A statement by Gale E. Klappa, Chairman, President and Chief Executive Officer of Wisconsin Energy Corporation is given below. The statement has been taken from the company’s 2005 annual report.
In many ways, 2005 can best be described as a year of promise and performance for Wisconsin Energy.
Promisebecause a number of positive developments occurred that will allow us to move forward building the infrastructure Wisconsin needs to meet the state’s growing demand for energy.
Performancebecause we were able to deliver higher customer satisfaction, solid financial results, and real shareholder value.
Promise and Performance: Financial Highlights
Earnings from continuing operations totaled $304 million or $2.56 a share for 2005.
On a comparable basis in 2004, earnings were $220 million or $1.84 per share. Warm summer weather, lower debt levels, and six months of earnings from the new power plant we brought into service in July were key factors in our improved results.
I’m also pleased to report that Wisconsin Energy stock continued to gain in value last year, trading at an all-time high of $40.83 a share on October 4. The stock closed the year above $39 a share up more than 15 percent from year-end 2004. And over the past six years, Wisconsin Energy stock has outperformed the S&P 500 and our peer group of 30 utilities across the United States.
Our ratio of debt to total capital in the business remained essentially unchanged as we closed 2005. We accomplished this in the face of soaring prices for natural gas, two refueling outages and vessel head replacements on the reactors at our Point Beach Nuclear Plant, and the investment of nearly $750 million to improve our energy production and delivery system in Wisconsin and Michigan’s Upper Peninsula.
In January 2006, our board of directors voted to raise the dividend on our common stock by 4.5 percent. This is the third time in three years that we’ve been able to increase our dividend payments to you a reflection of the strong performance of our business and our confidence in our long-term business plan.
And as we turned the page on the new year, we were pleased to receive word that Forbes magazine named Wisconsin Energy one of the 10 best managed utilities in America.
Promise and Performance: Operational Highlights
As I mentioned earlier, we made significant progress on our Power the Future plan in 2005. In late June, the Supreme Court of Wisconsin reinstated an order from the Wisconsin Public Service Commission authorizing construction of two new coal-fired units at our site in Oak Creek, south of Milwaukee. With regulatory approvals secured, work began in earnest on this $2.2 billion project.
At our Port Washington site north of Milwaukee, the first of two new gas-fired units went into service on July 16 on time and on budget. This new power station, which was named best gas-fired project of the year by Power Engineering magazine, is a cornerstone of our promise to deliver reasonably priced energy and improved environmental performance for decades to come.
We’ll continue to move forward on the second unit at Port Washington this year. We expect to complete the project in time for the peak summer season in 2008.
Our nuclear units at Point Beach also achieved several milestones last year. In late December, the U.S. Nuclear Regulatory Commission extended the operating licenses for both units for an additional 20 years to 2030 and 2033, respectively. And Point Beach unit one set a plant record with 472 days of continuous operation before being taken out of service for normal refueling.
A Promising Economy
As we look back on the year, I believe it’s also important to note that nearly every sector of the Wisconsin economy posted gains during 2005. The state added some 37,700 jobs last year. In fact, according to the Bureau of Labor Statistics, Wisconsin added more jobs than nearly every neighboring state. Manufacturing and construction led the way, with the construction sector setting record employment levels during every month of 2005.
Our customer base and the demand for electricity and natural gas reflect this economic strength. We now serve 1.1 million electric customers in Wisconsin and upper Michigan and more than 1 million natural gas customers in Wisconsin. Our customers used 32.5 million megawatt hours of electricity last year underscoring the ongoing need for energy to power the region’s economy.
Promise and Performance: Customer Satisfaction and Reliability
Despite unprecedented volatility in the fuel markets that resulted in higher prices for electricity and natural gas, our customer satisfaction scores rose again in 2005. In the J.D. Power study of satisfaction among business customers, we ranked second in the Midwest and fifth out of 53 major electric utilities nationwide.
And in our own surveys, more customers were very satisfied with the company and with our services than in 2004.
We also maintained our status as one of the most reliable utilities in the country. In mid- September, one of the largest storms in the company’s history left nearly 128,000 of our customers without power. The response from our crews and those who traveled here to help was swift and effective. We restored power to 70 percent of those customers in 24 hours. And virtually all were back in service in a record time of less than 60 hours.
As part of our effort to become the industry leader in customer satisfaction, we also increased the number of follow-up calls we make to customers after a transaction or an outage. In addition, we expanded our Business Contact Center in 2005 to better serve the special needs of small businesses throughout our region.
A Promise for the Future
We know from the lessons of history and the success of great businesses that financial discipline, a solid growth plan, and a relentless focus on customer satisfaction lead to greater shareholder value. Our focus will be to make this enterprise even more valuable to our customers and stockholders in the year ahead. Thank you for your confidence and support