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NORTHERN STATES (WIS.) $40 MILLION FIRST MORTGAGE BONDS DUE 2003 RATED 'AA' BY FITCH -- FITCH FINANCIAL WIRE --

 NEW YORK, Sept. 16 /PRNewswire/ -- Northern States Power Co.'s (Wisconsin) (NSPW) $40 million first mortgage bonds due Oct. 1, 2003 are rated 'AA' by Fitch. The issue is a takedown from a previously rated shelf registration. Proceeds will refund the company's outstanding 7-3/4 percent first mortgage bonds due Oct. 1, 2003 and 4-1/2 percent first mortgage bonds due Aug. 1, 1994, fund construction expenditures, and repay short-term borrowings. The credit trend is stable.
 The ratings for this wholly owned subsidiary of Northern States Power Co. (Minnesota) reflects strong bondholder protection measures, a constructive regulatory environment, and low-risk operations. For the 12 months ended March 31, 1993, the company earned a 14.0 percent return on equity (ROE) with pretax interest coverage of 4.48 times (x). Over the past five years, these ratios averaged 13.1 percent and 4.54x, respectively. The capital structure was also strong at 41.9 percent total debt and 58.1 percent common equity at March 31, 1993. No preferred stock is outstanding.
 Prospectively, rating stability is anticipated. NSPW has no base load generating capacity of its own and purchases about 80 percent of its generating requirements through an interchange agreement with its parent. This off-balance sheet obligation is mitigated by the favorable purchase costs and the parent/subsidiary relationship. Downside risk is limited by a healthy service territory, low-cost operations, minimal acid rain exposure, and the expectation of continued regulatory support of strong credit quality.
 Favorable regulatory policies in Wisconsin mandate that utilities file rate requests every two years, using a forecast test period that permits cost recovery on a relatively current basis. Although the company's last rate order in January reduced the allowed ROE to 12.0 percent from 12.6 percent, it was based on a large common equity component of 56.94 percent. Additionally, the company was authorized 74 percent and 79 percent respectively, of its requested $10.8 million electric and $1.4 million gas rate requests. The company's 1994 rate filing with the Wisconsin PSC was filed in June 1993, requesting a $1.5 million (1.9 percent) increase in gas revenues utilizing a ROE of 12.0 percent. No electric rate increase was requested, and the company plans to make up for its estimated revenue deficiency of $6.0 million through aggressive cost-cutting. A final order on the gas request is expected by the end of the year.
 -0- 9/16/93
 /CONTACT: Ed King of Fitch, 212-908-0574/


CO: Northern States Power Co. ST: New York, Wisconsin IN: UTI SU: RTG

WB -- NY061 -- 2756 09/16/93 14:54 EDT
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Publication:PR Newswire
Date:Sep 16, 1993
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