that ongoing operations can deliver basic earnings per share of between $2.40 and $2.70 with the likelihood of a gain from the sale of a portion of our synthetic fuel facility adding approximately 59 cents per share by year-end. That will provide total earnings per share of between $2.99 and $3.29.

Investors have had a tough nine months in attempting to identify quality companies. They are recognizing that WPS Resources' conservative nature has served it well throughout the years. Our core competencies are in energy and energy related businesses. We intend to stay in those businesses. Our electric and gas utility has served northeastern Wisconsin for over 119 years. We understand the energy business and have developed a business plan that capitalizes on that understanding. Our utility base is solid and our nonregulated energy businesses are focused. We've rewarded our shareholders with 44 consecutive years of increased dividends. We effectively mitigate and minimize risk in the operation of our business. We work hard to maintain quality credit ratings. Finally, we deliver value to our customers and our shareholders.

We plan to continue delivering shareholder value through our strong utility foundation, focused nonregulated energy and energy-related businesses, achieving our projected annualized earnings per share growth of 8 to 10 percent, and maintaining our outstanding dividend record. We plan to continue delivering value for many years to come!

Now, I'd like to take time to answer some of your questions about our financial picture and plans for the future.

Thank you for being a part of our third quarter earnings conference call. A replay of this conference call will be available through November 12 by dialing 888-562-6876.

The text for today's presentation is available on our Web site. Just select Financial Information and then Presentations.

If you have additional questions, you may contact Joe O'Leary at 920-433-1463.