First Quarter 2014

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May 2, 2014

First Quarter 2014 Earnings Conference Call
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

2

Index

3. Condensed Commentary on Forward-Looking Statements

4. Non-GAAP Financial Information

5. First Quarter 2014 Financial Results; 2014 Guidance; Long-Term 

Growth Expectations

6. Operational Update

7. Operational Update (continued)

8. Operational Update (continued)

9. Operational Update (continued)

10. Diluted EPS – Adjusted and Weather Impacts

11. Guidance – 2014 Diluted EPS – Adjusted

12. Key Investment Highlights

13. APPENDIX

14. Estimated Capital Expenditures

15. Estimated Utility Depreciation

16. Projected Average Rate Base 2013 – 2016

17. Supporting Data for Projected Average Rate Base 2013 – 2016 

18. Financing Summary

19. Integrys Long-Term Debt Maturities

20. Integrys Credit Ratings

21. Economic Drivers in Regulated Utility Service Territories

22. Regulated Utilities – Regulatory Rate Base and Return on Equity

23. Regulated Utilities – Statistics

24. Rider QIP Background Information

25. Costs Recovered Through Rider QIP

26. Rider QIP Recovery Mechanism

27. Minnesota Energy Resources – 2013 General Rate Case – As Filed

28. Minnesota Energy Resources Rate Case – Positions of Department 

of Commerce (DOC) and Office of Attorney General (OAG)

29. Wisconsin Public Service – 2014 General Rate Case – As Filed

30. Wisconsin Public Service – Residential Electric – 2009 – 2014 

Average Annual Customer Bill Change

31. Peoples Gas and North Shore Gas – 2014 General Rate Cases – As 

Filed

32. State Regulatory Commissions in Jurisdictions Served by Integrys 

Energy Group 

33. Nonregulated Operational Update

34. Integrys Energy Services – Delivered and Estimated Contracted

Volumes

35. Integrys Energy Services – Margins

36. Integrys Energy Services – Volumes, Unit Margins, and Definitions 

Related to Margins Slide

37. Nonregulated Estimated Contracted Retail Volumes at March 31, 

2014 by Region

38. Nonregulated Retail Services Offered

39. Special Items by Segment – Adjusted Earnings (Loss) – First 

Quarters 2014 and 2013

40. Special Items by Segment – Diluted EPS – Adjusted – First 

Quarters 2014 and 2013

41. Adjusted Earnings Drivers – Regulated Natural Gas Utility Segment –

First Quarter 2014 vs. 2013

42. Adjusted Earnings Drivers – Regulated Electric Utility Segment – First 

Quarter 2014 vs. 2013

43. Adjusted Earnings Drivers – Electric Transmission Investment Segment –

First Quarter 2014 vs. 2013

44. Adjusted Earnings Drivers – Nonregulated Integrys Energy Services 

Segment – First Quarter 2014 vs. 2013

45. Adjusted Earnings Drivers – Holding Company and Other Segment –

First Quarter 2014 vs. 2013

46. Disclosure of Full Forward-Looking Statements
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

3

In this presentation, we make statements concerning our expectations, beliefs, plans, 

objectives, goals, strategies, and future events or performance. These statements are 

“forward-looking statements” within the meaning of Section 21E of the Securities Exchange 

Act of 1934, as amended. Forward-looking statements are not guarantees of future results 

and conditions. Although we believe that these forward-looking statements and the 

underlying assumptions are reasonable, we cannot provide assurance that such statements 

will prove correct.

Forward-looking statements involve a number of risks and uncertainties. Some risks and 

uncertainties that could cause actual results to differ materially from those expressed or 

implied in forward-looking statements include those described in Item 1A of our Annual 

Report on Form 10-K for the year ended December 31, 2013, as may be amended or 

supplemented in Part II, Item 1A of our subsequently filed Quarterly Reports on Form 10-Q. 

Other risks and uncertainties are set forth in greater detail in the aforementioned filing with 

the United States Securities and Exchange Commission and in Slide 46 in the Appendix. You 

are encouraged to read and understand the disclaimers set forth in these filings.

 

All forward-looking statements included in this presentation are based upon information 

presently available, and we, except to the extent required by the federal securities laws, 

undertake no obligation to publicly update or revise any forward-looking statements, 

whether as a result of new information, future events, or otherwise. 

Condensed Commentary on

Forward-Looking Statements
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

4

Non-GAAP Financial Information

We prepare financial statements in accordance with accounting principles 

generally accepted in the United States (GAAP). In addition, we disclose and 

discuss diluted earnings per share (EPS) – adjusted and adjusted earnings (loss), 

which are non-GAAP measures. Management uses these measures in its internal 

performance reporting and for reports to the Board of Directors. We disclose 

these measures in our quarterly earnings releases, on investor conference calls, 

and during investor conferences and related events. Management believes that 

diluted EPS – adjusted and adjusted earnings (loss) are useful measures for 

providing investors with additional insight into our operating performance. These 

measures allow investors to better compare our financial results from period to 

period, as they eliminate the effects of certain items that are not comparable. 

This additional information is not meant to be considered in isolation or as a 

substitute for our results of operations prepared and presented in conformance 

with GAAP. Tax impacts are calculated using the applicable combined federal and 

state statutory rate modified for any attributable permanent tax effect and/or tax 

credit. A reconciliation of non-GAAP information to GAAP information is included 

on the slide where the information appears.
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

5

First Quarter 2014 Financial Results; 2014 

Guidance; Long-Term Growth Expectations

 First Quarter 2014 Financial Results

– Consolidated diluted EPS – adjusted of $1.73 for the three months 

ended March 31, 2014 versus $1.76 for the same period in 2013

 2014 Guidance

– Consolidated diluted EPS – adjusted of $3.50 to $3.75 

 Long-Term Growth Expectations

– Earnings per share growth for Integrys Energy Group consolidated 

in the range of 4% to 6% on average annualized basis

– Base year: 2013

– Projection does not include any growth from Integrys Energy 

Services
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

6

Regulated Natural Gas Utility Segment

 Weather impact

– Coldest in 30 years resulted in record throughput

– Identified areas for investment as a result of system vulnerabilities 

– Weather and propane prices/shortages elevated an increased 

interest in natural gas conversion

 Natural Gas Consumer, Safety & Reliability Act (Rider 

Qualifying Infrastructure Program which is known as Rider QIP)

– 2014 projects underway, including replacement of high pressure 

system on south side of Chicago

– Deep frost line delayed construction season 

– Additional Rider QIP details in Appendix on Slides 24 to 26

 Acquisition of Alliant Energy’s Minnesota natural gas utility 

assets 

– Filed for required approvals on February 4, 2014

– Targeting transaction close by end of 2014

Operational Update 
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

7

Regulated Electric Utility Segment

 Columbia environmental upgrade nearing completion

– Scrubber on Unit 2 commenced operation in April 2014

– Scrubber on Unit 1 expected to be on line in June 2014

 Weston 3 environmental upgrade (ReACTTM) – advanced from site 

preparation to foundation work

 System Modernization and Reliability Project (SMRP)

– Plan to complete 185 miles of underground installations this year

– Received permits from Department of Natural Resources, State Historical 

Preservation Organization, and Army Corps of Engineering 

– Easements for 2014 project segments completed

– Construction is underway

 Generation strategy

– Fox Energy Center site selected for a combined cycle natural gas turbine 

power plant of up to 500 megawatts

– Announced plant retirements effective June 2015

• Pulliam Units 5 and 6 (combined 112 megawatts)

• Weston Unit 1 (60 megawatts)

– Weston Unit 2 (75 megawatts) – to be run exclusively on natural gas by June 

2015

 Weather impact on generation; reduced coal deliveries, high 

natural gas prices

Operational Update (continued) 
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

8

Operational Update (continued) 

Rate Cases

 Minnesota Energy Resources – revised requested rate 

increase 

 Wisconsin Public Service 

– Wisconsin retail jurisdiction rate case filed April 1, 2014

– Expect to file rate case for Wisconsin Public Service’s Michigan retail 

jurisdiction in third quarter 2014 

 Peoples Gas/North Shore Gas

– Rate increase request filed February 26, 2014

– Schedule set for final decision no later than January 20, 2015

 Details included in Appendix (Slides 27 through 31)
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

9

Proposed Sale of Upper Peninsula Power Company 

(UPPCO) to Balfour Beatty Infrastructure Partners

 Stock purchase agreement signed: January 17, 2014

 Anticipated closing: End of 3Q14

 Terms of transaction:

– Purchase price: $298.8 million (subject to post-closing 

adjustments)

– Expected net after-tax proceeds: $220 million

– One-time after-tax gain expected: $48 million or $0.60 per 

share

– Excludes UPPCO’s ATC investment (approximately $15 million)

– Includes transition service agreements with Integrys Business 

Support ranging from 18 to 30 months for such services as 

accounting and information technology

 Expected use of proceeds: reduce equity and debt 

financing for generation and infrastructure investment at 

other regulated utilities

 Regulatory approvals needed:

– Wisconsin Public Service Commission – filed March 3, 2014

– Federal Energy Regulatory Commission – filed March 14, 2014

– Michigan Public Service Commission – filed March 17, 2014

• Timeline can be found at: 

http://efile.mpsc.state.mi.us/efile/docs/17564/0020.pdf

 Balfour Beatty Infrastructure Partners Information

– www.bbip.com

– www.balfourbeatty.com (BBIP sponsor)

Operational Update (continued) 

 Established in 1884 (acquired by Integrys Energy Group in 

1998)

 Regulated electric utility

 Operates in 10 of the 15 counties in the Upper Peninsula of 

Michigan

 118 employees

 Serves approximately 52,000 electric retail customers in 

118 communities

 A firm peak demand was reached on August 20, 2013, with 

a system demand of 101 megawatts

 Electric property includes approximately 3,300 miles of 

electric distribution lines and 57 distribution substations 

and 50.8 megawatts of generating capacity (based on 

summer ratings)

 Rate base/ROE/equity layer

 $161 million/10.15%/56.74% excluding deferred taxes in 

rate base

► 2013 regulated utility income (excluding ATC earnings): 

$8.6 million
First Quarter 2014 Earnings Conference Call – May 2, 2014

10

Diluted EPS – Adjusted

and Weather Impacts

Diluted Earnings Per Share Information (Non-GAAP Information)

Three Months Ended March 31

2014 2013

Diluted EPS $ 1.89 $ 2.37

Special Items (net of taxes):

Net noncash gains related to derivative and inventory accounting activities (0.16) (0.53)

Discontinued operations – (0.08)

Diluted EPS – adjusted $ 1.73 $ 1.76

Average Shares of Common Stock – Diluted (in millions) 80.5 79.3

Weather Impacts (Compared to Normal, Net of Decoupling)

Three Months Ended March 31

Dollar Impacts, net of taxes (Millions) 2014 2013

Natural Gas Utility Segment $ 7.4 $ 0.6

Electric Utility Segment 5.7 –

Integrys Energy Services – Core (2.8) 0.2

Reversal of the full calendar year 2012 reserves related to decoupling mechanisms at Peoples Gas and North Shore Gas – 9.9

Total $ 10.3 $ 10.7

Three Months Ended March 31

Diluted EPS Impacts, net of taxes 2014 2013

Natural Gas Utility Segment $ 0.09 $ 0.01

Electric Utility Segment 0.07 –

Integrys Energy Services – Core (0.03) –

Reversal of the full calendar year 2012 reserves related to decoupling mechanisms at Peoples Gas and North Shore Gas – 0.12

Total $ 0.13 $ 0.13
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

11

Guidance – 2014 Diluted EPS – Adjusted 

Non-GAAP Financial Information

Note that the consolidated guidance 

is narrower than the sum of the 

segments. 

Low Midpoint High

Scenario Scenario Scenario

$ 1.42 $ 1.48 $ 1.53

 1.45 1.53 1.60

 0.70 0.71 0.71

Core 0.17 0.19 0.21

 0.31 0.33 0.35

$ 4.10 $ 4.23 $ 4.35

 80.7 80.7 80.7

Information on Special Items:

Integrys Energy Group Consolidated Diluted EPS $ 4.10 $ 4.23 $ 4.35

Special Items (net of taxes)

Holding Company and Other Segment – Gain on Sale of Upper Peninsula Power Company (0.60) (0.60) (0.60)

Integrys Energy Group Consolidated Diluted EPS – Adjusted $ 3.50 $ 3.63 $ 3.75

Average Shares of Common Stock – Diluted (in millions) 80.7 80.7 80.7

Key Assumptions for 2014:

• Availability of generation units

• Normal weather conditions for the rest of the year

• Not estimating the impact of derivative and inventory fair value accounting activities

Regulated Natural Gas Utility Segment

Potential 2014 

Diluted EPS guidance is adjusted for special items and their financial impact on diluted EPS guidance for 2014.

Diluted EPS Guidance

Regulated Electric Utility Segment

Electric Transmission Investment Segment

Holding Company and Other Segment

Integrys Energy Services Segment

Integrys Energy Group Consolidated Diluted EPS 

Average Shares of Common Stock – Diluted (in millions) Data has not changed since the fourth quarter 2013 earnings 

conference call that took place on February 27, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

12

 Execution of our business plan for the regulated utilities remains on track as we 

continue to make prudent infrastructure investments for approved projects

 Our asset management strategy allows us to continually review our portfolio of 

businesses and take advantage of opportunities as they arise, such as the pending 

sale of Upper Peninsula Power Company

 Our 34% ownership in American Transmission Company continues to contribute to 

earnings

 2014 guidance range for diluted EPS – adjusted on a consolidated basis of $3.50 to 

$3.75

 Expect long-term earnings per share growth of 4% to 6% on an average annualized 

basis, with 2013 as a base year, for Integrys Energy Group consolidated and not 

including any growth from Integrys Energy Services

 Given our solid long-term business plan, our current dividend is sustainable, and we 

expect our dividend payout ratio will decline to utility industry norms as our 

earnings grow over time

Key Investment Highlights
Appendix

13 First Quarter 2014 Earnings Conference Call – May 2, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

14

Estimated Capital Expenditures 

(Dollars in Millions) 2014 2015 2016 Total

Wisconsin Public Service $ 323 $ 314 $ 432 $ 1,069 

Peoples Gas 473 392 400 1,265 

Upper Peninsula Power * 12 10 10 32 

Minnesota Energy Resources 25 44 25 94 

North Shore Gas 30 28 25 83 

Michigan Gas Utilities 20 17 16 53 

 Subtotal for Utilities $ 883 $ 805 $ 908 $ 2,596 

Integrys Energy Services 68 42 42 152 

Integrys Business Support 68 31 40 139 

Integrys Transportation Fuels (Trillium CNG) 32 44 45 121 

 Total Anticipated Capital Expenditures $ 1,051 $ 922 $ 1,035 $ 3,008 

American Transmission Company (equity contribution) $ 26 $ 14 $ 16 $ 56 

* If regulatory approvals received, expect to close on sale in 3Q14 which would eliminate expenditures in 2015 and 2016.

Capital expenditure data has not changed since the fourth quarter 

2013 earnings conference call that took place on February 27, 2014. 

American Transmission Company data has been updated.
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

15

Estimated Utility Depreciation

(Dollars in Millions) 2014 2015 2016 Total

Wisconsin Public Service $ 109 $ 115 $ 127 $ 351 

Peoples Gas 108 119 123 350 

Upper Peninsula Power 8 9 9 26 

Minnesota Energy Resources 9 10 11 30 

North Shore Gas 11 12 12 35 

Michigan Gas Utilities 9 9 10 28 

 Total for Utilities $ 254 $ 274 $ 292 $ 820 

Data has not changed since the fourth quarter 2013 earnings 

conference call that took place on February 27, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

16

Projected Average Rate Base 2013 – 2016 

* Excludes Upper Peninsula Power Company

 $-

 $1.0

 $2.0

 $3.0

 $4.0

 $5.0

 $6.0

2013 2014 2015 * 2016 *

Fox Energy Center

Electric not yet approved/not in rates

Electric approved not yet in rates

Electric in rates

Natural Gas not yet approved/not in

rates

Natural Gas approved not yet in rates

Natural Gas in rates

Billions 35% Growth
First Quarter 2014 Earnings Conference Call – May 2, 2014

17

Supporting Data for Projected Average 

Rate Base 2013 – 2016 

(Dollars in Billions) 2013 2014 2015 * 2016 *

Natural Gas in rates $2.5 $2.6 $ 2.6 $ 2.6

Natural Gas approved not yet in rates 0.2 0.4 0.6

Natural Gas not yet approved/not in rates 0.1

Electric in rates 1.8 2.4 2.2 2.2

Electric approved not yet in rates 0.1 0.3

Electric not yet approved/not in rates 0.1

Fox Energy Center 0.3

Total $4.6 $5.2 $ 5.3 $ 5.9

* Excludes Upper Peninsula Power Company
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

18

 Provide adequate capital levels at a reasonable cost 

and maintain current credit ratings; see Slide 20 for 

credit rating details

 Transactions expected in 2014

– Long-term debt

• Integrys Energy Group – 7.27%, $100 million, matures on June 1, 2014

• Peoples Gas – approximately $150 million late in 2014

• Opportunities to call, reprice, or remarket existing long-term debt 

transactions are also evaluated

– Equity

• No new equity required in 2014

• Shares needed for stock investment, dividend reinvestment, and equity 

compensation plans to be purchased in open market

Financing Summary
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

19

$0

$100

$200

$300

2014 2015 2016 2017 2018 2019 2020

Other NSG PGL WPS PEC TEG

Millions

Integrys Long-Term Debt Maturities

NOTE: 2016 maturities exclude approximately $270 million of Integrys Energy Group hybrid debt securities which convert in 

that year to a floating rate and are callable at par. Integrys Energy Group has the option to retire the hybrids and 

reissue securities of similar equity content or allow them to remain outstanding until final maturity in 2066. 

Data has not changed since the fourth quarter 2013 earnings 

conference call that took place on February 27, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

20

Standard & Poor’s Moody’s

(Upgrades for utilities effective 

January 31, 2014)

Integrys Energy Group

Issuer credit rating

Senior unsecured debt

Commercial paper

Junior subordinated notes

ABBB+

A-2

BBB

N/A

Baa1

P-2

Baa2

Wisconsin Public Service

Issuer credit rating *

First mortgage bonds *

Senior secured debt *

Preferred stock *

Commercial paper

AN/A

A

BBB

A-2

A1

Aa2

Aa2

A3

P-1

Peoples Gas

Issuer credit rating * 

Senior secured debt *

Commercial paper *

AA

A-2

A2

Aa3

P-1

North Shore Gas

Issuer credit rating *

Senior secured debt *

AAA2

Aa3

Integrys Credit Ratings

N/A = Not Applicable

* Upgraded by Moody’s effective January 31, 2014. Data has not changed since the fourth quarter 2013 earnings 

conference call that took place on February 27, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

21

Economic Drivers in Regulated Utility Service 

Territories

2014

 2007 2008 2009 2010 2011 2012 2013 Jan Feb Mar

United States (29.0) (41.0) (25.0) (12.7) (14.3) 26.1 28.0 17.0 14.7 20.1

Minnesota (31.0) (39.0) (23.0) (18.6) 0.9 19.9 23.0 (18.0) (4.1) (0.6)

Wisconsin (17.0) (38.0) (21.0) (28.9) (5.6) 10.2 12.8 (25.0) (23.0) 7.6

Illinois (35.0) (52.0) (30.0) (26.3) (15.9) 21.8 12.7 (17.6) 5.4 10.2

Michigan (39.0) (41.0) (29.0) (9.8) (16.2) 22.3 23.7 (7.9) (12.4) (2.3)

Source: U.S. Census Bureau

Preliminary

Single Family Housing Construction (Year-Over-Year Percent Change) 

Integrys Energy Group’s Regulated Utility Service Area – States 2014

 2007 2008 2009 2010 2011 2012 2013 Jan Feb Mar

United States 4.6 5.8 9.3 9.6 8.9 8.1 7.4 6.6 6.7 6.7

Minnesota 4.6 5.4 8.0 7.3 6.6 5.7 5.1 4.7 4.8 4.8

 Rochester 4.0 4.5 6.5 6.1 5.4 4.8 4.3 4.8 4.8

Wisconsin 4.9 4.8 8.5 8.3 7.5 6.9 6.8 6.2 6.1 5.9

 Green Bay 4.6 4.7 8.1 7.7 7.1 6.9 6.2 6.2 6.5

Illinois 5.0 6.4 10.1 10.3 9.4 8.9 9.1 8.7 8.7 8.4

 Chicago 4.9 6.2 10.0 10.2 9.5 8.8 9.1 8.6 9.0

Michigan 7.2 8.3 13.6 12.5 10.4 8.9 8.7 7.8 7.7 7.5

 Monroe 6.5 8.6 14.6 12.4 9.8 7.9 8.0 7.9 7.6

Preliminary

Source: Bureau of Labor Statistics 

Unemployment Rates (Percent) for Integrys Energy Group’s Regulated 

Service Area – States and Selected Metropolitan Areas
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

22

Regulated Utilities – Regulatory 

Rate Base and Return on Equity 

Retail last authorized, IL/MN

Rate base/investment ($ millions) 1,495 201 190

Allowed ROE 9.28% 9.28% 9.70%

Authorized regulatory equity % 50.43% 50.32% 50.48%

Date of decision 12/18/2013 12/18/2013 7/13/2012

Retail last authorized, MI

Rate base/investment ($ millions) 210 (1) 2 1 4 218 (2)

Allowed ROE 10.25% 14.25% 10.60% 10.15%

Authorized regulatory equity % 42.40% 56.39% 41.10%

Date of decision 6/7/1983 12/4/2007 12/19/2013

Retail last authorized, WI

Rate base/investment ($ millions) 383 (3) 1,918 (3)

Allowed ROE 10.20% 10.20%

Authorized regulatory equity % 50.14% 50.14%

Date of decision 12/18/2013 12/18/2013

Wholesale last authorized

Rate base/investment ($ millions) 299 (4) 3 (5)

Allowed ROE -

Authorized regulatory equity % -

Date of decision -

11/14/2013

Natural Gas Natural Gas Electric

48.62% (1)

Natural Gas Electric

 PGL NSG

Natural Gas Natural Gas

 MERC MGU WPS UPPCO

Notes:

(1) The MGU rate case was settled with no stated rate base value. $210 million corresponds to MGU's filed amount with deferred taxes included in the capital structure. Rate base would be 

$177 million, and the common equity ratio would be 50.12%, with deferred taxes in rate base.

(2) The UPPCO rate case was settled with no stated rate base value. $221 million corresponds to UPPCO’s filed amount, with deferred taxes included in the capital structure. Rate base would 

be $161 million, and the common equity ratio would be 56.74%, with deferred taxes in rate base.

(3) Wisconsin includes working capital.

(4) Service provided under FERC Tariff and Market-Based Rate Contracts, each of which is formula based.

(5) Primarily Distribution Service served under the Joint Tariff for the Sales of Ancillary Services (“JAST”).

Data has not changed since the fourth quarter 2013 earnings conference call that took place on February 27, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

23

Regulated Utilities – Statistics

UPPCO

As of 12-31-2013

Electric Customers 52,000

Natural Gas Customers 831,000 159,000 216,000 169,000

Generation capacity (megawatts) 50.8

Natural gas storage (billion cubic feet) 40.0 3.9

Employees 1,296 166 217 159 118

For the period ending 12-31-2013

Annual electric volumes (million megawatt-hours) 0.8

Annual natural gas throughput (billion cubic feet) 182.9 37.5 82.9 32.0

Retail as of 12-31-2013 (Estimated) Natural Gas Natural Gas Natural Gas Natural Gas Natural Gas Electric Electric

Rate base/investment ($ millions) - Illinois 1,549 205

Rate base/investment ($ millions) - Wisconsin 381 * 1,814 *

Rate base/investment ($ millions) - Michigan 149 1 40 150

Rate base/investment ($ millions) - Minnesota 193

Wholesale as of 12-31-2013 (Estimated)

Rate base/investment ($ millions) 262 2

323,000

2,698.3

15.6

82.3

1,242

PGL NSG MERC MGU WPS

445,000

* Rate base includes working capital as the Wisconsin Commission handles it differently.

Data has not changed since the fourth quarter 2013 earnings 

conference call that took place on February 27, 2014
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

24

Rider QIP Background Information

 Effective January 1, 2014

 Qualifying property

– Main and service pipe replacement, movement of inside meters to 

outside

– Pipeline integrity

 Rider QIP cumulative annual increase capped at 4% per 

year of base rates

– i.e., maximum Rider QIP recovery in year 1 is 4%, year 2 is 8%, etc.

– Maximum 5.5% increase in any given year

– Filed third monthly surcharge with ICC in mid-April

 Reconciliation, including prudence review, in the following 

year

 Sunset after 2023
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

25

Costs Recovered Through Rider QIP

 Return of investment, i.e., depreciation

 Return on investment based on:

– Cost of capital from most recent rate case

– Multiplied by: 

• Plant placed in service

• Less accumulated depreciation and accumulated deferred 

taxes on Rider QIP plant

• Less “minimum spend”

– Minimum spend will usually be met by non-QIP capital expenditures
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

26

Rider QIP Recovery Mechanism

 One month cash flow lag, recovery recorded immediately.

– Example:

• Recovery of costs for property placed in service in January 2014 

begins March 1, 2014.

• For accounting purposes, March revenue is accrued in January

 Half year problem from traditional rate cases avoided

– Due to averaging convention, traditional rate case only recovers 

half of costs from additions in the test year, creating regulatory 

lag until the next rate case

– In a test year, current year additions are recovered through 

Rider QIP, so no regulatory lag between rate cases
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

27

 Filed on September 30, 2013 (Docket No. 13-617)

 Requested:

– $14.2 million, 5.52% increase in retail natural gas rates

– Rate base – $198.3 million retail natural gas

– Return on Equity – 10.75% with equity component of 50.31%

 Key reasons for rate increase request:

– Inflation $2.0 million

– Return on equity $0.9 million

– Labor costs $0.9 million

– Conservation Improvement Program amortization $0.8 million

– Integrys Business Support customer relations system upgrade $0.7 million

– Property taxes $0.7 million

– Rate case expense $0.4 million

– Employee benefits $(0.5 million)

– Executive/non-executive incentives $(0.7 million)

– Depreciation $(1.1 million)

 Key Dates:

– Interim rates effective: January 1, 2014

– Final order expected: October 2014

 Website: https://www.edockets.state.mn.us/EFiling/edockets/searchDocuments.do?method=eDocketsResult&userType=public

Minnesota Energy Resources –

2013 General Rate Case – As Filed
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

28

Minnesota Energy Resources Rate Case – Positions of Department of 

Commerce (DOC) and Office of Attorney General (OAG)

n/a = not applicable * These items should have no net income impact because of offset to expenses.

Natural Gas Retail

Rate Increase (a) $ 12.2 M $ 2.9 M $ 4.8 - 6.0 M

Rate Base/Investment (b) $ 199.2 M $ 185.8 M n/a

Return on Equity 10.75% 9.4% 8.8% - 9.2%

Equity Component 50.3% 50.3% n/a

Revenue Requirement Impacts of Major Adjustments:

 Conservation Improvement Program $ (3.8) M * n/a

 Return on Equity $ (2.3) M $(2.6) - (3.8) M

 Sales $ (1.7) M n/a

 Pension Expense $ (1.4) M n/a

 Removal of Pension Asset from Rate Base $ (1.4) M n/a

 Rate Case Amortization $ (0.3) M * n/a

 Transportation Revenues n/a $ (2.0) M

 O&M Inflation n/a $ (1.0) M

 Customer Relations n/a $ (0.8) M

 Property Taxes n/a $ (0.7) M

 Travel/Entertainment Expenses n/a $ (0.6) M

 Bad Debt Expense n/a $ (0.4) M

 Membership Dues n/a $ (0.1) M

(a) Reduced to reflect revised sales data ($1.1M), reduced benefits expense ($0.7M), other ($0.2M).

(b) Increased to reflect updated working capital data.

MERC Revised DOC OAG
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

29

 Filed on April 1, 2014 for new rates effective January 2015 (Docket No. 6690-UR-123)

 Requested for Wisconsin jurisdiction:

– $76.8 million (8.0%) increase in retail electric rates

– $1.6 million (0.5%) decrease in retail natural gas rates

– Rate base – $1,900 million Wisconsin electric retail and $360 million Wisconsin natural gas retail

– Return on Equity – 10.6% with equity component of 50.51%

 Reasons for rate increase request:

Wisconsin Public Service –

2014 General Rate Case – As Filed

Electric Natural Gas

Increased fuel costs (including impact of fuel refunds) $ 22 n/a

Pay-at-risk plan $ 13 $ 3

Increased transmisson costs $ 12 n/a

Reduced decoupling refund $ 9 $ (16)

Inflation at 3% $ 7 $ 2

Increase in ROE from 10.2% to 10.6% $ 7 $ 1

Increase in equity component $ 5 $ 1

Increased depreciation expenses $ 4 $ 1

Recovery of 2013 Fox Energy Center deferrals (over 4 years) $ 3 n/a

Increase in taxes other than income taxes $ 3 $ 1

Increase in interest expense $ 3 n/a

Decrease/increase in non-fuel O&M $ (3) $ 5

(Increase)/decrease in margin revenues $ (5) $ 2

Expiration of 2013 rate case deferrals $ (6) $ (2)

Increase in manufactured gas clean up n/a $ 1

(Millions)

n/a = not applicable
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

30

Wisconsin Public Service – Residential Electric –

2009 – 2014 Average Annual Customer Bill Change

0.00% 0.00%

0.61%

0.85%

0.00%

-1.30% -1.5%

-0.5%

0.5%

1.5%

2.5%

3.5%

4.5%

2009 2010 2011 2012 2013 2014
First Quarter 2014 Earnings Conference Call – May 2, 2014

31

Peoples Gas and North Shore Gas – 2014 

General Rate Cases – As Filed

$ in Millions

Peoples 

Gas

North 

Shore 

Gas

Total Revenue Increase Requested $ 128.9 $ 7.1

Rate Base/Investment $ 1,869.6 $210.8

Equity Component 50.31% 50.41%

Return on Equity Requested 10.25% 10.25%

Key Drivers

Upgrading delivery systems $ 60.4 $ 2.1

Production/distribution/storage/transmission maintenance 28.6 3.8 Key Dates:

Increased cost of capital 21.5 1.1

Other administrative and general and taxes other than income tax 14.0 (0.2) Staff/Intervenor Testimony 7/2/2014

Loss of revenue under existing rates 10.2 1.2 Companies Rebuttal 8/4/2014

Customer accounts and customer service (5.8) (0.9) Staff/Intervenor Rebuttal 9/3/2014

 Total $ 128.9 $ 7.1 Companies Surrebutal 9/12/2014

Hearings Begin 9/22/2014

Key Dates Hearings End 9/26/2014

New rates expected January/February 2015 Initial Briefs 10/2/2014

Reply Briefs 11/5/2014

Website for Current Rate Case Proposed Order by ALJ 12/5/2014

http://www.icc.illinois.gov/docket/casedetails.aspx?no=14-0225 Peoples Gas Decision deadline 1/20/2015

http://www.icc.illinois.gov/docket/casedetails.aspx?no=14-0224 North Shore Gas

Filed on February 26, 2014 for new rates to be effective in 2015
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

32

State Regulatory Commissions in Jurisdictions 

Served by Integrys Energy Group

Commissioner Party Affiliation Appointed By

Initial Date 

Appointed Confirmed Term Expires

Illinois – 5-year terms, party split required, appointment by governor, confirmation by State Senate

http://www.icc.illinois.gov/cc/

Doug Scott, Chair

Miguel Del Valle

Sherina Maye

Ann McCabe

John Colgan

Democrat

Democrat

Independent

Republican

Democrat

Governor Quinn

Governor Quinn

Governor Quinn

Governor Quinn

Governor Quinn

03-11-2011

02-08-2013

02-25-2013

03-16-2012

11-15-2009

No

Yes

Yes

Yes

Yes

TBD

01-15-2018

01-15-2018

03-16-2017

01-19-2015

Michigan – Staggered 6-year terms, party split required, appointment by governor, confirmation by State Senate

http://www.michigan.gov/mpsc/0,1607,7-159-16400-40504--,00.html

John Quackenbush, Chair

Sally Talberg

Greg White

Republican

Independent

Independent

Governor Snyder

Governor Snyder

Governor Granholm

09-15-2011

06-26-2013

12-04-2009

Yes

Yes

Yes

07-02-2017

07-02-2019

07-02-2015

Minnesota – Staggered 6-year terms, party split required, appointment by governor, confirmation by State Senate

http://www.puc.state.mn.us/PUC/aboutus/commissioners/index.html

Beverly Jones Heydinger, Chair

Dr. David Boyd

Nancy Lange

Dan Lipschultz

Betsy Wergin

Democrat

Republican

Democrat

Republican

Republican

Governor Dayton

Governor Pawlenty

Governor Dayton

Governor Dayton

Governor Pawlenty

07-02-2012

07-10-2007

02-11-2013

01-07-2014

08-01-2008

Yes

Yes

Yes

No

Yes

01-02-2017

01-05-2015

01-07-2019

01-06-2020

01-04-2016

Wisconsin – Staggered 6-year terms, appointment by governor, confirmation by State Senate

http://psc.wi.gov/aboutUs/organization/commissioners.htm

Phil Montgomery, Chair

Eric Callisto

Ellen Nowak

Republican

Democrat

Republican

Governor Walker

Governor Doyle

Governor Walker

04-04-2011

05-27-2008

07-05-2011

Yes

Yes

Yes

03-01-2017

03-01-2015

03-01-2019
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

33

 1Q14 weather impact – adverse but within revised expectations

 Margin recognition timing impact will to reverse by end of year

 Contract with Chicago repriced – includes both demand and 

commodity charge

 Status of aggregation program – over 80% of eligible renewal 

volume has been completed, with others still pending

 Energy marketing business – 2014 

– Realized retail gross margins (see Slide 35)

• 1Q14 vs. 1Q13: Natural gas up 29%, electric down 61%

– Unit margins – continued competitive pressures and weather

• 1Q14 vs. 1Q13: Natural gas down 16% and electric down 72% (see Slide 36)

– Delivered volumes higher

• 1Q14 vs. 1Q13: Electric up 47%, natural gas up 73% (see Slide 34)

 Energy marketing business – 2014 and beyond

– 1Q14 contracted forward volumes up versus 1Q13

• Natural gas up 76% and electric up 13% based upon estimated volumes (see 

Slide 37 for distribution by region)

Nonregulated Operational Update 
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

34

Integrys Energy Services –

Delivered and Estimated Contracted Volumes

183.6*

240 - 265**

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

200.0

220.0

240.0

260.0

280.0

300.0

2013 2014

Billion

Cubic Feet Retail Natural Gas

Estimated 2014 Volumes Incremental to Contracted Volumes as of

March 31, 2014

Estimated Contracted Volumes as of March 31, 2014

Actual Delivered Volumes

Actual 2013* and Estimated 2014** Annual Delivered Volumes

21.3*

26.0 - 30.5 **

0.0

4.0

8.0

12.0

16.0

20.0

24.0

28.0

32.0

36.0

2013 2014

Million

MegawattHours

Retail Electric

Estimated 2014 Volumes Incremental to Contracted Volumes as of

March 31, 2014

Estimated Contracted Volumes as of March 31, 2014

Actual Delivered Volumes

Actual 2013* and Estimated 2014** Annual Delivered Volumes
First Quarter 2014 Earnings Conference Call – May 2, 2014

35

Integrys Energy Services – Margins

(Millions)

2014 2013 Change

Natural Gas

Retail

Realized margins without lower-of-cost-or-market impact $ 27.0 $ 18.9 $ 8.1

Lower-of-cost-or-market impact on realized margins 1.6 4.0 (2.4)

Unrealized gains/(losses) (1.1) 6.6 (7.7)

Effect of purchase accounting on margins (2.6) - (2.6)

 24.9 29.5 (4.6)

Wholesale

Realized margins without lower-of-cost-or-market impact (0.2) 0.2 (0.4)

Unrealized gains/(losses) 3.0 (4.3) 7.3

 2.8 (4.1) 6.9

Total Natural Gas Margins 27.7 25.4 2.3

Electric and Renewable Energy Assets

Retail

Realized margins 9.8 23.9 (14.1)

Unrealized gains 17.7 61.9 (44.2)

Effect of purchase accounting on realized margins (0.4) - (0.4)

 27.1 85.8 (58.7)

Renewable Energy Assets Realized Margins 2.6 3.0 (0.4)

Wholesale

Unrealized gains - 0.8 (0.8)

 - 0.8 (0.8)

Total Electric and Renewable Energy Assets Margins 29.7 89.6 (59.9)

Total Gross Margin $ 57.4 $ 115.0 $ (57.6)

Realized margins without lower-of-cost-or-market impact $ 39.2 $ 46.0 $ (6.8)

Lower-of-cost-or-market impact on realized margins 1.6 4.0 (2.4)

Unrealized gains 19.6 65.0 (45.4)

Effect of purchase accounting on margins (3.0) - (3.0)

Total Gross Margin $ 57.4 $ 115.0 $ (57.6)

Three Months Ended March 31
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

36

Integrys Energy Services – Volumes, Unit Margins, 

and Definitions Related to Margins Slide

2014 2013 Change

Physically Settled Volumes

Retail Natural Gas (in billion cubic feet) 87.6 50.7 36.9

Realized per unit margins ($ per dekatherm) $ 0.31 $ 0.37 $ (0.06)

Retail Electric (in million kilowatt hours) 6,356.9 4,318.2 2,038.7

Realized per unit margins ($ per megawatt hour) $ 1.54 $ 5.53 $ (3.99)

Three Months Ended March 31 Definitions

Realized margins – Represents physical sales, net of physical purchases and the cash settlement of financial contracts 

(i.e., forwards, futures, options, and swaps).

Lower-of-cost-or-market – As required by GAAP, natural gas inventory is to be valued at the lower of acquired price or 

current market price. In any given period, the margin impact is a function of the current market price relative to the 

average acquisition price, as well as the reversal of non-cash losses resulting from withdrawals.

Unrealized gains/(losses) – Represents the non-cash change in fair value of the portfolio of contracts deemed to be 

derivative instruments for accounting purposes. In addition to the change in the value of currently outstanding contracts, 

this amount is impacted when contracts are settled. The value is reversed out of unrealized gains/(losses) and the actual 

settlement gains/(losses) and the actual settlement amount is reflected in realized margins. 

Effect of purchase accounting on margins – Represents the assignment of purchase price related to the contracts acquired 

via acquisitions. The value of the individual contracts (calculated as of the acquisition date) is amortized through gross 

margin in the month of settlement. This schedule excludes the amortization of intangibles identified as part of the 

acquisition (i.e., customer relationships) which is included in operating expenses.

Wholesale Gas and Electric – Activity relates to remaining contracts, following the divestiture of these businesses, for 

which offsetting positions were entered into.

Renewable Energy Assets – Represents the portfolio of energy assets owned and/or operated by Integrys Energy Services 

and is comprised of energy assets with renewable attributes. 
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

37

Nonregulated Estimated Contracted Retail 

Volumes at March 31, 2014 by Region

Wisconsin

28.1%

Illinois

19.3%

Mid Atlantic

2.5%

Michigan

9.0%

Ohio

7.4%

Compass 

(Mid Atlantic & 

Ohio)

33.7%

Retail Natural Gas

Illinois

40.3%

Mid Atlantic

11.9%

New York

8.3%

New England

15.0%

Michigan/Ohio 

24.5%

Retail Electric
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

38

Nonregulated Retail Services Offered

GAS GAS ELECTRIC ELECTRIC GAS ELECTRIC

Residential and 

Small Commercial

Government 

Aggregation

Residential and 

Small Commercial

Government 

Aggregation

Commercial and 

Industrial

Commercial and 

Industrial

Wisconsin X

Illinois X X X X X

Michigan X X X

Indiana XX

Kentucky XX

Ohio X X X X X 0

New England

Connecticut X

Maine X

Massachusettts X

New Hampshire 0 X

Rhode Island X

Mid-Atlantic

Delaware X

Maryland 0 X

New Jersey 0 0 X

 North Carolina XX

Pennsylvania 0 XX 0

South Carolina XX

 Virginia 0

Washington, D.C. 0 X

West Virginia XX

New York X X

Minnesota 0

 X Existing Integrys Energy Services' region

 0 New offering within last 2 years

XX New region associated with Compass acquisition

State
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

39

Special Items by Segment – Adjusted 

Earnings (Loss) – First Quarters 2014 and 2013

Non-GAAP Financial Information

Net income (loss) attributed to common shareholders is adjusted by reportable segment for the financial impact of special items for the quarters 

ended March 31, 2014 and 2013.

March 31, 2014

(Millions)

Natural Gas

Utility

Electric

Utility

Electric 

Transmission 

Investment

Integrys Energy

Services Holding Company 

and Other

Integrys Energy 

Group 

Core Other Consolidated

Net income (loss) attributed to common shareholders $ 99.1 $ 31.1 $ 13.7 $ (1.9) $ 12.7 $ (2.3) $ 152.4

Special Items (net of taxes)

Net noncash gains related to derivative and inventory 

accounting activities

– – – – (12.8) – (12.8)

Discontinued operations – – – – 0.1 – 0.1

Adjusted earnings (loss) $ 99.1 $ 31.1 $ 13.7 $ (1.9) $ – $ (2.3) $ 139.7

March 31, 2013

(Millions)

Natural Gas

Utility

Electric

Utility

Electric 

Transmission 

Investment

Integrys Energy 

Services Holding Company 

and Other

Integrys Energy 

Group 

Core Other Consolidated

Net income attributed to common shareholders $ 89.7 $ 28.6 $ 13.4 $ 9.9 $ 41.5 $ 4.4 $ 187.5

Special Items (net of taxes)

Net noncash gains related to derivative and inventory 

accounting activities (0.1) – – – (41.4) – (41.5)

Discontinued operations – – – – (0.1) (6.0) (6.1)

Adjusted earnings (loss) $ 89.6 $ 28.6 $ 13.4 $ 9.9 $ – $ (1.6) $ 139.9
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

40

Special Items by Segment – Diluted EPS – Adjusted –

First Quarters 2014 and 2013 

Non-GAAP Financial Information

Diluted earnings per share is adjusted by reportable segment for the financial impact of special items on diluted earnings per share for the quarters 

ended March 31, 2014 and 2013.

March 31, 2014

Natural Gas

Utility

Electric

Utility

Electric 

Transmission 

Investment

Integrys Energy 

Services Holding Company 

and Other

Integrys Energy 

Group 

Core Other Consolidated

Diluted EPS $ 1.23 $ 0.39 $ 0.17 $ (0.03) $ 0.16 $ (0.03) $ 1.89

Special Items (net of taxes)

Net noncash gains related to derivative and inventory 

accounting activities

– – – – (0.16) – (0.16)

Discontinued operations

– – – – – – –

Diluted EPS – adjusted $ 1.23 $ 0.39 $ 0.17 $ (0.03) $ – $ (0.03) $ 1.73

March 31, 2013

Natural Gas

Utility

Electric

Utility

Electric 

Transmission 

Investment

Integrys Energy 

Services Holding Company 

and Other

Integrys Energy 

Group 

Core Other Consolidated

Diluted EPS $ 1.13 $ 0.36 $ 0.17 $ 0.12 $ 0.53 $ 0.06 $ 2.37

Special Items (net of taxes)

Net noncash gains related to derivative and inventory 

accounting activities

– – – – (0.53) – (0.53)

Discontinued operations

– – – – – (0.08) (0.08)

Diluted EPS – adjusted $ 1.13 $ 0.36 $ 0.17 $ 0.12 $ – $ (0.02) $ 1.76
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

41

Adjusted Earnings Drivers – Regulated Natural Gas 

Utility Segment – First Quarter 2014 vs. 2013

$0 

$20 

$40 

$60 

$80 

$100 

$120 

$140 

1Q13 Adjusted 

Earnings

A B C D E 1Q14 Adjusted 

Earnings

$ in millions

A – Utility rate impacts

B – Tax impacts/other, which includes the impact of variances in weather-normalized sales volumes on utility margins, changes in

interest expense, and other miscellaneous items

C – Weather, net of decoupling

D – Decoupling reserve reversal in the first quarter 2013 when Peoples Gas and North Shore Gas reversed reserves that had been 

recorded in 2012 against decoupling amounts

E – Operating expense impacts, driven by an increase in natural gas distribution costs at Peoples Gas as well as an increase in 

depreciation and amortization expense 

$9.5

Non-GAAP Financial Information

$99.1

$17.5

($2.0)

$7.6

($12.5)

Note: All amounts are shown net of tax. Certain variances have been adjusted 

to exclude amounts that have no impact on net income, including certain 

utility riders.

$89.6

$6.8 ($9.9)
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

42

Adjusted Earnings Drivers – Regulated Electric 

Utility Segment – First Quarter 2014 vs. 2013

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

1Q13 Adjusted

Earnings

A B C D 1Q14 Adjusted

Earnings

$ in millions

A – Utility rate impacts (includes the impact of the Fox Energy Center purchase)

B – Weather, net of decoupling

C – Tax impacts/other, which includes the impact of variances in weather-normalized sales volumes on utility margins, changes in

interest expense, and other miscellaneous items

D – Operating expense impacts, driven by increased maintenance costs at Wisconsin Public Service’s Pulliam generation plant and 

the purchase of the Fox Energy Center at the end of the first quarter of 2013

$2.5

$28.6

$8.9

$1.4

Non-GAAP Financial Information

$31.1

($1.3)

($10.8)

Note: All amounts are shown net of tax. 

$5.7
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

43

Adjusted Earnings Drivers – Electric Transmission 

Investment Segment – First Quarter 2014 vs. 2013

$0

$2

$4

$6

$8

$10

$12

$14

1Q13 Adjusted Earnings A 1Q14 Adjusted Earnings

A – Tax impacts/other

$ in millions $0.3

$13.4 $13.7

$0.3

Non-GAAP Financial Information Note: All amounts are shown net of tax. 
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

44

Adjusted Earnings Drivers – Nonregulated Integrys Energy 

Services Segment – First Quarter 2014 vs. 2013

$ in millions

A – Operating expense impacts

B – Weather

C – Other nonregulated margins

D – Tax impacts/other, which includes changes in interest expense and other miscellaneous items

Non-GAAP Financial Information

$9.9

$1.8

($4)

($2)

$0

$2

$4

$6

$8

$10

$12

1Q13 Adjusted

Earnings

A B C D 1Q14 Adjusted

Loss

$9.9

($1.9)

($2.4)

($3.0)

($1.1)

($2.6)

Note: All amounts are shown net of tax. 

($3.0)

($3.4)

($11.8)
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

45

Adjusted Earnings Drivers – Holding Company 

and Other Segment – First Quarter 2014 vs. 2013

A – Nonregulated margins

B – Operating expense impacts

C – Tax impacts/other, which includes changes in interest expense and other miscellaneous expense

$ in millions

($3)

($2)

($2)

($1)

($1)

$0 

$1 

1Q13 Adjusted Loss A B C 1Q14 Adjusted Loss

$0.2

($2.3)

($0.7)

Non-GAAP Financial Information

($1.6) $1.7 ($2.6)

Note: All amounts are shown net of tax. 

($0.7)
First Quarter 2014 Earnings Conference Call 

– May 2, 2014

46

In this presentation, we make statements concerning our expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. These statements are “forward-looking 

statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not guarantees of future results and conditions. Although we 

believe that these forward-looking statements and the underlying assumptions are reasonable, we cannot provide assurance that such statements will prove correct.

Forward-looking statements involve a number of risks and uncertainties. Some risks and uncertainties that could cause actual results to differ materially from those expressed or implied in forwardlooking statements include those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2013, as may be amended or supplemented in Part II, Item 1A of our 

subsequently filed Quarterly Reports on Form 10-Q, and those identified below:

 The timing and resolution of rate cases and related negotiations, including recovery of deferred and current costs and the ability to earn a reasonable return on investment, and other regulatory 

decisions impacting our regulated businesses;

 Federal and state legislative and regulatory changes, including deregulation and restructuring of the electric and natural gas utility industries, financial reform, health care reform, energy efficiency 

mandates, reliability standards, pipeline integrity and safety standards, and changes in tax and other laws and regulations to which we and our subsidiaries are subject;

 The risk of terrorism or cyber security attacks, including the associated costs to protect our assets and respond to such events;

 The risk of failure to maintain the security of personally identifiable information, including the associated costs to notify affected persons and to mitigate their information security concerns;

 Federal and state legislative and regulatory changes relating to the environment, including climate change and other environmental regulations impacting generation facilities and renewable 

energy standards;

 Costs and effects of litigation and administrative proceedings, settlements, investigations, and claims;

 The ability to retain market-based rate authority;

 The effects, extent, and timing of competition or additional regulation in the markets in which our subsidiaries operate;

 Changes in credit ratings and interest rates caused by volatility in the financial markets and actions of rating agencies and their impact on our and our subsidiaries’ liquidity and financing efforts;

 The risk of financial loss, including increases in bad debt expense, associated with the inability of our and our subsidiaries’ counterparties, affiliates, and customers to meet their obligations;

 The effects of political developments, as well as changes in economic conditions and the related impact on customer energy use, customer growth, and our ability to adequately forecast energy use 

for our customers;

 The ability to use tax credit and loss carryforwards;

 The investment performance of employee benefit plan assets and related actuarial assumptions, which impact future funding requirements;

 The risk associated with the value of goodwill or other intangible assets and their possible impairment;

 The timely completion of capital projects within estimates, as well as the recovery of those costs through established mechanisms;

 Potential business strategies, including acquisitions or dispositions of assets or businesses, which cannot be assured to be completed timely or within budgets;

 The risks associated with changing commodity prices, particularly natural gas and electricity, and the available sources of fuel, natural gas, and purchased power, including their impact on margins, 

working capital, and liquidity requirements;

 Changes in technology, particularly with respect to new, developing, or alternative sources of generation;

 Unusual weather and other natural phenomena, including related economic, operational, and/or other ancillary effects of any such events;

 The impact of unplanned facility outages;

 The financial performance of American Transmission Company and its corresponding contribution to our earnings;

 The timing and outcome of any audits, disputes, and other proceedings related to taxes;

 The effectiveness of risk management strategies, the use of financial and derivative instruments, and the related recovery of these costs from customers in rates;

 The effect of accounting pronouncements issued periodically by standard-setting bodies; and

 Other factors discussed in reports we file with the United States Securities and Exchange Commission.

Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future 

events, or otherwise.

Disclosure of Full Forward-Looking Statements