Why are the lands being sold?: The decision to sell these lands is part of WPS Resource Corporation's (UPPCO's parent company and owner of the real estate) overall Real Estate Asset Management Strategy. That strategy, to dispose of all real estate assets that aren't needed for ongoing business operations, began late in 2001 with the sale of the Peshtigo River hydro lands to the Wisconsin DNR. The Peshtigo transaction involved selling thousands of acres to the DNR, while retaining some land for private development.

Selling the UPPCO lands allowed us to defer an electric rate increase in 2005. We also hope that selling the land for development will help stimulate the economy in the U.P. while continuing to provide recreational opportunities.

Why and how did you acquire your hydro lands?: At the time the lands were acquired, it was difficult to determine how much was needed for hydro operations, so excess land was purchased. Additionally, some landowners may have been reluctant to sell small parcels and required entire tracts to be purchased.

The lands in Ontonagon County and Baraga County were acquired in 1947 when UPPCO was formed from three smaller electric utilities. These hydro lands had been part of the predecessor companies' holdings since the 1920s and 1930s.

The lands in Marquette and Delta counties were acquired in 1988 when UPPCO purchased four hydroelectric facilities from Cliffs Electric Service Company, a subsidiary of The Cleveland-Cliffs Iron Company, and in 1997 with the purchase of three facilities on the Escanaba River from Mead Publishing Paper Division. These properties had been part of their previous owners' hydro development since the early 1900s.

Have you sold land in the past?: In May 1992, a unit of UPPCO sold 34,000 acres of land to the Trust for Public Land (TPL), a non-profit organization that acquires land for transfer to public ownership. The lands eventually became the property of the U.S. Forest Service. Most of those lands bordered the Ontonagon River system, were contiguous to the Ottawa National Forest, and were best described as wilderness.

What lands are being sold?: We are selling approximately 7,300 acres in Michigan's Upper Peninsula, primarily in Alger (2,300 acres), Ontonagon (2,800 acres), Marquette/Delta (500 acres), and Houghton/Baraga (1,700 acres) counties. The property is adjacent to our land associated with our Au Train, Boney Falls, Bond Falls, Cataract, Prickett, and Victoria hydro facilities.

On December 29, 2005, we finalized the sale of 1,360 acres: 960 acres near Bond Falls in Ontonagon County, 150 acres near Boney Falls in Marquette and Delta counties, and 250 acres near the Cataract Basin in Marquette County. All these lands are outside the Federal Energy Regulatory Commission project boundaries, as is the remaining acreage that will be sold over the next few years, also to Naterra Land.

Why are you selling this land now?: UPPCO is always looking for ways to reduce costs for its ratepayers and provide added value to its shareholders. UPPCO has been analyzing the sale of these lands for several years. After attempts to garner interest from public or conservation groups failed, UPPCO made the decision to sell to a developer.

WPSR looks at the land sales from a strategic position. This non-project land is privately held land not subject to hydro-electric relicensing requirements. If we control the development, we can assure it is developed responsibly. If WPSR were purchased by another company and the lands sold by the new owner, there is no guarantee that they would be developed responsibly.

We believe the sales of these lands will spur needed economic development, especially in some of the Upper Peninsula's most hard-hit economies, and will continue to provide recreational opportunities for citizens.

We are committed to assuring the development is completed in a sound and environmentally sensitive manner. It will be consistent with the requirements for any impacts to the FERC Hydroelectric Project properties as stated in the licenses for each project.