A message from the President and CEO

Every year, we report on the stewardship activities of WPPI Energy and our member communities. As public power utilities, we are committed to our customers, communities and the environment. We define "stewardship" as conducting our business in ways that meet our responsibility to our customers to enhance the health of our communities and protect the environment for future generations.

Many challenges face the utility industry today, particularly issues related to climate change and rising energy costs. In this complex environment, it is necessary to lead with foresight . . . to be ahead of the curve. Fortunately, as public power utilities, we are accustomed to thinking long-term on behalf of the communities we serve. Our strategic focus has resulted in some significant accomplishments in the past year.

A milestone was achieved as of mid-2009 - six years early - when we had the resources in place to meet Wisconsin and Michigan requirements that at least 10 percent of electricity purchased by retail customers be supplied from clean, renewable resources starting in 2015. These state laws, designed to protect the environment and facilitate new green jobs, are mandates we have embraced as opportunities.

We will continue pursuing additional renewable resources to increase the diversity of our power portfolio and we will aggressively promote programs that encourage and enable customers to purchase renewable energy and invest in their own green power resources.

It is imperative that WPPI Energy and our members recognize and respond to the difficult economic conditions faced by the homes and businesses we serve. Our customers are feeling the effects of the recession, and this makes affordable energy a top concern. While we cannot control major energy cost drivers such as fuel prices, we can act prudently to reduce the costs we can control.

• We are working harder than ever with customers to help them conserve and use energy more efficiently. This is the most important action customers can take to keep utility bills down in a rising rate environment. Since 2007, WPPI Energy members have tripled funding for energy efficiency and conservation programs from $2.4 million in 2006 to $7.9 million in 2009. We believe this to be an investment that will save our customers money for many years to come.



• We are reducing our costs wherever we can without imperiling strategic long-term objectives. Recent budget cuts include a reduction of 8.5 percent in WPPI Energy's combined administrative, general, operation and maintenance budgets. In addition, we are estimating a 6.7 percent reduction in our cost of purchased power and fuel. These adjustments will reduce the total budgeted revenue requirement from our member utilities for 2009 by about $25 million.



• We are examining our carbon dioxide footprint and taking actions that will reduce our costs of compliance with federal climate change legislation.

These initiatives are good for the environment; when customers save energy, they reduce greenhouse gas emissions, lower their utility bills, and help us defer building very expensive new plants. It's a win-win situation, but it takes education, funding and commitment to get there.

The needs of our customers and the environment must also be carefully balanced. Climate change legislation at the federal level is a near certainty, and WPPI Energy is an active participant in the national conversation. We are working very hard to make sure that whatever legislation is passed incorporates measures that mitigate costs for consumers while still meeting environmental goals.

Making our communities better places to live and work is at the core of the public power mission. This means helping keep our businesses competitive and growing jobs. In order to be good stewards of our communities, we must keep energy costs at reasonable levels, for consumers and businesses, preserve the environment for future generations, and ensure a reliable supply of energy over the long term. In this report, you will learn about the many ways WPPI Energy and our member communities are working to fulfill this commitment.

There is an old saying that is particularly pertinent in complex times like these: "Lead, follow or get out of the way." We choose to lead.

Roy Thilly
President and Chief Executive Officer