Exhibit 10.32
March 29, 2000
▇▇. ▇▇▇▇▇ ▇▇▇▇
Secretary
Public Service Commission of Wisconsin
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear ▇▇. ▇▇▇▇:
Please find enclosed a service agreement between Wisconsin
Electric Power Company (WEPCo) and Wisconsin Gas Company (WGC),
for which the companies seek the Commission's approval.
The Commission has recently approved the merger of Wisconsin
Energy Corporation (of which WEPCo is a utility subsidiary) and
WICOR, Inc (of which WGC is a utility subsidiary). Closing of
the merger of these two holding companies is scheduled to occur
on April 26, 2000. After that closing, it is anticipated that
certain transactions will be conducted between the two utility
affiliates. The enclosed service agreement contains the terms
under which those transactions will take place. The terms
continued in this agreement are consistent with Commission
guidelines for such transactions.
It should be noted that the enclosed agreement is signed by the
appropriate parties from each company, but is not dated. The
date of the agreement will be the date of closing. The companies
request that the enclosed service agreement be approved as soon
as possible so as to coincide with the closing date of the
merger.
In the near future, Wisconsin Energy expects to file an
affiliated interest agreement which covers transactions between
utility and non-utility affiliates in the Wisconsin Energy system
after the merger.
If you have any questions regarding this application, please call
me at ▇▇▇-▇▇▇-▇▇▇▇.
Sincerely,
/s/▇▇▇▇▇ ▇. Draba
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Manager-State Regulatory Affairs
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SERVICE AGREEMENT
THIS AGREEMENT is made and entered into this 25th day of
April, 2000, by and between Wisconsin Electric Power Company
and Wisconsin Gas Company, the parties being hereinafter
collectively called the "Companies" and individually called the
"Company".
WHEREAS, the Companies are affiliated interests pursuant to
Sec. 196.52, Wis. Stats.; and
WHEREAS, from time to time either Company may perform
various services involving the use of its employees and/or
property for the other Company; and
WHEREAS, from time to time either Company may lease or rent
office space to the other Company; and
WHEREAS, from time to time either Company may make its
property available for joint use by both Companies;
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants herein set forth, the parties agree as follows:
ARTICLE I
SERVICES OF EMPLOYEES
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Each Company will furnish such services involving use of its
employees and/or property to the other Company as such Company
may from time to time reasonably request, for the compensation as
determined under Article V, upon the terms and conditions herein
set forth.
ARTICLE II
SALE OR TRANSFER OF PROPERTY
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Each Company may sell or transfer to the other Company upon
request, property independent of and not related to the provision
of any of the services furnished under Article I.
The Company selling or transferring such property shall be
compensated for such property at the cost to the Company of such
property as recorded on its books of account.
ARTICLE III
LEASE OF OFFICE SPACE
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Each Company may lease or rent office space to the other Company
upon request with rental payments to be based upon the providing
Company's actual cost, including a return of original cost and a
return on the depreciated original cost equal to its latest
overall rate of return authorized by the Public Service
Commission of Wisconsin and adjusted for the income tax effect.
ARTICLE IV
JOINT USE OF PROPERTY
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Each Company will permit the joint use of its property,
whether real or personal, by both Companies. The Company owning
such property shall be compensated for the proportionate use of
such property made by the other Company on the basis of the
owning Company's actual cost, including a return of original cost
and a return on the depreciated original cost equal to its latest
overall rate of return authorized by the Public Service
Commission of Wisconsin and adjusted for the income tax effect.
ARTICLE V
COMPENSATION FOR SERVICES
-------------------------
Compensation for services provided by either Company to the
other Company shall be at the cost to the providing Company of
rendering such services. For purposes of this Agreement, the
cost to the providing Company of rendering each such service
shall be determined as follows:
1. Each employee of the providing Company who in any month was
involved in providing any service to the other Company
shall for that month identify the service and the time
spent providing such service. The Companies may agree in
advance to sharing services of an employee of either Company
and to a fixed apportionment of such employee's time.
2. The hourly rates shall be computed for employees identified
in paragraph 1 above, which shall include vacation, absent
time, benefits and payroll taxes.
3. The sum of the number of hours spent by each employee
identified in paragraph 1 above, providing each service to the
other Company, multiplied by the hourly rate as determined for
that employee under paragraph 2 above, shall
be determined.
4. An overhead rate shall be established for the providing
Company based upon:
a. costs associated with training and professional
development;
b. costs of office space based upon a return of original
cost and a return on the depreciated original cost,
based on the Company's latest overall rate of return
authorized by the Public Service Commission of
Wisconsin and adjusted for the income tax effect
and/or actual rental payments made by the Company;
c. costs of office supplies;
d. costs for office furniture and equipment based upon a return
of original cost and a return on the depreciated original cost,
based on the Company's latest overall rate of return authorized
by the Public Service Commission of Wisconsin and adjusted for
the income tax effect.
e. costs for miscellaneous administrative and general support.
The total labor charges determined in paragraph 3 shall be
increased by the overhead rate.
5. The number of miles traveled in the specific month by the
Company's employees in their own vehicles in performing each
service for the other company shall be multiplied by the
appropriate per mile rate at which the providing Company
reimburses its employees for the use of their own personal
vehicles for utility business. The use of Company vehicles
in performing services for the other Company will be billed
at the prevailing hourly rate (rate charged to providing
Company accounts and customers for work performed) plus
overhead.
The sum of the charges calculated in paragraphs 4 and 5 shall
constitute the cost of services provided by either Company to the
other Company.
ARTICLE VI
BILLING AND PAYMENT
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A bill will be prepared by each Company reflecting the cost
of providing the services and/or providing, renting, leasing or
jointly using the property of such Company. Bills shall be sent
to the other Company for the charges associated with the services
and/or property furnished to the other Company by the end of the
month following the month on which the charges were based. Bills
shall be due and payable thirty (30) days after issuance.
Charges of third party suppliers, to the maximum extent
practicable, shall be paid directly by the appropriate Company.
Any invoices paid by either Company on behalf of the other Company
will be billed
whether real or personal, by both Companies. The Company owning
such property shall be compensated for the proportionate use of
such property made by the other Company on the basis of the
owning Company's actual cost, including a return of original cost
and a return on the depreciated original cost equal to its latest
overall rate of return authorized by the Public Service
Commission of Wisconsin and adjusted for the income tax effect.
ARTICLE VII
MISCELLANEOUS
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This Agreement shall become effective upon the execution by
both Companies and approval by the Public Service Commission of
Wisconsin and shall remain in effect until cancelled upon sixty
(60) days written notice given by either Company or until
replaced by a successor Agreement.
This Agreement may be amended or modified by mutual
agreement of the Companies at any time. Any such modification or
amendment shall not become effective until approved by the Public
Service Commission of Wisconsin.
Nothing herein contained shall be construed to release the
officers and directors of either Company from the obligation to
perform their respective duties, or to limit the exercise of
their powers in accordance with the provisions of law or
otherwise. The performance of this Agreement shall be subject to
valid rules, regulations and orders of any regulatory body having
jurisdiction, including approval by the Public Service Commission
of Wisconsin.
IN WITNESS WHEREOF, EACH OF THE PARTIES HERETO HAS CAUSED
THIS Agreement to be executed on its behalf by its officers
thereunto duly authorized as of the day and year first above
written.
WISCONSIN ELECTRIC POWER COMPANY
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title Vice President-Finance and CFO
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WISCONSIN GAS COMPANY
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title Vice President
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