----

| Report      of Independent Registered Public Accounting Firm  | 3                                                                                                                       |
|--------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------|
| Financial      Statements                                     |                                                                                                                    |
|                                                               | Statements      of Operations for the Years Ended December 31, 2009, 2008 and      2007                            | 4  |
|                                                               | Statements      of Cash Flows for the Years Ended December 31, 2009, 2008 and      2007                            | 5 |
|                                                               | Balance      Sheets as of December 31, 2009 and 2008                                                               | 6 |
|                                                               | Statements      of Changes in Members’ Equity for the Years Ended December 31, 2009,      2008 and      2007 | 7  |
|                                                               | Notes      to Financial Statements                                                                                 |               8-31 |

----

----

| (In      Thousands)                                        |   |   |    |   |   |   |    |   |   |
|------------------------------------------------------------|--------|--------|---------|--------|--------|--------|---------|--------|--------|
|                                                       |   | 2009   |    |   | 2008   |   |    | 2007   |   |
| Operating      Revenues                                    |   |   |    |   |   |   |    |   |   |
| Transmission      Service Revenue                          |   | $      | 520,364 |   |   | $      | 464,992 |   |   | $ | 406,893 |   |
| Other      Operating Revenue                               |   |   | 1,161   |   |   |   | 1,579   |   |   |   | 1,126 |   |
| Total      Operating Revenues                              |   |   | 521,525 |   |   |   | 466,571 |   |   |   | 408,019 |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Operating      Expenses                                    |   |   |    |   |   |   |    |   |   |   |   |   |
| Operations      and Maintenance                            |   |   | 131,693 |   |   |   | 121,096 |   |   |   | 119,901 |   |
| Depreciation      and Amortization                         |   |   | 85,099  |   |   |   | 75,834  |   |   |   | 69,154 |   |
| Taxes      Other than Income                               |   |   | 12,485  |   |   |   | 11,134  |   |   |   | 9,124 |   |
| Income      Tax Expense of ATC LLC                         |   |   | 1,039   |   |   |   | 896     |   |   |   | - |   |
| Total      Operating Expenses                              |   |   | 230,316 |   |   |   | 208,960 |   |   |   | 198,179 |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Operating      Income                                      |   |   | 291,209 |   |   |   | 257,611 |   |   |   | 209,840 |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Other      Income (Expense), Net                           |   |   | (621    | )      |   |   | (514    | )      |   |   | 78 |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Earnings      Before Interest and Members' Income Taxes    |   |   | 290,588 |   |   |   | 257,097 |   |   |   | 209,918 |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest      Expense                                      |   |   |    |   |   |   |    |   |   |   |   |   |
| Interest      Expense, Net                                 |   |   | 77,223  |   |   |   | 69,135  |   |   |   | 58,938 |   |
| Allowance      for Borrowed Funds Used During Construction |   |   | -       |   |   |   | (83     | )      |   |   | (3,109 | ) |
| Net      Interest Expense                                  |   |   | 77,223  |   |   |   | 69,052  |   |   |   | 55,829 |   |
|                                                       |   |   |    |   |   |   |    |   |   |   |   |   |
| Earnings      Before Members' Income Taxes                 |   | $      | 213,365 |   |   | $      | 188,045 |   |   | $ | 154,089 |   |

----

| (In      Thousands)                                                        |   |   |     |   |   |   |     |   |   |
|----------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|----------|--------|--------|
|                                                                       |   | 2009   |     |   | 2008   |   |     | 2007   |   |
| Cash      Flows from Operating Activities                                  |   |   |     |   |   |   |     |   |   |
| Earnings      Before Members' Income Taxes                                 |   | $      | 213,365  |   |   | $      | 188,045  |   |   | $ | 154,089 |   |
| Adjustments      to Reconcile Earnings Before Members' Income Taxes to Net |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      Provided by Operating Activities-                                |   |   |     |   |   |   |     |   |   |   |   |   |
| Depreciation      and Amortization                                         |   |   | 85,099   |   |   |   | 75,834   |   |   |   | 69,154 |   |
| Bond      Discount and Debt Issuance Cost Amortization                     |   |   | 986      |   |   |   | 831      |   |   |   | 698 |   |
| Provision      for Deferred Income Taxes of ATC LLC, Net                   |   |   | 545      |   |   |   | 504      |   |   |   | - |   |
| Change      in-                                                            |   |   |     |   |   |   |     |   |   |   |   |   |
| Accounts      Receivable                                                   |   |   | (4,412   | )      |   |   | (9,437   | )      |   |   | (7,261 | ) |
| Other      Current Assets                                                  |   |   | 129      |   |   |   | (534     | )      |   |   | (1,783 | ) |
| Accounts      Payable                                                      |   |   | (872     | )      |   |   | (8,482   | )      |   |   | 6,883 |   |
| Accrued      Liabilities                                                   |   |   | (8,585   | )      |   |   | 14,409   |   |   |   | 6,684 |   |
| Other,      Net                                                            |   |   | (4,138   | )      |   |   | 2,842    |   |   |   | 10,663 |   |
| Total      Adjustments                                                     |   |   | 68,752   |   |   |   | 75,967   |   |   |   | 85,038 |   |
| Net      Cash Provided by Operating Activities                             |   |   | 282,117  |   |   |   | 264,012  |   |   |   | 239,127 |   |
|                                                                       |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      Flows from Investing Activities                                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Capital      Expenditures for Property, Plant and Equipment                |   |   | (401,671 | )      |   |   | (364,653 | )      |   |   | (407,071 | ) |
| Insurance      Proceeds Received for Damaged Property, Plant andEquipment  |   |   | 3,906    |   |   |   | -        |   |   |   | - |   |
| Proceeds      from the Sale of Property, Plant and Equipment               |   |   | -        |   |   |   | 5,125    |   |   |   | - |   |
| Allowance      for Borrowed Funds Used During Construction                 |   |   | -        |   |   |   | (83      | )      |   |   | (3,109 | ) |
| Net      Cash Used in Investing Activities                                 |   |   | (397,765 | )      |   |   | (359,611 | )      |   |   | (410,180 | ) |
|                                                                       |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      Flows from Financing Activities                                  |   |   |     |   |   |   |     |   |   |   |   |   |
| Distribution      of Earnings to Members                                   |   |   | (166,178 | )      |   |   | (140,828 | )      |   |   | (116,345 | ) |
| Issuance      of Membership Units for Cash                                 |   |   | 99,987   |   |   |   | 97,985   |   |   |   | 66,643 |   |
| Return      of Capital to Tax-exempt Members                               |   |   | -        |   |   |   | (8,553   | )      |   |   | - |   |
| Issuance      (Repayment) of Short-term Debt, Net                          |   |   | 74,476   |   |   |   | 17,710   |   |   |   | (90,574 | ) |
| Issuance      of Long-term Debt, Net of Issuance Costs                     |   |   | 149,014  |   |   |   | 208,675  |   |   |   | 248,266 |   |
| Advances      Received Under Interconnection Agreements                    |   |   | 7,072    |   |   |   | 31,493   |   |   |   | 63,157 |   |
| Repayments      Made Under Interconnection Agreements                      |   |   | (47,995  | )      |   |   | (111,382 | )      |   |   | - |   |
| Other,      Net                                                            |   |   | (552     | )      |   |   | 388      |   |   |   | (35 | ) |
| Net      Cash Provided by Financing Activities                             |   |   | 115,824  |   |   |   | 95,488   |   |   |   | 171,112 |   |
|                                                                       |   |   |     |   |   |   |     |   |   |   |   |   |
| Net      Change in Cash and Cash Equivalents                               |   |   | 176      |   |   |   | (111     | )      |   |   | 59 |   |
|                                                                       |   |   |     |   |   |   |     |   |   |   |   |   |
| Cash      and Cash Equivalents, Beginning of Period                        |   |   | -        |   |   |   | 111      |   |   |   | 52 |   |
| Cash      and Cash Equivalents, End of Period                              |   | $      | 176      |   |   | $      | -        |   |   | $ | 111 |   |

----

| (In      Thousands)                                               |   |   |      |   |   |   |
|-------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                              |   |   |      |   |   |   |
| ASSETS                                                            |   | 2009   |      |   | 2008   |   |
| Property,      Plant and Equipment                                |   |   |      |   |   |   |
| Transmission      Plant                                           |   | $      | 3,174,792 |   |   | $      | 2,734,539 |   |
| General      Plant                                                |   |   | 91,833    |   |   |   | 84,165 |   |
| Less-      Accumulated Depreciation                               |   |   | (712,724  | )      |   |   | (659,075 | ) |
|                                                              |   |   | 2,553,901 |   |   |   | 2,159,629 |   |
| Construction      Work in Progress                                |   |   | 197,057   |   |   |   | 303,965 |   |
| Net      Property, Plant and Equipment                            |   |   | 2,750,958 |   |   |   | 2,463,594 |   |
|                                                              |   |   |      |   |   |   |   |   |
| Current      Assets                                               |   |   |      |   |   |   |   |   |
| Cash      and Cash Equivalents                                    |   |   | 176       |   |   |   | - |   |
| Accounts      Receivable                                          |   |   | 46,311    |   |   |   | 46,028 |   |
| Prepaid      Expenses                                             |   |   | 2,886     |   |   |   | 2,986 |   |
| Other      Current Assets                                         |   |   | 1,748     |   |   |   | 1,777 |   |
| Total      Current Assets                                         |   |   | 51,121    |   |   |   | 50,791 |   |
|                                                              |   |   |      |   |   |   |   |   |
| Regulatory      and Other Assets                                  |   |   |      |   |   |   |   |   |
| Regulatory      Assets                                            |   |   | 7,760     |   |   |   | 8,252 |   |
| Other      Assets                                                 |   |   | 8,531     |   |   |   | 8,188 |   |
| Total      Regulatory and Other Assets                            |   |   | 16,291    |   |   |   | 16,440 |   |
|                                                              |   |   |      |   |   |   |   |   |
| Total      Assets                                                 |   | $      | 2,818,370 |   |   | $      | 2,530,825 |   |
|                                                              |   |   |      |   |   |   |   |   |
| MEMBERS'      EQUITY AND LIABILITIES                              |   |   |      |   |   |   |   |   |
| Capitalization                                                    |   |   |      |   |   |   |   |   |
| Members’      Equity (see Note 3 for redemption provisions) |   | $      | 1,196,396 |   |   | $      | 1,049,222 |   |
| Long-term      Debt                                               |   |   | 1,259,643 |   |   |   | 1,109,397 |   |
| Total      Capitalization                                         |   |   | 2,456,039 |   |   |   | 2,158,619 |   |
|                                                              |   |   |      |   |   |   |   |   |
| Current      Liabilities                                          |   |   |      |   |   |   |   |   |
| Accounts      Payable                                             |   |   | 19,602    |   |   |   | 41,493 |   |
| Accrued      Interest                                             |   |   | 20,274    |   |   |   | 19,260 |   |
| Other      Accrued Liabilities                                    |   |   | 45,645    |   |   |   | 40,622 |   |
| Current      Portion of Regulatory Liabilities                    |   |   | 1,502     |   |   |   | 19,953 |   |
| Short-term      Debt                                              |   |   | 197,537   |   |   |   | 123,578 |   |
| Current      Portion of Advances Under Interconnection Agreements |   |   | 934       |   |   |   | 7,129 |   |
| Total      Current Liabilities                                    |   |   | 285,494   |   |   |   | 252,035 |   |
|                                                              |   |   |      |   |   |   |   |   |
| Regulatory      and Other Long-term Liabilities                   |   |   |      |   |   |   |   |   |
| Regulatory      Liabilities                                       |   |   | 59,734    |   |   |   | 66,067 |   |
| Other      Long-term Liabilities                                  |   |   | 17,103    |   |   |   | 54,104 |   |
| Total      Regulatory and Other Long-term Liabilities             |   |   | 76,837    |   |   |   | 120,171 |   |
|                                                              |   |   |      |   |   |   |   |   |
|                                                              |   |   |      |   |   |   |   |   |
| Commitments      and Contingencies (see Notes)                    |   |   | -         |   |   |   | - |   |
|                                                              |   |   |      |   |   |   |   |   |
| Total      Members’ Equity and Liabilities                  |   | $      | 2,818,370 |   |   | $      | 2,530,825 |   |

----

| (In      Thousands)                                    |   |   |   |   |   |    |
|--------------------------------------------------------|--------|--------|--------|--------|--------|---------|
|                                                   |   |   |   |   |   |    |
| Members’      Equity as of December 31, 2006     |   |   |   |   | $      | 807,310 |   |
|                                                   |   |   |   |   |   |    |   |
| Membership      Units Outstanding at December 31, 2006 |   |   | 55,555 |   |   |    |   |   |
|                                                   |   |   |   |   |   |    |   |   |
|                                                   |   |   |   |   |   |    |   |   |
| Issuance      of Membership Units                      |   |   |   |   |   | $       | 67,519 |   |
|                                                   |   |   |   |   |   |    |   |   |
| Earnings      Before Members' Income Taxes             |   |   |   |   |   |    | 154,089 |   |
|                                                   |   |   |   |   |   |    |   |   |
| Distribution      of Earnings to Members               |   |   |   |   |   |    | (116,345 | ) |
|                                                   |   |   |   |   |   |    |   |   |
| Members’      Equity as of December 31, 2007     |   |   |   |   |   | $       | 912,573 |   |
|                                                   |   |   |   |   |   |    |   |   |
| Membership      Units Outstanding at December 31, 2007 |   |   | 60,769 |   |   |    |   |   |
|                                                   |   |   |   |   |   |    |   |   |
|                                                   |   |   |   |   |   |    |   |   |
|  Issuance      of Membership Units                |   |   |   |   |   | $       | 97,985 |   |
|                                                   |   |   |   |   |   |    |   |   |
|  Return      of Capital to Tax-exempt Members     |   |   |   |   |   |    | (8,553 | ) |
|                                                   |   |   |   |   |   |    |   |   |
|  Earnings      Before Members' Income Taxes       |   |   |   |   |   |    | 188,045 |   |
|                                                   |   |   |   |   |   |    |   |   |
|  Distribution      of Earnings to Members         |   |   |   |   |   |    | (140,828 | ) |
|                                                   |   |   |   |   |   |    |   |   |
| Members’      Equity as of December 31, 2008     |   |   |   |   |   | $       | 1,049,222 |   |
|                                                   |   |   |   |   |   |    |   |   |
| Membership      Units Outstanding at December 31, 2008 |   |   | 68,089 |   |   |    |   |   |
|                                                   |   |   |   |   |   |    |   |   |
|                                                   |   |   |   |   |   |    |   |   |
|  Issuance      of Membership Units                |   |   |   |   |   | $       | 99,987 |   |
|                                                   |   |   |   |   |   |    |   |   |
|  Earnings      Before Members' Income Taxes       |   |   |   |   |   |    | 213,365 |   |
|                                                   |   |   |   |   |   |    |   |   |
|  Distribution      of Earnings to Members         |   |   |   |   |   |    | (166,178 | ) |
|                                                   |   |   |   |   |   |    |   |   |
| Members’      Equity as of December 31, 2009     |   |   |   |   |   | $       | 1,196,396 |   |
|                                                   |   |   |   |   |   |    |   |   |
| Membership      Units Outstanding at December 31, 2009 |   |   | 75,266 |   |   |    |   |   |

----

|  (1) | Nature      of Operations and Summary of Significant Accounting      Policies |
|-----------|-------------------------------------------------------------------------------|

|   | (a)   | General |
|--------|-----------------|---------|

|   | (b)   | Corporate      Manager |
|--------|-----------------|------------------------|

----

|   |                                       |   | 2009   |   |   | 2008   |   |
|--------|--------------------------------------------|--------|--------|--------|--------|--------|--------|
|   |                                       |   |   |   |   |   |   |
|   | Other      Accrued Liabilities             |   | $      | 15,791 |   |   | $      | 14,922 |   |
|   | Other      Long-term Liabilities           |   |   | 6,777  |   |   |   | 11,045 |   |
|   | Net      Amount Payable to Management Inc. |   | $      | 22,568 |   |   | $      | 25,967 |   |

|   | (c)   | Revenue      Recognition |
|--------|-----------------|--------------------------|

----

|   | (d)   | Transmission      and General Plant and Related  Depreciation |
|--------|-----------------|---------------------------------------------------------------|

|   | (e)   | Asset      Retirement Obligations |
|--------|-----------------|-----------------------------------|

----

|   | Asset      Retirement Obligations at December 31, 2008 |   | $      | 1,838 |   |
|--------|--------------------------------------------------------|--------|--------|-------|--------|
|   | Accretion                                              |   |   | 130   |   |
|   | Liabilities      Incurred                              |   |   | 25    |   |
|   | Liabilities      Settled                               |   |   | (96   | )      |
|   | Asset      Retirement Obligations at December 31, 2009 |   | $      | 1,897 |   |

|   | (f)   | Allowance      for Funds Used DuringConstruction |
|--------|-----------------|--------------------------------------------------|

|   | (g)   | Interconnection      Agreements |
|--------|-----------------|---------------------------------|

----

|   | (h)   | Cash      and Cash Equivalents |
|--------|-----------------|--------------------------------|

|   | (i)   | Regulatory      Accounting |
|--------|-----------------|----------------------------|

----

|   |                                                                                                |   | 2009   |   |   | 2008   |   |
|--------|-----------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   |                                                                                                |   |   |   |   |   |   |
|   | 2009      Network Revenue to be Collected in 2011, IncludingInterest                                |   | $      | 973    |   |   | $      | - |   |
|   | 2009      Regional Cost-sharing Revenue to be Collected in 2011,  Including      Interest |   |   | 3,743  |   |   |   | - |   |
|   | Recognition      of Under-funded Postretirement Benefit Plan                                        |   |   | 3,044  |   |   |   | 8,252 |   |
|   | Total      Regulatory Assets                                                                        |   | $      | 7,760  |   |   | $      | 8,252 |   |

|   |                                                                                                                         |   | 2009   |   |   | 2008   |   |
|--------|------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|   |                                                                                                                         |   |   |   |   |   |   |
|   | 2007      Regional Cost-sharing Revenue Refunded in 2009, Including      Interest                                            |   | $      | -      |   |   | $      | 3,994 |   |
|   | 2008      Network Revenue Refunded in 2009, Including Interest                                                               |   |   | -      |   |   |   | 15,959 |   |
|   | 2008      Regional Cost-sharing Revenue to be Refunded in 2010,      Including  Interest                           |   |   | 854    |   |   |   | 817 |   |
|   | 2008      Network Revenue to be Refunded in 2010, Including Interest                                                         |   |   | 648    |   |   |   | - |   |
|   | Non-ARO      Removal Costs Recovered through Rates                                                                           |   |   | 58,405 |   |   |   | 63,745 |   |
|   | Cumulative      Difference between ARO Costs Recovered through Rates and  ARO Recognition      under FASC 410 |   |   | 1,329  |   |   |   | 1,505 |   |
|   | Total      Regulatory Liabilities                                                                                            |   | $      | 61,236 |   |   | $      | 86,020 |   |

|   |                                           |   | 2009         |   |   | 2008   |   |
|--------|------------------------------------------------|--------|--------------|--------|--------|--------|--------|
|   |                                           |   |         |   |   |   |   |
|   | Current      Portion of Regulatory Liabilities |   | $            | 1,502  |   |   | $      | 19,953 |   |
|   | Regulatory      Liabilities (long-term)        |   |    | 59,734 |   |   |   | 66,067 |   |
|   | Total      Regulatory Liabilities              |   | $            | 61,236 |   |   | $      | 86,020 |   |

----

|   | (j)   | Other      Assets |
|--------|-----------------|-------------------|

|   |                                 |   | 2009   |   |   | 2008   |   |
|--------|--------------------------------------|--------|--------|--------|--------|--------|--------|
|   |                                 |   |   |   |   |   |   |
|   | Unamortized      Debt Issuance Costs |   | $      | 6,619  |   |   | $      | 6,338 |   |
|   | Deferred      Project Costs          |   |   | 1,434  |   |   |   | 1,639 |   |
|   | Other                                |   |   | 478    |   |   |   | 211 |   |
|   | Total      Other Assets              |   | $      | 8,531  |   |   | $      | 8,188 |   |

|   |  (k)  | Impairment      of Long-lived Assets |
|--------|-----------------|--------------------------------------|

|   | (l)   | Income      Taxes |
|--------|-----------------|-------------------|

----

|   | (m)   | Use      of Estimates |
|--------|-----------------|-----------------------|

|   | (n)   | New      Accounting Pronouncements |
|--------|-----------------|------------------------------------|

|     | 1)  | The      period after the balance sheet date during which management of a reporting      entity should evaluate events or transactions that may occur for potential      recognition or disclosure in the financial  statements, |
|--------------------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 2) | The      circumstances under which an entity should recognize events or      transactions occurring after the balance sheet date in its financials      statements, and |
|--|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 3) | The      disclosures that an entity should make about events or transactions that      occurred after the balance sheetdate. |
|--|----|------------------------------------------------------------------------------------------------------------------------------|

----

|   |   |   |  | 1)    | Level      1, defined as directly observable inputs for identical assets or      liabilities, such as quoted prices in active  markets |
|--------|--------|--------|--|----------------------|----------------------------------------------------------------------------------------------------------------------------------------|

|   |   |   |  | 2) | Level      2, defined as directly or indirectly observable market inputs other than      quoted prices |
|--------|--------|--------|--|----|--------------------------------------------------------------------------------------------------------|

|   |   |   |  | 3)     | Level      3, defined as significant unobservable market inputs that are not able to      be corroborated by observable market data, therefore requiring an entity      to develop its own measurementassumptions. |
|--------|--------|--------|--|----------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)  | Benefits |
|-----------|----------|

|   |                                         |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|--------|----------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |                                         |   |   |   |   |   |   |   |   |   |
|   | Discount      Rate                           |   |   | 6.07   | %      |   |   | 5.90   | %      |   |   | 6.75 | % |
|   | Medical      Cost Trend:                     |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Initial      Range                           |   |   | 8.60   | %      |   |   | 9.00   | %      |   |   | 9.00 | % |
|   | Ultimate      Range                          |   |   | 5.00   | %      |   |   | 5.00   | %      |   |   | 5.00 | % |
|   | Long-term      Rate of Return on Plan Assets |   |   | 6.00   | %      |   |   | 6.00   | %      |   |   | 6.00 | % |

----

|   |                                             |   | 2009   |   |   | 2008   |   |   | 2007   |   |
|--------|--------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|   |                                             |   |   |   |   |   |   |   |   |   |
|   | Service      Cost                                |   | $      | 2,164  |   |   | $      | 1,260  |   |   | $ | 1,471 |   |
|   | Interest      Cost                               |   |   | 1,079  |   |   |   | 884    |   |   |   | 864 |   |
|   | Amortization      of Prior Service Cost          |   |   | 250    |   |   |   | 250    |   |   |   | 313 |   |
|   | Amortization      of Net Actuarial Loss / (Gain) |   |   | 142    |   |   |   | (1     | )      |   |   | 3 |   |
|   | Expected      Return on Plan Assets              |   |   | (827   | )      |   |   | (711   | )      |   |   | (683 | ) |
|   | Net      Periodic Postretirement Cost            |   | $      | 2,808  |   |   | $      | 1,682  |   |   | $ | 1,968 |   |

|                                                          |   | 2009   |   |   | 2008   |   |
|---------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
|                                                          |   |   |   |   |   |   |
| Prior      Service Cost                                       |   | $      | 688    |   |   | $      | 938 |   |
| Accumulated      Loss                                         |   |   | 2,356  |   |   |   | 7,314 |   |
| Regulatory      Asset for Amounts Recoverable in Future Rates |   | $      | 3,044  |   |   | $      | 8,252 |   |

|   |                                                                |   | One      Percent |   |   | One      Percent |   |
|--------|---------------------------------------------------------------------|--------|------------------|--------|--------|------------------|--------|
|   |                                                                |   | Increase         |   |   | Decrease         |   |
|   |                                                                |   |             |   |   |             |   |
|   | Effect      on Total of Service and Interest Cost Components        |   | $                | 898    |   |             | $      | (670 | ) |
|   | Effect      on Postretirement Benefit Obligation at the End of Year |   | $                | 4,253  |   |             | $      | (3,273 | ) |

----

|                                                            |   | 2009   |   |   | 2008   |   |
|-----------------------------------------------------------------|--------|--------|--------|--------|--------|--------|
| Change      in Projected Benefit Obligation:                    |   |   |   |   |   |   |
| Accumulated      Postretirement Benefit Obligation at January 1 |   | $      | 18,368 |   |   | $      | 13,144 |   |
| Service      Cost                                               |   |   | 2,164  |   |   |   | 1,260 |   |
| Interest      Cost                                              |   |   | 1,079  |   |   |   | 884 |   |
| Benefits      Paid                                              |   |   | (81    | )      |   |   | (47 | ) |
| Actuarial      Losses / (Gains)                                 |   |   | (2,591 | )      |   |   | 3,127 |   |
| Benefit      Obligation at December 31                          |   | $      | 18,939 |   |   | $      | 18,368 |   |
|                                                            |   |   |   |   |   |   |   |   |
| Change      in Plan Assets:                                     |   |   |   |   |   |   |   |   |
| Fair      Value of Plan Assets at January 1                     |   | $      | 9,587  |   |   | $      | 11,686 |   |
| Employer      Contributions                                     |   |   | 2,720  |   |   |   | 1,641 |   |
| Actual      Return on Plan Assets (Net of Expenses)             |   |   | 3,053  |   |   |   | (3,699 | ) |
| Net      Benefits Paid                                          |   |   | (73    | )      |   |   | (41 | ) |
| Fair      Value at December 31                                  |   | $      | 15,287 |   |   | $      | 9,587 |   |
|                                                            |   |   |   |   |   |   |   |   |
| Funded      Status at December 31                               |   | $      | (3,652 | )      |   | $      | (8,781 | ) |

| 2010      | $      | 153   |   |
|-----------|--------|-------|--------|
| 2011      |   | 232   |   |
| 2012      |   | 311   |   |
| 2013      |   | 396   |   |
| 2014      |   | 498   |   |
| 2015-2019 |   | 3,538 |   |
| Total     | $      | 5,128 |   |

----

|              |   | 2009   |   |   | 2008   |   |   | Target |   |   | Range  |   |
|-------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|              |   |   |   |   |   |   |   |   |   |   |   |   |
| U.S. Equities     |   |   | 50     | %      |   |   | 52     | %      |   |   | 50     | %      |   |   | +/- 5 | % |
| Non-U.S. Equities |   |   | 18     | %      |   |   | 10     | %      |   |   | 15     | %      |   |   | +/- 4 | % |
| Fixed Income      |   |   | 32     | %      |   |   | 38     | %      |   |   | 35     | %      |   |   | +/- 5 | % |
|              |   |   | 100    | %      |   |   | 100    | %      |   |   | 100    | %      |   |   |   |   |

| ·   | U.S.      Equities – Strategy of achieving long-term growth of capital and      dividend income through investing primarily in common stock of companies      in the U.S. stock market with the Wilshire 5000 Index (or a comparable      broad U.S. stock index) as the investment  benchmark. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Non-U.S.      Equities – Strategy of achieving long-term growth of capital and      dividend income through investing primarily in common stock of companies      in the non-U.S. stock markets with the Morgan Stanley Capital Index All      Country World ex-U.S Index (or a comparable broad non-U.S. stock index) as      the investment benchmark. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Fixed      Income – Strategy of achieving total return from current income and      capital appreciation by investing in a diversified portfolio of fixed      income securities with the Barclays Capital Aggregate Index (or a      comparable broad bond index) as the investment      benchmark. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level      1 | Inputs      to the valuation methodology are unadjusted quoted prices for identical      assets or liabilities in active markets that the Company’s postretirement      healthcare plans have the ability toaccess. |
|--------|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Level      2 | Inputs      to the valuation methodologyinclude: |
|--------|--------------|--------------------------------------------------|

| ·   | Quoted      prices for similar assets or liabilities in active  markets; |
|--------------------|--------------------------------------------------------------------------|

| ·   | Quoted      prices for identical or similar assets or liabilities in inactive      markets; |
|--------------------|---------------------------------------------------------------------------------------------|

| ·   | Inputs      other than quoted prices that are observable for the asset or      liability; |
|--------------------|-------------------------------------------------------------------------------------------|

----

| ·   | Inputs      that are derived principally from, or corroborated by, observable market      data by correlation or othermeans. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------|

|   | Level      3 | Inputs      to the valuation methodology are unobservable and significant to the fair      value measurement. |
|--------|--------------|---------------------------------------------------------------------------------------------------------------|

| ·   | Money      Market Fund:  Valued at cost plus accrued interest, which      approximates the fair value of the net asset value of the shares held by      the Plan at year end. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Mutual      Funds: Valued at the net asset value of shares held by the Plan at      year end. |
|--------------------|-----------------------------------------------------------------------------------------------|

|                                                            |   | Level      1 |   |   | Level      2 |   |   | Level      3 |   |   | Total  |   |
|-----------------------------------------------------------------|--------|--------------|--------|--------|--------------|--------|--------|--------------|--------|--------|--------|--------|
|                                                            |   |         |   |   |         |   |   |         |   |   |   |   |
|            U.S. Equity Mutual Funds    |   | $            | 7,668  |   |         | $      | -      |         |   | $      | -      |   |   | $ | 7,668 |   |
|            Non-U.S. Equity Mutual Fund |   |         | 2,698  |   |         |   | -      |         |   |   | -      |   |   |   | 2,698 |   |
|            Fixed Income Mutual Funds   |   |         | 4,138  |   |         |   | -      |         |   |   | -      |   |   |   | 4,138 |    |
|            Money Market Fund           |   |         | -      |   |         |   | 783    |         |   |   | -      |   |   |   | 783 |   |
|            Total                       |   | $            | 14,504 |   |         | $      | 783    |         |   | $      | -      |   |   | $ | 15,287 |   |

----

| (3)   | Members’      Equity |
|-----------------|----------------------------|

----

| (4)   | Debt |
|-----------------|------|

| (a)   | Credit      Facilities |
|-----------------|------------------------|

| (b)   | Commercial      Paper |
|-----------------|-----------------------|

----

| (c)   | Long-term      Debt |
|-----------------|---------------------|

|                                                                                                                                |   | 2009   |      |   | 2008   |   |
|-------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|
|                                                                                                                                |   |   |      |   |   |   |
| Senior      Notes at stated rate of 7.125%, due March 15, 2011                                                                      |   | $      | 300,000   |   |   | $      | 300,000 |   |
| Unamortized      Discount                                                                                                           |   |   | (367      | )      |   |   | (649 | ) |
|                                                                                                                                |   |   | 299,633   |   |   |   | 299,351 |   |
| Senior      Notes at stated rate of 7.02%, due August 31, 2032                                                                      |   |   | 50,000    |   |   |   | 50,000 |   |
| Senior      Notes at stated rate of 6.79%, due on dates ranging from    August      31, 2024 to August 31, 2043 |   |   | 100,000   |   |   |   | 100,000 |   |
| Senior      Notes at stated rate of 4.992%, due April 15, 2015                                                                      |   |   | 100,000   |   |   |   | 100,000 |   |
| Senior      Notes at stated rate of 5.59%, due December 1, 2035                                                                     |   |   | 100,000   |   |   |   | 100,000 |   |
| Senior      Notes at stated rate of 5.91%, due August 1, 2037                                                                       |   |   | 250,000   |   |   |   | 250,000 |   |
| Senior      Notes at stated rate of 5.58%, due April 30, 2018                                                                       |   |   | 200,000   |   |   |   | 200,000 |   |
| Senior      Notes at stated rate of 5.40%, due May 15, 2019                                                                         |   |   | 150,000   |   |   |   | - |   |
| Business      Note at stated rate of 5.75%, due May 1, 2011                                                                         |   |   | 10,000    |   |   |   | 10,000 |   |
| Other      Long-term Notes Payable                                                                                                  |   |   | 10        |   |   |   | 46 |   |
| Net      Long-term Debt                                                                                                             |   | $      | 1,259,643 |   |   | $      | 1,109,397 |   |

----

| (5) | Fair      Value of FinancialInstruments |
|-----|-----------------------------------------|

|   |                      |   | 2009   |    |   | 2008   |   |
|--------|---------------------------|--------|--------|---------|--------|--------|--------|
|   |                      |   |   |    |   |   |   |
|   | Carrying      amount      |   | $      | 1,259.6 |   |   | $      | 1,109.4 |   |
|   |                      |   |   |    |   |   |   |   |   |
|   | Estimated      fair value |   | $      | 1,318.9 |   |   | $      | 998.9 |   |

|  (6) | Income      Taxes |  |   |
|-----------|-------------------|--|--------|

----

|                              |   | 2009   |   |   | 2008   |   |
|-----------------------------------|--------|--------|--------|--------|--------|--------|
|                              |   |   |   |   |   |   |
| Deferred      Tax Liabilities     |   | $      | 4,085  |   |   | $      | 3,539 |   |
| Deferred      Tax Assets          |   |   | (3,036 | )      |   |   | (3,035 | ) |
| Net      Deferred Tax Liabilities |   | $      | 1,049  |   |   | $      | 504 |   |

| (7)   | Commitments      and Contingencies |
|-----------------|------------------------------------|

| (a)   | Operating      Leases |
|-----------------|-----------------------|

----

| 2010       |   | $      | 6.7  |   |
|------------|--------|--------|------|--------|
| 2011       |   |   | 5.9  |   |
| 2012       |   |   | 5.9  |   |
| 2013       |   |   | 5.6  |   |
| 2014       |   |   | 5.6  |   |
| Thereafter |   |   | 63.8 |   |
|       |   | $      | 93.5 |   |

| 2010       |   | $      | 4.9  |   |
|------------|--------|--------|------|--------|
| 2010       |   |   | 4.9  |   |
| 2011       |   |   | 4.9  |   |
| 2012       |   |   | 5.0  |   |
| 2013       |   |   | 5.0  |   |
| Thereafter |   |   | 63.0 |   |
|       |   | $      | 87.7 |   |

| (b)   | MISO      Revenue Distribution |
|-----------------|--------------------------------|

| (c)   | Interconnection      Agreements |
|-----------------|---------------------------------|

----

| (d)   | Potential      Adverse Legal Proceedings |
|-----------------|------------------------------------------|

| (e)   | Environmental  Matters |
|-----------------|----------------------------------|

|   | In      the future, the Company may become party to proceedings pursuant to      federal and/or state laws or regulations related to the discharge of      materials into the environment. Such proceedings may involve property the      Company acquired from the contributing utilities. Pursuant to the asset      purchase agreements executed with the contributing utilities, dated      January 1, 2001, the contributing utilities will indemnify the Company for      twenty-five years from such date for any environmental liability resulting      from the previous ownership of theproperty. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | The      Company has an agreement with the Wisconsin Department of Natural      Resources that describes the Company’s responsibilities for soil      management should it identify lead-based paint on its structures and      should soil lead levels in the vicinity of structures being removed where      soil is being disturbed exceed applicable regulatory      limits.  The timing and amounts related to potential future      lead-based paint remediation costs are presently unknown.  If      sufficient information becomes available in the future, the Company will,      at that time, recognize a liability.  The Company expects that      any remediation costs for which it is not reimbursed pursuant to the asset      purchase agreements will be collected in future  rates. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | In      December 2008, the Company reported to the U.S. Environmental Protection      Agency (“EPA”) known non-compliance matters and potential violations      involving PCB storage and disposal regulations under the federal Toxic      Substances Control Act.  None of these potential violations      resulted in a discharge of PCB’s into the environment.  The      Company identified the potential violations during a review conducted      pursuant to its internal policies and the potential violations were      reported in accordance with the EPA’s Audit Policy.  The Company      signed a negotiated Corporate Audit Agreement with the EPA and conducted      an audit pursuant to that agreement.  The audit is now complete      and there were no significant findings.  The final audit report      was submitted to the EPA in December 2009, and the Company is now awaiting      a response from the EPA.  The Company is not able to estimate      the cost of potential enforcement actions, if any, that the EPA may      issue. |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | There      is increased awareness of the potential effect of greenhouse gas emissions      on global climate change and, as a result, legislation is continually      being introduced in Congress and state legislatures and litigation is      being initiated based on the potential effects of greenhouse gas      emissions.  Certain substation equipment on the Company’s      transmission system contains a greenhouse gas called sulfur hexafluoride      (“SF6”), the use of which is standard in electrical circuit breakers and      buses in the utility industry.  On April 17, 2009, the EPA      issued a proposed rule that, if adopted, would state that the atmospheric      concentrations of certain greenhouse gases, including SF6, endanger the      public health and welfare within the meaning of section 202(a) of the      Clean Air Act.  The proposed rule, along with any legislation      passed by Congress, may result in future regulation of greenhouse gases      such as SF6.  The potential impact on the Company’s financial      position, results from operations or cash flows of such regulation is not      known; however, the Company would seek recovery of the cost of compliance      with any such measures through its rateformula. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (8)  | Related      Party Transactions |
|-----------|---------------------------------|

| (a)   | Asset      Transfers and MembershipInterests |
|-----------------|----------------------------------------------|

|   | Member                 |   |  Date      of Transfer |   | Net      Book Value |   |
|--------|------------------------|--------|-----------------------------|--------|---------------------|--------|
|   |                   |   |                        |   |                |   |
|   | City      of Stoughton |   |  January      2007     |   | $                   | 0.2    |   |
|   |                   |   |                        |   |                |   |   |
|   | MGE      Transco LLC   |   |  February      2007    |   |                | 1.4    |   |
|   |                   |   |                        |   |                |   |   |
|   |  Total            |   |                        |   | $                   | 1.6    |   |

----

| (b)   | Operations      & Maintenance and Transitional Services    Agreements |
|-----------------|---------------------------------------------------------------------------|

| (c)   | Transmission      Service |
|-----------------|---------------------------|

| (d)   | Agreement      with Alliant Energy |
|-----------------|------------------------------------|

----

| (e)   | Marshfield      Lease |
|-----------------|-----------------------|

| (f)   | Management      Inc. |
|-----------------|----------------------|

| (g)   | Interconnection      Agreements |
|-----------------|---------------------------------|

----

| (9)   | Quarterly      Financial Information(unaudited) |
|-----------------|-------------------------------------------------|

|   | (In      Thousands)                        |   | Three      Months Ended |    |   |         |   |
|--------|--------------------------------------------|--------|-------------------------|---------|--------|--------------|--------|
|   |                                       |   | 2009                    |    |   |         |   |
|   |                                       |   | March      31           |    |   | June      30 |   |   | September      30 |   |   | December      31 |   |   | Total |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |
|   | Operating      Revenues                    |   | $                       | 126,232 |   |         | $      | 129,016 |   |   | $ | 132,288 |   |   | $ | 133,989 |   |   | $ | 521,525 |   |
|   | Operating      Expenses                    |   |                    | 56,955  |   |         |   | 56,617 |   |   |   | 58,743 |   |   |   | 58,001 |   |   |   | 230,316 |   |
|   | Operating      Income                      |   |                    | 69,277  |   |         |   | 72,399 |   |   |   | 73,545 |   |   |   | 75,988 |   |   |   | 291,209 |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Other      Income (Expense)                |   |                    | (63     | )      |         |   | (66 | ) |   |   | (147 | ) |   |   | (345 | ) |   |   | (621 | ) |
|   | Interest      Expense, Net                 |   |                    | 18,265  |   |         |   | 19,653 |   |   |   | 19,595 |   |   |   | 19,710 |   |   |   | 77,223 |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Earnings      Before Members' Income Taxes |   | $                       | 50,949  |   |         | $      | 52,680 |   |   | $ | 53,803 |   |   | $ | 55,933 |   |   | $ | 213,365 |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   |                                       |   |                    |         |   |         |   |  2008 |   |   |   |   |   |   |   |   |   |
|   |                                       |   | March      31           |    |   | June      30 |   |   | September      30 |   |   | December      31 |   |   | Total |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Operating      Revenues                    |   | $                       | 109,092 |   |         | $      | 116,084 |   |   | $ | 119,955 |   |   | $ | 121,440 |   |   | $ | 466,571 |   |
|   | Operating      Expenses                    |   |                    | 50,916  |   |         |   | 53,244 |   |   |   | 52,107 |   |   |   | 52,693 |   |   |   | 208,960 |   |
|   | Operating      Income                      |   |                    | 58,176  |   |         |   | 62,840 |   |   |   | 67,848 |   |   |   | 68,747 |   |   |   | 257,611 |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Other      Income (Expense)                |   |                    | (148    | )      |         |   | 2 |   |   |   | (169 | ) |   |   | (199 | ) |   |   | (514 | ) |
|   | Interest      Expense, Net                 |   |                    | 15,635  |   |         |   | 17,122 |   |   |   | 18,037 |   |   |   | 18,258 |   |   |   | 69,052 |   |
|   |                                       |   |                    |    |   |         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   | Earnings      Before Members' Income Taxes |   | $                       | 42,393  |   |         | $      | 45,720 |   |   | $ | 49,642 |   |   | $ | 50,290 |   |   | $ | 188,045 |   |

----