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After the presentation, the conference will be opened to analysts for questions and answers. In conjunction with this call, Wisconsin Energy has posted on its website a package of detailed financial information at www.wisconsinenergy.com. A replay of our remarks will be available approximately two hours after the conclusion of this call.And now, it’s my pleasure to introduce Mr. Gale Klappa, Chairman of the Board, President and Chief Executive Officer of Wisconsin Energy Corporation. Gale Klappa Colleen, thank you. Good afternoon, everyone, and thank you for joining us as we review the company’s 2012 first quarter results. Let me begin, as always, by introducing the members of the Wisconsin Energy management team who are here with me today. We have Allen Leverett, President and Chief Executive of We Generation; Rick Kuester, our Chief Financial Officer; Susan Martin, General Counsel; Pat Keyes, our Treasurer; and Steve Dickson, Controller. Susan, of course, was recently promoted to the General Counsel position. She succeeds Jim Fleming, who retired just a few weeks ago. Rick will review our financial results in detail in just a moment. But as you saw from our news release this morning, we reported earnings from continuing operations of $0.74 a share for the first quarter of 2012. This compares with earnings of $0.72 a share for the first quarter of 2011. Weather of course both regionally and nationally was the big story in the opening quarter of 2012. For Wisconsin Energy, the warmest winter in 122 years drove down residential demand for natural gas by nearly 24% compared to last year’s first quarter. As you’ll recall, sharply lower demand for natural gas prompted us to revise our first quarter earnings guidance on March 29. At the same time, we also reaffirmed our full year forecast. Now, although the weather was a dominant factor in our first quarter results, there were several bright spots that I’d like to briefly touch on. First, we had a positive swing of $17 million from the recovery of fuel costs in the quarter compared with the first quarter of 2011. We also recorded significantly lower operation and maintenance costs. That’s largely because of the one-year holiday on regulatory amortizations approved by the Wisconsin Commission in the order that froze our base rates for 2012. We also had lower interest costs and there was an uptick in electric sales to our largest customers.
Turning now to the economy. Wisconsin’s unemployment rate at 6.8% in March, remains well below the national average. And as I mentioned, electric sales to our large commercial and industrial customers rose by 3% in the first quarter of 2012. The sector is showing particular strength in the past quarter include iron ore mining, heavy equipment manufacturing, and for the first time since the recession, the producers of rubber and plastic products.We’re also seeing a rebound in new customer connections. Compared to the low level of activity during the recession, electric customer connections were up 29% and connections of new natural gas customers rose by 33% over the 12-months ended March. On the construction front, we have two major projects underway, the 50-megawatt biomass plant in Northern Wisconsin and the air quality control upgrade at the original Oak Creek units. We’re making excellent progress on the biomass plant in Northern Wisconsin. We’ve already topped out the structural steel for the boiler and the steel structure for the turbine and fuel storage buildings are now 90% complete. Construction of the cooling tower is underway as well as excavation work for the auxiliary boiler. As I’ve noted before, the biomass plant will help us diversify our portfolio of renewable energy. We’ll be able to dispatch the unit in the efficient technology that will produce steam for the operating paper mill of the site will clearly enhance the economics of the project. Our investment of the biomass plant is expected to total between $245 million and $255 million excluding allowance for funds used during construction. We’re on schedule and on budget and meet the completion date by the end of 2013. Of course, the biomass project and Glacier Hills Wind Park that we completed late last year are key components that will help us meet Wisconsin’s renewable portfolio standard for the year 2015. To refresh your memory, the standard calls for an increase in the amount of electricity delivered from renewable sources from 5% in 2010 to 10% in 2015 at a statewide level.
The standard sets targets for each Wisconsin utility using an historical baseline. Using that baseline approximately 8.27% of our retail sales of electricity must come from renewable sources in the year 2015. When we complete the biomass project, we’ll be well positioned to meet that 2015 standard. I should point out, however, that we expect to deplete our bank of renewable credits and as a result, we expect to need additional credits or additional renewable generation in the year 2017.Finally, we’re in the last stages of completing the air quality control upgrade for the older coal-fired units at our Oak Creek site. The four older units at Oak Creek are still among the most efficient base load units in the Midwest. So the economic solution for our customers was to invest approximately $900 million, including allowance for funds used during construction for the installation of wet scrubbers and selective catalytic reduction facilities. Read the rest of this transcript for free on seekingalpha.com