Exhibit 10.46
                       EARLY RETIREMENT AGREEMENT BETWEEN
            INTERSTATE ENERGY CORPORATION ET AL. AND RICHARD R. EWERS


       This Agreement is entered into between Interstate Energy Corporation,  on
behalf of itself,  its subsidiary  Interstate  Power  Company,  and any of their
affiliates  (collectively  referred to herein as the  "Company")  and Richard R.
Ewers ("Officer"), this 4th day of December, 1998 (the "Agreement Date").

       In consideration of this mutual Agreement, Officer and the Company hereby
agree as follows:

       1.  Retirement.  Officer hereby  retires and resigns,  as an employee and
officer,  from  the  service  of the  Company  effective  August  1,  1999  (the
"Retirement  Date").  Officer  acknowledges  and agrees  that he will,  from the
Agreement Date through February 18, 1999, continue in the regular performance of
his duties and take all of his accrued vacation days; from February 19, 1999, to
his Retirement  Date, the Officer will actively  assist in the transition of his
duties to any successor(s) and perform  additional  transitional  assistance and
special  projects as  requested by the Chief  Executive  Officer of the Company.
Officer agrees to provide written  resignations from any ancillary  positions as
the Company deems necessary.

       2. Financial and Benefit Matters.

           a. Officer shall continue to be paid his annual salary of One Hundred
Twenty-six  Thousand Dollars  ($126,000)  through February 18, 1999, and will be
paid Five  Thousand  Dollars  ($5,000) on each of the  following  dates in 1999:
March 5, March 19,  April 2, April 16,  April 30, May 14, May 28,  June 11, June
25, July 9, and July 23. Officer will continue to be provided  senior  executive
welfare  benefits  and  continue  to  participate  in all  retirement  plans and
supplemental retirement plans on the same basis as other senior executives until
the  Retirement  Date,  and  will  be  paid  any  earned  Management   Incentive
Compensation Program bonus for 1998 at the regular time. This Agreement does not
affect or restrict in any way the  entitlement of Officer to pension and welfare
benefits  while an  employee,  post-retirement  welfare  benefits,  supplemental
retirement benefits,  or qualified retirement plan benefits that are provided to
Officer on  account  of his prior  service  with the  Company  and which are not
financial  accommodations  pertaining to his early  retirement.  As of Officer's
Retirement Date,  Officer shall be eligible to receive benefits under all of the
Company's  retiree welfare benefit plans available to retired senior  executives
of the Company as in effect on October 1, 1998.  Any changes in welfare  benefit
plans  available for retired  senior  executives  of the Company  retiring on or
before August 1, 1999, that are adopted after October 1, 1998, and are generally
applicable  to senior  executives  retiring on or before  August 1, 1999,  shall
apply to the  Officer.  It is mutually  understood  that the Officer is provided
supplemental  retirement  benefits pursuant to his Interstate Energy Corporation
Supplemental   Retirement  Agreement  and  that,  effective  commencing  on  the
Retirement Date, the Officer shall be entitled to the full benefits available to
him under such agreement. All calculations 


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under  such  agreement  shall be made in  accordance  with  its  terms as it was
interpreted in 1998 immediately prior to the Agreement Date.

           b. In  consideration  for the release provided in Section 6 below and
for the agreements in Section 4 below, the Company shall make a lump sum payment
to  Officer,  provided  the  Officer  is living on March 5,  1999,  equal to Two
Hundred  Thirty-eight  Thousand  Four  Hundred  Four  Dollars  ($238,404),  less
applicable federal and state income tax withholding and payroll tax amounts. The
payment will be made to Officer  coincident  with the  Company's  March 5, 1999,
payroll.  The lump sum amount is not  compensation for purposes of the Company's
retirement or pretax savings plans.

           c. It is mutually  agreed that any common  stock  options to purchase
shares of Interstate  Energy  Corporation  issued to Officer under the Company's
Long Term Equity  Incentive Plan are canceled  effective on the Agreement  Date,
and that no  additional  common stock  options shall be issued by the Company to
the  Officer  after  the  Agreement   Date.   Officer   acknowledges   that  the
considerations  contained in this Agreement fully incorporate all considerations
and accruals of such Long Term Equity Incentive Plan.

           d.  Officer  recognizes  that   consideration   provided  under  this
Agreement may result in taxable  income to the Officer and that the Company will
report such taxable income to the appropriate taxing authorities.

       3. Tax  Adjustment.  It is the mutual  intent of Officer  and the Company
that the payments  hereunder,  together  with any other  amounts  required to be
taken  into  account  for this  purpose,  should  not be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Internal  Revenue Code of 1986 (the
"Code") or any successor provision.  If it is determined that any portion of the
payments  hereunder  would be  subject  to the  Excise  Tax but for  retroactive
correction of an  overpayment  to the Company by the Officer,  the Officer shall
make the  necessary  repayment to the Company.  If,  however,  it is  ultimately
determined  by a court or  pursuant  to a final  determination  by the  Internal
Revenue  service  that any portion of the  payments  hereunder is subject to the
Excise Tax, and retroactive correction is not available or would be ineffective,
the  Company  shall pay to the  Officer  an  additional  amount  (the  "Gross-up
Payment")  such that the net amount  retained by the Officer after  deduction of
any  Excise  Tax and  any  interest  charges  or  penalties  in  respect  of the
imposition  of such Excise Tax (but not any federal,  state or local income tax)
on the  payments  hereunder,  and any federal,  state,  and local income tax and
Excise Tax upon the payment  provided  for by this  Section 3, shall be equal to
the payments  hereunder.  For purposes of determining the amount of the Gross-up
Payment,  the Officer shall be deemed to pay federal income taxes at the highest
marginal  rate of federal  income  taxation  in the  calendar  year in which the
Gross-up  Payment is to be made and state and local  income taxes at the highest
marginal rates of taxation in the state and locality of the Executive's domicile
for income tax  purposes on the date the  Gross-up  Payment is made,  net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes.


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       4. Certain  Agreements.  This Agreement does not limit or restrict in any
way Officer's  rights under the Company's  employee benefit plans. All the terms
of agreement  relating to Officer's  early  retirement  from employment with the
Company are embodied in this Agreement.  This Agreement fully supersedes any and
all prior agreements or understandings between Officer and the Company regarding
the Officer's  termination of employment with the Company. It is mutually agreed
that the agreement dated November 8, 1995,  between Officer and Interstate Power
Company,  entitled "Agreement," is null and void on the Agreement Date and of no
further  effect  as of such  date and that any other  employment  agreements  or
severance  agreements  previously  agreed to by or between  the  Officer and the
Company are null and void and of no further effect as of the Agreement Date. The
following  agreements,  however,  are entered into and/or continued in effect as
part of this Agreement:

           a. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Officer's  continuing or future participation in any plan, program,
policy or practice  provided  by the Company for which the Officer may  qualify,
nor shall  anything in this Agreement  limit or otherwise  affect such rights as
the Officer may have under any contract or agreement  with the Company or any of
its  affiliates  relating to such subject  matter  other than that  specifically
addressed  herein.  Vested  benefits  and  other  amounts  that the  Officer  is
otherwise entitled to receive under any plan, policy,  practice,  or program of,
or any contract or agreement  with,  the Company or any of its  affiliates on or
after the Retirement  Date shall be payable in accordance with the terms of each
such plan, policy, practice, program, contract or agreement, as the case may be,
except as specifically modified by this Agreement.

           b. Full  Settlement.  The  Company's  obligation to make the payments
provided for in, and otherwise to perform its obligations  under, this Agreement
shall not be affected by any set-off, counterclaim, recoupment, defense or other
claim,  right or action that the Company may have against the Officer or others.
In no event shall the Officer be obligated to seek other  employment or take any
other action by way of  mitigation  of the amounts  payable to the Officer under
any of the  provisions  of this  Agreement.  The amounts  payable by the Company
under this  Agreement  shall not be offset or reduced by any  amounts  otherwise
receivable or received by the Officer from any source.

           c. Confidential  Information and  Noncompetition.  The Noncompetition
and  Nondisclosure  Agreement between Officer and the Company dated November 23,
1997, is  incorporated  herein by this  reference  and remains  fully  effective
according  to its terms.  Furthermore,  the  Officer  shall hold in a  fiduciary
capacity for the benefit of the Company all secret or confidential  information,
knowledge or data relating to the Company or any of its affiliated companies and
their  respective  businesses  that the  Officer  obtains  during the  Officer's
employment  by the Company or any of its  affiliated  companies  and that is not
public  knowledge  (other than as a result of the  Officer's  violation  of this
subsection  ("Confidential  Information").  The Officer  shall not  communicate,
divulge or  disseminate  Confidential  Information at any time during or for not
less than five (5) years after the Officer's employment with the Company, except
with the prior written consent of the Company or as otherwise required by law or
legal  process.  In no event shall any asserted  violation of the  provisions of
this  subsection  constitute a basis for  deferring or  withholding  any

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amounts otherwise payable to the Officer under this Agreement.  Any provision of
any other  agreement  between the Officer and Interstate  Energy  Corporation or
Interstate  Power  Company  relating  to  noncompetition  and  nondisclosure  of
information is null and void and of no further effect.

       5.  Attorney's  Fees. The Company agrees to reimburse the Officer for his
reasonable  legal  fees and  expenses  incurred  in good faith by Officer in the
preparation  and review of this  agreement and as the result of any dispute with
the Company  regarding the payment of any benefit provided for in this Agreement
(including  but not limited to all such fees and expenses  incurred in disputing
any  termination or in seeking in good faith to obtain or enforce any benefit or
right  provided  by this  Agreement  or in  connection  with  any tax  audit  or
proceeding to the extent  attributable  to the application of section 499 of the
Code)  plus in each case  interest  on any  delayed  payment  at the  applicable
Federal rate in Section  7872(f)(2)(A)  of the Code. Such payments shall, in the
aggregate,  not exceed Ten Thousand  Dollars  ($10,000) and shall be made within
ten (10) business days after delivery of the Officer's  written request for such
reimbursement  in  accordance  with  established   Company  procedures  for  the
reimbursement of business expenses.

       6. Release and Covenants.

           a.  Officer,  on behalf of  himself,  his spouse,  heirs,  executors,
administrators,  agents,  successors,  assigns and  representatives  of any kind
(hereinafter collectively referred to as the "Releasors") confirm that Releasors
have released the Interstate Energy Corporation and each of its subsidiaries and
affiliates, the employees,  successors, assigns, executors, trustees, directors,
advisors,  agents and  representatives of Interstate Energy Corporation and each
subsidiary or affiliate,  and all their  respective  predecessors and successors
(hereinafter  collectively  referred  to as the  "Releasees"),  from any and all
actions,  causes of action,  charges,  debts,  liabilities,  accounts,  demands,
damages and claims of any kind whatsoever  including,  but not limited to, those
arising out of the changes in the terms and conditions of Officer's relationship
with the Company  described in this Agreement and those arising under any labor,
employment discrimination (including, without limitation, the Age Discrimination
in Employment  Act of 1967, as amended,  Title VII of the Civil Rights of Act of
1964, as amended,  applicable  State fair employment  legislation),  contract or
tort laws,  equity or public policy,  or negligence  standard,  whether known or
unknown, certain or speculative,  which against any of the Releasees, any of the
Releasors  ever had,  now has,  or  hereafter  shall  have or can have.  Officer
further  covenants  that he will not  initiate any action,  claim or  proceeding
against any of the Releasees  for any of the  foregoing,  will not  participate,
assist, or cooperate in any such action, claim, or proceeding unless required to
do so by law,  and will not apply for  employment  with the Company at any time.
Officer  acknowledges that the considerations  contained in this Agreement fully
compensate him for the release provided in this Section.

           b.  Notwithstanding  the  foregoing,  this  Agreement  does not waive
rights, if any, Officer or his successors and assigns may have under or pursuant
to, or release any member of Releasees from obligations,  if any, it may have to
Officer or to Officer's 

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successors and assigns on claims arising out of, related to or asserted under or
pursuant to, this Agreement or any indemnity  agreement or obligation  contained
in or adopted or acquired pursuant to any provision of the charter or by-laws of
Interstate  Energy  Corporation,  a Wisconsin  corporation,  or Interstate Power
Company, a Delaware  corporation,  or in any applicable insurance policy carried
by the  Company or its  affiliates  for any matter  which has  arisen,  or which
arises or which may arise in the future in connection with Officer's  employment
with the Company.

           c. In  accordance  with the  requirements  of  Title II of the  Older
Workers  Benefit  Protection  Act (P.  L.  101-433,  10/16/90),  Officer  hereby
acknowledges  that he has at least twenty-one (21) days to review this Agreement
from the date he first  received it and he has been advised to review it with an
attorney of his choice. Officer further understands that the twenty-one (21) day
review period ends when Officer signs this Agreement. Officer also has seven (7)
days after  signing  this  Agreement  to revoke by so  notifying  the Company in
writing.  Any revocation by Officer under this Section 6(c),  however,  does not
revoke the resignations  provided under Section 1 and Officer's resignation from
employment with the Company shall remain in effect as set forth therein. Officer
further  acknowledges  that he has  carefully  read  this  Agreement,  knows and
understands the contents thereof and its binding legal effect. Officer signs the
same of his own free will and act,  and it is his  intention  that he be legally
bound thereby.

           d.  Officer  agrees to keep this  Agreement  confidential  and not to
reveal its contents to anyone  other than his  attorney,  financial  consultant,
immediate family members,  and  representatives  of any governmental tax agency.
The  provisions  of this Section 6(d) shall not apply to any truthful  statement
required  to be made  by  Officer  in any  legal  proceeding  or  government  or
regulatory investigation; provided, however, that prior to making such statement
(other than to tax authorities), Officer will give the Company reasonable notice
and,  to the extent he is legally  entitled  to do so,  afford the  Company  the
ability to seek a confidentiality order.

       7.  Severability.  In the  event  any one or more  of the  terms  of this
Agreement shall for any reason be held to be invalid,  illegal or unenforceable,
the remaining  terms of this  Agreement  shall be  unimpaired,  and the invalid,
illegal or unenforceable  term shall be replaced by a term, which,  being valid,
legal and enforceable,  comes closest to the intention of the parties underlying
the invalid, illegal or unenforceable terms. However, in the event that any such
term of this  Agreement is adjudged by a court of competent  jurisdiction  to be
invalid,  illegal or unenforceable,  but that the other terms are adjudged to be
valid, legal and enforceable if such invalid, illegal or unenforceable term were
deleted or modified, then this Agreement shall apply with only such deletions or
modifications,  or both,  as the case may be, as are  necessary  to  permit  the
remaining separate terms to be valid, legal and enforceable.

       8. Company Property. Officer shall, not later than March 1, 1999, deliver
to the Company the original and all copies of all documents, records, electronic
files, and property of any nature  whatsoever which are in Officer's  possession
or control  and which are the  property  of the  Company or which  relate to the
business activities,  facilities, or customers

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of the Company,  its  subsidiaries,  or its  affiliates,  including any records,
documents  or  property  created  by Officer  and,  where  such  records  may be
maintained on hard disk files on computers owned by Officer, such files shall be
purged and eliminated;  provided,  however,  Officer shall be provided access to
information  and material  appropriate to fulfillment of his duties as described
in Section 1, above. To the extent Company  property is in possession or control
of the Officer on his  Retirement  Date it shall then be  similarly  returned or
purged, as described above. 

       9. Governing Law and Dispute Resolution. Except with regard to subsection
(b) of Section 6, this Agreement  shall be governed by the  substantive  laws of
the State of Iowa without regard to its conflict of laws provisions. The parties
agree that any  proceeding  to resolve any  dispute  arising  hereunder  will be
brought  only in the  courts of the State of Iowa or in the courts of the United
States of America  for the  District  of Iowa,  and that each party  irrevocably
submits to such  jurisdiction,  and hereby  waives any and all  objections as to
venue,  inconvenient  forum and the like.  It is the  intention  of the  parties
hereto,  however,  that to the extent practicable,  the parties will endeavor to
settle any dispute  arising  hereunder  first through the process of non-binding
mediation to be conducted in Madison, Wisconsin. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective  heirs,
legal representatives, successors and assigns. Section 6(b) shall be governed by
the laws of the State of Delaware, as to Interstate Power Company, and the State
of Wisconsin, as to Interstate Energy Corporation.

       10.  Successors.  This Agreement is personal to the Officer and shall not
be assignable by the Officer.  This Agreement  shall inure to the benefit of and
be  enforceable by the Officer's  legal  representatives.  This Agreement  shall
inure to the benefit of and be binding upon the Company and its  successors  and
assigns. The Company shall require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business  and/or assets of the Company  expressly to assume and agree to perform
this  Agreement in the same manner and to the same extent that the Company would
have been required to perform it if no such  succession had taken place. As used
in this  Agreement,  "Company"  shall mean both the Company as defined above and
any such  successor  that  assumes  and agrees to  perform  this  Agreement,  by
operation of law or otherwise.

                                      INTERSTATE ENERGY CORPORATION


                                      /s/ Erroll B. Davis                     
                                      Erroll B. Davis, Jr., President and CEO


                                      /s/ Richard R. Ewers                    
                                      Richard R. Ewers, Officer