Wisconsin Public Service Corporation
Wisconsin Public Service Corporation
Incorporated: 1883 as Oshkosh Gas Light Company
Sales: $634.8 million
Stock Exchanges: Midwest New York
SICs: 4931 Electric & Other Services Combined
Wisconsin Public Service Corporation is one of the larger public utilities in the Midwest. It supplies electricity and natural gas to customers in northeastern Wisconsin and part of the Upper Peninsula of Michigan. The company’s largest urban markets are the cities of Green Bay, Oshkosh, Wausau, and Stevens Point.
Wisconsin Public Service traces its origins to Oshkosh Gas Light Company, the successor company to a franchise that had been taken out in 1868 to sell coal gas, which was used for lighting, to the citizens of Oshkosh. The franchise had lain dormant for about five years when E. P. Sawyer, a businessman whose previous experience had been in the lumber industry, acquired it in 1883 and reincorporated it under the name Oshkosh Gas Light. In 1885 the company received a franchise to sell electricity in Oshkosh, putting it into direct competition with Oshkosh Electric Light and Power. The two companies merged in 1907.
In these early years, the electrical utility industry in the United States little resembled its current state, in which a relatively small number of large companies are granted state-regulated franchises to produce and sell power in large geographic areas. Instead, a bewildering array of strictly local companies took out franchises to provide electricity and coal gas to small areas on a small scale. But, as the merger between Oshkosh Gas Light and Oshkosh Electric Power suggests, this began to change after the turn of the century, when the industry underwent a period of rapid consolidation and centralization of power.
In 1911 a Milwaukee engineer named Clement Smith joined with his brother-in-law, utility lawyer George Miller, to found Wisconsin Securities Company with the purpose of operating it as a utilities holding company. They quickly acquired Green Bay Gas and Electric Company, Green Bay Traction Company, and Northern Hydro-Electric Power Company. In 1922 Wisconsin Securities acquired Oshkosh Gas Light from the estate of E. P. Sawyer, changed its name to Wisconsin Public Service Corporation, and merged it with the other companies that it had acquired, which by now included Sheboygan Gas Light Company, Calumet Service Company, and Manitowoc and Northern Traction Company. Wisconsin Securities had also founded Peninsula Service Company to supply electricity to Door County in 1920, and it, too, was merged into Wisconsin Public Service.
This rapid consolidation among electrical utilities did not escape notice and drew fire from some reform-minded journalists. New Republic, for instance, published two books during the 1920s critical of current trends in the industry, one of which mentioned Wisconsin Public Service as a brief example. However, the desire to gain monopolistic control of regional markets for electrical power was not the sole factor at work, perhaps not even the most important one. The attrition rate for the small power companies that characterized the early days of the industry was quite high. Nor were those small companies likely to have the capital to invest in new power plants. In the case of Wisconsin Securities, the owners of Green Bay Gas and Electric, Green Bay Traction, and Northern Hydro-Electric Power asked Clement Smith and George Miller for help after cost overruns from a hydro-electric plant they were building threatened to bankrupt them. Thus, a certain amount of consolidation was not only inevitable, but healthy for the industry and necessary for maintaining consistency of service.
More mergers and acquisitions followed the creation of Wisconsin Public Service. In 1924 the company bought small electric companies operating in the towns of Brillion, Mishicot, and DePere. The next year it acquired all the assets of Northeastern Power Company, including its subsidiaries Riverview Motor Bus Company; Oslo Power and Light Company; Denmark Power and Light Company; Green Bay Park Railway Company; Northern Light, Heat, and Power Company of Suring; and Wabeno Lighting Company.
As some of the names of the acquired Northeastern Power subsidiaries suggest, Wisconsin Public Service operated public transportation at this time, in addition to supplying electricity. Electric companies had long been in this line of business, a natural consequence of the fact that they produced the electricity that made trolley cars run. After World War I, street railways were widely replaced by buses, which were more flexible and less expensive to operate. From the 1920s through World War II, Wisconsin Public Service operated transportation systems in Green Bay, Wausau, Merrill, and, briefly, in Menominee and Marinette.
Just after the Northeastern Power acquisition, Wisconsin Public Service was itself acquired by H. M. Byellsby, an electrical engineer who had worked for the Edison and Westinghouse Electric Corporation before going into business himself, designing and building power stations and hydro-electric plants for utility companies. Byellsby immediately turned over control of Wisconsin Public Service to Standard Gas and Electric, a public utility holding company that he had founded in 1910. As a result of the move, Clement Smith stepped down as president in 1926.
In 1927 Standard Gas and Electric acquired another large electrical utility, Wisconsin Valley Electric Company. Like Wisconsin Public Service, Wisconsin Valley Electric had grown rapidly through a series of mergers and acquisitions, and was selling electricity to the towns of Merrill, Stevens Point, Tomahawk, Antigo, Rhinelander, and Waupaca when Standard Gas and Electric won a bidding war to acquire it. Though a successful and growing company, Wisconsin Valley Electric operated hydro-electric plants exclusively and ran into trouble in winter because of ice and low water on the Wisconsin River. In 1933 Standard Gas and Electric decided to merge its two main subsidiaries, so that Wisconsin Public Service’s steam turbine plants could pick up Wisconsin Valley Electric’s wintertime slack.
During World War II, Wisconsin Public Service’s public transportation systems saw increases in ridership due to gas rationing and reduced automobile production. However, wartime shortages also made running bus lines difficult, despite the increases in business. For instance, the company’s fleet in Green Bay was forced to bring an old 1925 Reo bus out of mothballs and press it into service. It was christened the Queen Marie, and a slogan painted on her side declared that she would be retired again, “when the clock strikes peace!” After the clock did, in fact, strike peace, bus ridership declined as gasoline rationing ended and private cars returned to the roads. In 1951 Wisconsin Public Service divested its bus lines in Wausau and Merrill, and they began independent operation under the name Wausau Transit Lines.
Wisconsin Public Service also gained independence of a sort in the 1950s; in 1952 Standard Gas and Electric divested its entire stake in the company. Common stock was distributed to Wisconsin Public Service’s preferred stockholders. The following year, Wisconsin Public Service was listed on the Midwest and New York Stock Exchanges for the first time.
In the 1960s natural gas became an increasingly important fuel source, and Wisconsin Public Service responded by expanding its operations in that area. The company had been selling natural gas to its customers since 1950, just after the first pipeline from the Hugoton Field in the Oil Patch of Oklahoma and Texas to the Upper Midwest was built. In 1961 it made a move to control the means of distribution when it acquired two natural gas franchises, Merrill Gas Company and Oneida Gas Company. By 1963 over half of the homes in Wisconsin Public Service’s service area were heated with gas, and by the mid-1970s natural gas sales would account for about 30 percent of the company’s operating revenues.
In 1967 Wisconsin Public Service acquired the electrical distribution system for the municipality of Kewaunee, which had been owned by the city. That year, the company also took its first plunge into the age of nuclear energy when it broke ground on a nuclear plant nine miles south of Kewaunee, on the shores of Lake Michigan. The Kewaunee nuclear plant, which did not begin operation until 1974 (once safety and environmental concerns had been assuaged), was built and operated by Wisconsin Public Service, but was, in fact a joint venture between three Wisconsin utility companies. Wisconsin Public Service owned 41.2 percent, with Wisconsin Power and Light Company holding 41 percent and Madison Gas and Electric Company 17.8 percent.
In 1970 the company consolidated its corporate offices. True to its roots as an amalgamation of many small, local companies, Wisconsin Public Services had long operated out of offices scattered among the cities of Green Bay, Milwaukee, and Oshkosh. For decades, Wisconsin Public Service had used a stately old mansion in Milwaukee as one of its headquarters—which made little sense, since the city lay outside the company’s operating area, except that Clement Smith had acquired the house from his brother-in-law. In 1970, the old Milwaukee mansion was vacated, and operations were consolidated at a new corporate headquarters in Green Bay.
In 1973 Wisconsin Public Service left the public transportation business entirely. Its Green Bay lines had been losing money since the 1950s, and the company finally sold its operations to the city of Green Bay that year. Its Green Bay bus system notwithstanding, Wisconsin Public Service prospered during the 1970s. In 1975 it posted revenues of $219.9 million, its best sales year ever. Its most important customer was the paper industry, which accounted for 15 percent of the company’s electricity sales, and renewed strength among paper companies operating mills in northeastern Wisconsin meant increased demand for Wisconsin Public Service’s main product. The company’s reliance on the paper industry continued to serve it well into the 1980s, giving it a solid base of industrial demand.
In 1992 Wisconsin Public Service’s contacts with the paper industry resulted in a joint venture seeking to find an efficient, ecologically sound way to generate electricity. That year, the company signed an agreement with Rhinelander Paper Company to build a 90 to 100 megawatt power plant that would be fueled by low-sulfur coal and paper mill waste. Wisconsin Public Service began using more low-sulfur coal in its power plants in the 1990s in order to comply with state and federal air pollution laws.
Wisconsin Public Service has performed well financially, especially in recent years; its revenues tripled between 1975 and 1992. This record of growth is impressive, considering that the relatively modest city of Green Bay is its largest urban market. It has benefited from the presence of large industrial customers in its area of operations, and it has shown that an electrical utility can prosper and grow large by hanging around small towns.
WPS Communications, Inc.
Campanella, Frank W., “Profits Generator,” Barron’s, March 29, 1982.
Hillert, Mark, and Paul Davis, Wisconsin Public Service Corporation: 100 Years—1883-1983—A Century of Service, Green Bay: Wisconsin Public Service Corporation, 1983.
“Wisconsin Public Service Generating Higher Net,” Barron’s, August 30, 1976.