Exhibit 10.5

INTEGRYS ENERGY GROUP, INC.
PERFORMANCE STOCK RIGHT AGREEMENT

 
THIS AGREEMENT is entered into as of May 17, 2007, (the “Grant Date”), by and
between INTEGRYS ENERGY GROUP, INC.(the “Company”), and __________________
____________________ (the “Participant”).  This Agreement sets forth the terms,
rights and obligations of the parties with respect to the grant of Performance
Stock Rights to the Participant.  This agreement shall not become effective
until the Participant signs and returns the “Acknowledgement Form” attached
hereto.
 
The Performance Stock Rights are granted under, and are subject to, the terms of
the Integrys Energy Group, Inc. 2007Omnibus Incentive Compensation Plan (the
“Plan”), which are specifically incorporated by reference in this
Agreement.  Any capitalized terms used in this Agreement which are not defined
shall have the meaning set forth in the Plan.
 
The parties to this Agreement covenant and agree as follows:
 
1. Grant of Performance Stock Rights.  (a)  Subject to the terms of this
Agreement, the Company grants to the Participant Performance Stock Rights
representing the right to receive ______ shares (“Target Award”), of the common
stock of the Company, par value $1.00 (“Stock”), in the event certain
Performance Goals specified herein are satisfied.  The Participant obtains no
ownership interest in the Company and will not be considered a shareholder of
the Company by virtue of the grant of Performance Stock Rights hereunder until
such time as Stock may be issued to the Participant as a Final Award.
 
(b) In the event of certain corporate transactions described in Section 12 of
the Plan, the number of Performance Stock Rights willbe adjusted by the
Compensation Committee of the Board of Directors of the Company (the
“Committee”).  The Committee’s determination as to any adjustment shall be
final.
 
2. Performance Period. Subject to the provisions of Section 7, the period from
April 1, 2007to December 31, 2009.
 
3. Performance Measures.
 
(a) Total Shareholder Return (“TSR”).  The quotient obtained by dividing (1) the
Shareholder Return with respect to a share of common stockof the Company, by (2)
the Beginning Market Price of a share of common stockof the Company.  For this
purpose:
 
(1) The Shareholder Return means the cash dividends paid on a share of common
stock during the Performance Period, increased by (if positive) or reduced by
(if negative) the change in stock price from the Beginning Market Price of a
share of common stock to the Ending Market Price of a share of common stock.
 

--------------------------------------------------------------------------------

 
(2) The Beginning Market Price of a share of common stock is the average closing
market price of a share of common stock for the 30 trading days immediately
preceding the first day of the Performance Period as reported by the securities
exchange on which such stock is principally traded.
 
(3) The Ending Market Price of a share of common stock is the average closing
market price of a share of common stock for the 30 trading days immediately
preceding the last day of the Performance Period as reported by the securities
exchange on which such stock is principally traded.
 
(b) Comparison Group.  All of the companies included in the Towers Perrin
database of publicly traded electric power companies.
 
4. Determination of Final Awards.
 
(a) Presumptive Award.  As soon as practicable following the completion of the
Performance Period, the Committee will determine the TRS of the Company and of
each company in the Comparison Group. The Committee’s determination will be
final and binding on all persons.  The Participant’s presumptive award shall be
determined in accordance with the following table; provided that any fractional
share of Stock that would otherwise result from the foregoing calculation shall
be disregarded.
 

 
Company TSR In Relation to
TSR of All Comparison Group
Companies
 
Presumptive Award Equal to
the Following Percentage of
the Target Award*
     90thPercentile or Greater 200%   75thPercentile 150%   50thPercentile 100% 
 25thPercentile  50%  Below the 25thPercentile
 0%

 
* The Presumptive Award for performance between points on the payout schedule
would be interpolated.

(b) Final Award.  The Presumptive Award is used as a guideline for the Committee
in determining the Final Award to be made to the Participant, and the
Participant obtains no rights as a result of the determination of the
Presumptive Award.  In determining the Final Award to be made to the
Participant, the Committee, in its sole discretion, may increase or decrease the
amount of the Presumptive Award; provided that the Committee will not increase
the amount of the Presumptive Award applicable to the Participant if the Final
Award is intended to comply with Section 162(m) of the Internal Revenue Code and
if the Participant is a Covered Executive (as defined in the Plan) for purposes
of Section 162(m) of the Internal Revenue Code.  
 
-2-

--------------------------------------------------------------------------------

 
Except with respect to the portion (if any) of the Final Award payment of which
is deferred in accordance with the Integrys Energy Group, Inc.Deferred
Compensation Plan, the Final Award will be distributed to the Participant by
March 15 of the calendar year following the calendar year in which the
Performance Period ends..
 
5. Dividend Equivalents.  The Participant shall not receive any cash or other
consideration to reflect dividends that would have been paid or accrued had the
Performance Stock Rights been actual shares of Stock during the Performance
Period.
 
6. Effect of Termination of Employment.
 
(a) Except as set forth in subsection (b) below and Section 8 below, or as
otherwise determined by the Committee, the Performance Stock Rights will be
cancelled immediately and without notice to the Participant, and no Final Award
will be made, in the event of the Participant’s termination of employment from
the Company and its Affiliates prior to the last day of the Performance Period.
 
(b) The Participant’s Performance Stock Rights will not be cancelled upon
termination of employment, and the Participant (or the Participant’s estate) may
be eligible to receive a Final Award, determined in accordance with Section 4
and this Section 6(b) following the conclusion of the Performance Period, if:
(i) the Participant’s termination of employment is on account of death or
disability (as defined in the Company’s long-term disability plan), or (ii) the
Participant terminates employment on or after December 31 of the calendar year
in which the Performance Period began and such termination is on account of
retirement on or after age fifty-five.  Except with respect to the portion (if
any) of the Final Award payment of which is deferred in accordance with the
Integrys Energy Group, Inc. Deferred Compensation Plan, the Final Award will be
distributed to the Participant by March 15 of the calendar year following the
calendar year in which the Performance Period ends.
 
7. Change in Control.  Upon the occurrence of a Change of Control (as defined in
the Plan), the Performance Period shall be terminated, and the Participant will
be entitled to a Final Award based upon the Target Award (or, if greater, the
then projected Final Award) prorated for the portion of the Performance Period
that has been completed as of the date of the Change in Control. Except with
respect to the portion (if any) of the Final Award payment of which is deferred
in accordance with the Integrys Energy Group, Inc. Deferred Compensation Plan,
distribution will be made as soon as is administratively practicable following
the Change of Control; provided, that if distribution following the Change of
Control would result in the Participant being subject to imposition of an
additional tax under Code Section 409A, distribution of the Final Award will be
made (without interest) as soon as administratively practicable following the
earlier to occur of (i) the date on which the Participant separates from the
service of the Company and all affiliates (six months following the date of
separation if Participant qualifies as a “specified employee” as that term is
defined for purposes of Section 409A of the Internal Revenue Code), or (ii) the
date that distribution would otherwise have been made under Section 4 had the
Change of Control not occurred.
 
-3-

--------------------------------------------------------------------------------

 
8. Tax Withholding.  Upon the issuance of Stock pursuant to a Final Award, the
Company may satisfy its withholding obligations in any manner determined by the
Committee, including by withholding a portion of the Participant’s compensation
or by withholding a number of the shares of Stock included in any Final Award
that have a Fair Market Value, as determined by the Committee, equal to the
amount required to be withheld.  The Fair Market Value of fractional shares of
Stock remaining after the withholding requirements are satisfied will be paid to
the Participant in cash.  The Company may also require the Participant to
deliver a check for the Company’s withholding tax obligation prior to effecting
the transfer of shares pursuant to a Final Award.
 
9. Miscellaneous.
 
(a) The Participant (or his legal representatives, the executor of his estate or
his heirs) shall not be deemed to be a shareholder of the Company with respect
to any of the Performance Stock Rights until shares of Stock have been issued
pursuant to a Final Award and the Company’s withholding tax liability has been
satisfied, to the Committee’s satisfaction.
 
(b) The Performance Stock Rights shall not be transferable by the Participant;
provided that following the Participant’s death, any Final Award made with
respect to the Participant will be paid to the Participant’s estate or to such
person as the executor of the estate certifies as being entitled to such payment
as a result of the operation of the Participant’s last will and testament or as
a result of the laws of intestate succession.
 
(c) It is fully understood that nothing contained in this Agreement or the Plan
shall interfere with or limit in any way the right of the Company or any
Affiliate to terminate the Participant’s employment at any time nor confer upon
the Participant any right to continue in the employ of the Company or any
Affiliate.
 
(d) As a condition of the granting of Performance Stock Rights under this
Agreement, the Participant agrees, for himself and his legal representatives,
the executor of his estate, and his heirs, that the Plan and this Agreement
shall be subject to discretionary interpretation by the Committee and that any
interpretation by the Committee of the terms of the Plan and this Agreement
shall be final, binding and conclusive on the Participant, his legal
representatives, the executor of his estate and his heirs.  The Participant, his
legal representatives, the executor of his estate and his heirs shall not
challenge or dispute the Committee’s decisions.
 
(e) The Committee may modifythe Performance Stock Rights at any time.  However,
no modification, extension or renewal shall (i) confer on the Participant any
right or benefit which he would not be entitled to if new Performance Stock
Rights were granted under the Plan at such time or (ii) alter, impair or
adversely affect the Performance Stock Rights or this Agreement without the
written consent of the Participant; provided that the Committee need not obtain
written consent of the Participant for a modification of the Performance Stock
Right to the extent that the Plan specifically permits the Committee action or
to the extent that the Committee deems such modification necessary to comply
with any applicable law, the listing requirements of any principal securities
exchange or market on which the shares underlying the
 
-4-

--------------------------------------------------------------------------------

 
Performance Stock Right are then traded, or to preserve favorable accounting or
tax treatment of the Performance Stock Right for the Company; and provided
further, that unless the Committee determines that a Performance Stock Right is
not intended to comply with the requirements of Section 162(m) of the Internal
Revenue Code, the Committee shall not take any such action with respect to a
Participant who is a Covered Executive (as defined in the Plan) if such action
would cause any Final Award granted to the Participant to cease to qualify as
“qualified performance-based compensation” for purposes of Section 162(m) of the
Internal Revenue Code.
 
(f) No shares of Stock will be issued pursuant to a Final Award unless and until
the Company has determined to its satisfaction that such issuance complies with
all relevant provisions of applicable law, including the requirements of any
stock exchange on which the Stock may then be traded.
 
10. Governing Law.  This Agreement shall be governed by the internal laws of the
State of Illinois, without regard to the principle of conflict of laws, as to
all matters, including, but not limited to, matters of validity, construction,
effect, performance and remedies.  No legal action or proceeding may be brought
with respect to this Agreement more than one year after the later of (a) the
last date on which the act or omission giving rise to the legal action or
proceeding occurred; or (b) the date on which the individual bringing such legal
action or proceeding had knowledge (or reasonably should have had knowledge) of
such act or omission.  Any such action or proceeding must be commenced and
prosecuted in its entirety in the federal or state court having jurisdiction
over Brown County, Wisconsin, or Cook County, Illinois, and each individual with
any interest hereunder agrees to submit to the personal jurisdiction thereof,
and agrees not to raise the objection that such courts are not a convenient
forum.   Such action or other legal proceeding shall be heard pursuant to a
bench trial, and the parties to such proceeding shall waive their rights to a
trial by jury.
 
11. Severability.  In the event any provision of the Agreement is held illegal
or invalid for any reason, the illegality or invalidity will not affect the
remaining provisions of the Agreement, and the Agreement shall be construed and
enforced as if the illegal or invalid provision had not been included.
 
12. Terms of Plan Govern.  All parties acknowledge that this option is granted
under and pursuant to the Plan, which shall govern all rights, interests,
obligations and undertakings of both the Company and the Participant.
 
INTEGRYS ENERGY GROUP, INC.

 
                                                                

By:/s/ Bud
Treml                                                                      
Title: Senior VP & Chief HR Officer

-5-

--------------------------------------------------------------------------------

ACKNOWLEDGEMENT FORM

I have read the terms of the Integrys Energy Group, Inc. Performance Stock Right
Agreement, dated May 17, 2007, and I hereby declare that I understand and agree
to be bound by the terms and conditions of the Agreement.
 
 ________________________________________                                                                     

Participant

Print name: ___________________________          

PLEASE DETACH THIS ACKNOWLEDGEMENT FORM FROM THE PERFORMANCE STOCK RIGHT
AGREEMENT AND RETURN IT TO THE GREEN BAY HUMAN RESOURCES DEPARTMENT.  YOUR
PERFORMANCE STOCK RIGHT WILL NOT BECOME EFFECTIVE UNTIL THE COMPANY RECEIVES
THIS ACKNOWLEDGMENT FORM.

--------------------------------------------------------------------------------