Wisconsin Electric Power Company -- Moody's: No immediate rating implications for WEC's rating as it loses two major customers

New York, August 08, 2013 -- On July 31, 2012, Wisconsin Energy Corporation (WEC, A3 stable) announced that several customers of its subsidiary Wisconsin Electric Power (WEPCO, A2 stable) had decided to procure their power from an alternative supplier, effective September 1, 2013. Two of these customers, located in the Upper Peninsula of Michigan, include the Empire Mine and Tilden (owned by Cliffs Natural Resources Inc.) iron ore mines. Their decision to purchase electricity from an alternative supplier is credit negative because these mines have historically ranked as the group's largest retail electric customers, accounting for 6.6% of WEPCO's total retail sales at year-end 2012 (2011: 7%), according to WEC financial statements. The loss of these customers, however, has no immediate implications for the ratings of WEC and WEPCO given the expected limited financial impact on WEC's and WEPCO's financial performance. It may, however, raise the issue of the current 10% cap on retail shopping for utilities operating in Michigan, as explained below.

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