UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C. 20549





FORM
10-Q





þ
            QUARTERLY
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
the Quarterly Period Ended June 30, 2009





o
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


Commission
file number: 333-142860





NACEL
ENERGY CORPORATION





600
17th
Street, Suite 2800S


Denver,
Colorado 80202


Telephone
(720) 204-1150





Incorporated
      in Wyoming
              
              IRS
      ID# 20-4315791





Check
whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to the filing requirements for the past
90 days.     Yes þ  
No o





Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).  The registrant has not been
phased into the Interactive Data reporting system.


Yes o No þ





Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.





Large
      accelerated filer o
            Accelerated
      filer oNon-accelerated
      filer o (Do
      not check if a smaller reporting company)
            Smaller
      reporting
              company
      þ





Check
whether the issuer is a shell Company (as defined in Rule 12b-2 of the
Exchange Act).


Yes o No þ





Shares of
common stock outstanding on August 13, 2009: 21,876,000












NACEL
ENERGY CORPORATION





INDEX





FOR THE
QUARTERLY PERIOD ENDED JUNE 30, 2009





PART
      I. FINANCIAL INFORMATION
                
                
                3Item
      1.  Financial Statements
                
                
                3Consolidated
      Balance Sheets
                
                
                3Consolidated
      Statements of Expenses
                
                
                4Consolidated
      Statements of Cash Flows
                
                
                5Notes
      to Consolidated Financial Statements
                
                
                6Item
      2.  Management’s Discussion and Analysis or Plan of
      Operation
                
                
                8Item
      3.  Quantitative and Qualitative Disclosures About Market
      Risk
                
                
                10Item
      4.  Controls and Procedures
                
                
                11PART
      II. OTHER INFORMATION
                
                
                11Item
      1.  Legal Proceedings
                
                
                11Item
      2.  Unregistered Sales of Equity Securities and Use of
      Proceeds
                
                
                11Item
      3.  Defaults Upon Senior Securities
                
                
                11Item
      4.  Submission of Matters to a Vote of Security
      Holders
                
                
                11Item
      5.  Other Information
                
                
                11Item
      6.  Exhibits
                
                
                12


2





PART I. FINANCIAL
INFORMATION




Item
1.  Financial Statements





Nacel
Energy Corporation


(A
Development Stage Company)


Consolidated
Balance Sheets


(Unaudited)





June 30,
                                        
                                        
                                        March 31,2009
                                        
                                        
                                        2009ASSETSCurrent
      AssetsCash
                                        
                                        $
                                        189,218
                                        
                                        
                                        $
                                        564,677Other
      current assets
                                        
                                        
                                        64,943
                                        
                                        
                                        
                                        -Total
      current assets
                                        
                                        
                                        254,161
                                        
                                        
                                        
                                        564,677Property,
      plant and equipment, net of accumulated depreciation of $5,764 and $1,682,
      respectively
                                        
                                        
                                        162,413
                                        
                                        
                                        
                                        166,495TOTAL
      ASSETS
                                        
                                        $
                                        416,574
                                        
                                        
                                        $
                                        731,172LIABILITIES
      AND STOCKHOLDERS' EQUITY (DEFICIT)Current
      LiabilitiesAccounts
      payable
                                        
                                        $
                                        22,183
                                        
                                        
                                        $
                                        7,537Accrued
      interest
                                        
                                        
                                        -
                                        
                                        
                                        
                                        3,894Total
      current liabilities
                                        
                                        
                                        22,183
                                        
                                        
                                        
                                        11,431Shareholder
      line of credit
                                        
                                        
                                        400,000
                                        
                                        
                                        
                                        250,000Total
      liabilities
                                        
                                        
                                        422,183
                                        
                                        
                                        
                                        261,431Stockholders'
      equityCommon
      stock of $.001 par value. Authorized 50,000,000 issued 21,801,000 at June
      30, and 21,786,000 at March 31, 2009
                                        
                                        
                                        21,801
                                        
                                        
                                        
                                        21,786Additional
      paid-in capital
                                        
                                        
                                        3,655,171
                                        
                                        
                                        
                                        3,636,886Deficit
      accumulated during the development stage
                                        
                                        
                                        (3,682,581
                                        )
                                        
                                        
                                        (3,188,931
                                        )Total
      stockholders' equity (deficit)
                                        
                                        
                                        (5,609
                                        )
                                        
                                        
                                        469,741TOTAL
      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                                        
                                        $
                                        416,574
                                        
                                        
                                        $
                                        731,172





See
accompanying notes to consolidated financial statements


3





Nacel
Energy Corporation


(
A Development Stage Company)


Consolidated
Statements of Expenses


(Unaudited)


Three
months ended June 30, 2009 and 2008 and the period


from
February 7, 2006 (Inception) through June 30, 2009





Three Months Ended
                                          June 30,
                                        
                                        
                                        Inception
                                          through2009
                                        
                                        
                                        2008
                                        
                                        
                                        June 30,
                                          2009General
      and administrative expenses
                                        
                                        $
                                        202,454
                                        
                                        
                                        $
                                        1,304,673
                                        
                                        
                                        $
                                        2,195,296Wind
      projects donated by related party
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        490,000Wind
      project development costs
                                        
                                        
                                        287,661
                                        
                                        
                                        
                                        46,929
                                        
                                        
                                        
                                        974,429Net
      loss from operations
                                        
                                        
                                        490,115
                                        
                                        
                                        
                                        1,351,602
                                        
                                        
                                        
                                        3,659,725Other
      (income) expenseInterest
      expense
                                        
                                        
                                        3,535
                                        
                                        
                                        
                                        2,630
                                        
                                        
                                        
                                        27,123Interest
      income
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (3,848
                                        )Other
      income
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (279
                                        )
                                        
                                        
                                        (419
                                        )Total
      other (income) expense
                                        
                                        
                                        3,535
                                        
                                        
                                        
                                        2,351
                                        
                                        
                                        
                                        22,856Net
      loss
                                        
                                        $
                                        (493,650
                                        )
                                        
                                        $
                                        (1,353,953
                                        )
                                        
                                        $
                                        (3,682,581
                                        )Basic
      and diluted net loss per share
                                        
                                        $
                                        (0.02
                                        )
                                        
                                        $
                                        (0.06
                                        )
                                        
                                        
                                        N/ABasic
      and diluted weighted average common shares outstanding
                                        
                                        
                                        21,793,747
                                        
                                        
                                        
                                        21,487,758
                                        
                                        
                                        
                                        N/A




See
accompanying notes to consolidated financial statements


4





Nacel
Energy Corporation


(A
Development Stage Company)


Consolidated
Statements of Cash Flows


(Unaudited)


Three
months ended June 30, 2009 and 2008 and the period


from
February 7, 2006 (Inception) through June 30, 2009





InceptionThree Months Ended June30,
                                        
                                        
                                        through2009
                                        
                                        
                                        2008
                                        
                                        
                                        June 30,
                                          2009CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                                        
                                        $
                                        (493,650
                                        )
                                        
                                        $
                                        (1,353,953
                                        )
                                        
                                        $
                                        (3,682,581
                                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Depreciation
                                        
                                        
                                        4,082
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        5,764Stock
      for services
                                        
                                        
                                        18,300
                                        
                                        
                                        
                                        62,240
                                        
                                        
                                        
                                        176,490Wind
      projects donated by related party
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        490,000Imputed
      interest
                                        
                                        
                                        -
                                        
                                        
                                        
                                        2,630
                                        
                                        
                                        
                                        15,725Stock
      issued for executive compensation
                                        
                                        
                                        -
                                        
                                        
                                        
                                        1,007,500
                                        
                                        
                                        
                                        1,007,500Changes
      in:Prepaid
      and other current assets
                                        
                                        
                                        (64,943
                                        )
                                        
                                        
                                        1,277
                                        
                                        
                                        
                                        (64,943
                                        )Accounts
      payable
                                        
                                        
                                        14,646
                                        
                                        
                                        
                                        (78,660
                                        )
                                        
                                        
                                        22,183Accrued
      interest
                                        
                                        
                                        (3,894
                                        )
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Net
      Cash Used in Operating Activities
                                        
                                        
                                        (525,459
                                        )
                                        
                                        
                                        (358,966
                                        )
                                        
                                        
                                        (2,029,862
                                        )CASH
      FLOWS FROM INVESTING ACTIVITIESPurchase
      of fixed assets
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (42,564)
                                        
                                        
                                        
                                        (168,177
                                        )Net
      Cash Used in Investing Activities
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (42,564)
                                        
                                        
                                        
                                        (168,177
                                        )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from shareholder line of credit
                                        
                                        
                                        150,000
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        397,257Proceeds
      from sale of common stock
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        790,000Proceeds
      from exercise of warrant
                                        
                                        
                                        -
                                        
                                        
                                        
                                        690,373
                                        
                                        
                                        
                                        1,200,000Net
      cash Provided by Financing Activities
                                        
                                        
                                        150,000
                                        
                                        
                                        
                                        690,373
                                        
                                        
                                        
                                        2,387,257NET
      INCREASE IN CASH
                                        
                                        
                                        (375,459
                                        )
                                        
                                        
                                        288,843
                                        
                                        
                                        
                                        189,218CASH
      AT BEGINNING OF PERIOD
                                        
                                        
                                        564,677
                                        
                                        
                                        
                                        380,567
                                        
                                        
                                        
                                        -CASH
      AT END OF PERIOD
                                        
                                        $
                                        189,218
                                        
                                        
                                        $
                                        669,410
                                        
                                        
                                        $
                                        189,218Non-cash
      investing and financing activities:Subscription
      receivable
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONCASH
      PAID FOR:Interest
                                        
                                        $
                                        7,429
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        11,398Income
      taxes
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -
                                        
                                        
                                        $
                                        -





See
accompanying notes to consolidated financial statements


5





NACEL
ENERGY CORPORATION


(A
Development Stage Company)


NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS


(Unaudited)





NOTE
1 - BASIS OF PRESENTATION




The
unaudited interim financial statements included herein have been prepared by the
Company in accordance with accounting principles generally accepted in the
United States of America and the rules of the Securities and Exchange
Commission. The consolidated financial statements include the accounts of Nacel
Energy and its wholly-owned subsidiary, 0758817 BC Ltd. Significant
inter-company accounts and transactions have been eliminated.




We
suggest that these interim financial statements be read in conjunction with the
audited financial statements and notes thereto included in our Form 10-K for the
year ended March 31, 2009, as filed with the SEC. We believe that all
adjustments, consisting of normal recurring adjustments, necessary for a fair
presentation of financial position and the results of operations for the interim
periods presented have been reflected herein and that the disclosures made are
adequate to make the information not misleading.  The results of
operations for interim periods are not necessarily indicative of the results to
be expected for the full year.  Notes to the financial statements
which would substantially duplicate the disclosure contained in the audited
financial statements for the most recent fiscal year as reported in Form 10-K
have been omitted.





Reclassifications.




Certain
prior year amounts have been reclassified to conform with the current year
presentation.





NOTE
2 – GOING CONCERN




The
accompanying consolidated financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business. Nacel Energy has incurred material
recurring losses from operations.  Since inception, Nacel Energy has
incurred losses of approximately $3.68 million. For the three months ended June
30, 2009, Nacel Energy sustained a loss of $493,650. In addition, Nacel Energy
is experiencing a continuing operating cash flow deficiency. These factors,
among others, indicate that Nacel Energy may be unable to continue as a going
concern for a reasonable period of time.





Nacel
Energy plans to continue to pursue additional equity financing and/or debt
financing while managing cash flow in an effort to provide funds and cash flow
to meet its obligations on a timely basis and to support wind project
development activities.





The
consolidated financial statements do not contain any adjustments to reflect the
possible future effects on the classification of assets or the amounts and
classification of liability that may result should Nacel Energy be unable to
continue as a going concern.





NOTE
3 - SHAREHOLDER LINE OF CREDIT




At
inception, Nacel Energy entered into an agreement with Mr. Fleming with respect
to an unsecured, no-interest $250,000 line of credit repayable at an unspecified
future date.




Effective
July 1, 2008, Nacel Energy agreed to new terms for the line of credit, which
provided for simple interest to be added to the outstanding balance of the line
of credit, once each quarter, based upon the current 3 month LIBOR plus 500
basis points.  Prior to that date, interest on the line of credit was
imputed to paid-in capital based on the market rate of interest for the
period.





On June
30, 2009, Mr. Fleming loaned an additional $150,000 on the line of
credit.  On July 1, 2009, we ratified the terms for the line of credit
to allow an increase in the balance to $400,000, which provides for simple
interest of 8% per annum on the outstanding balance with interest payments
beginning October 1, 2009.  The line of credit is due July 1,
2010.


6





For the
three months ended June 30, 2009, interest of $3,535 was accrued and
paid.  For the three months ended June 30, 2008, interest of $2,630
was imputed to paid-in capital.




As of
June 30, 2009, the $400,000 line of credit extended by the director was fully
drawn upon, and no further amounts are available for borrowing unless the loan
agreement is re-negotiated, of which there is no certainty.





NOTE
4 - EQUITY TRANSACTIONS




During
the three months ended June 30, 2009, the Company issued 15,000 shares of
restricted common stock to Renergix Wind LLC, our project development
consultants, for services related to the achievement of a wind project
development milestone as specified in our joint development
agreement.  We expensed
$18,300 during the quarter related to this stock issuance





NOTE 5 – SUBSEQUENT
EVENTS




Through
August 13, 2009 the following occurred:





On July
22, 2009, Nacel issued 75,000 restricted shares of common stock to Renergix Wind
LLC, our project development consultants, for services related to the
achievement of wind project development milestones as specified in our joint
development agreement.





In July
2009, Nacel executed a new loan with a lender in the amount of $250,000, which
provides for simple interest of 10% to be paid upon the outstanding
balance.  The note is due on demand and is unsecured.


7





Item
2.  Management’s Discussion and Analysis or Plan of
Operation





At the
directive of the Securities and Exchange Commission to use “plain English” in
its public filings, the Company will use such terms as “we”, “our” and “us” in
place of Nacel Energy Corporation or “the Company.” When such terms are used in
this manner throughout this document they are in reference only to the
corporation, Nacel Energy Corporation and its subsidiary, and are not used in
reference to the board of directors, corporate officers, management, or any
individual employee or group of employees.





Forward-Looking
Statements




This Form
10-Q includes “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E
of the Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this Form 10-Q, including, without
limitation, the statements under both “Notes to Consolidated Financial
Statements” and “Item 2. Management’s Discussion and Analysis or Plan of
Operation” located elsewhere herein regarding the Company’s financial position
and liquidity, the amount of and its ability to make debt service payments, its
strategies, financial instruments, and other matters, are forward-looking
statements. Although we believe that the expectations reflected in such
forward-looking statements are reasonable, we can give no assurance that such
expectations will prove to have been correct. Important factors that could cause
actual results to differ materially from our expectations are disclosed in this
Form 10-Q.




History




Nacel
Energy Corporation is a Wyoming corporation incorporated on February 7, 2006,
with our principal executive office located at 600 17th Street,
Suite 2800S, Denver, Colorado 80202. We are a development stage wind power
generation company engaged in the business of developing wind power generation
facilities from “green field” (or blank state) up to and including operation.
Our domestic development efforts are primarily focused upon wind power
generation facilities in the 10 MW to 30 MW range. We have not ruled out the
possibility of larger projects including internationally.


.


Current
Operations





As of
June 30, 2009, we had four (4) wind energy projects totaling 80 MW or more of
potential capacity located on approximately 4,350 acres of land located in the
Panhandle area of Texas.  The status of each of our development stage
wind energy projects were described in our Annual Report on Form 10-K for the
fiscal year ended March 31, 2009, filed with the Commission. We are also
actively engaged in efforts to locate and evaluate other “green field” sites for
development of additional wind power generation facilities. We do not have any
wind energy projects in operation currently and it is estimated that it will be
up to 18 to 24 months before any of our projects may become operational, which
requires that we obtain substantial additional financing and/or equity. There
are no assurances that we will be able to obtain any additional financing and/or
equity and, even if obtained, that any of our wind power generation facilities
will ultimately become operational or generate sufficient revenues to be
profitable.




During
the three month period ending June 30, 2009, the following activities have
occurred with respect to our four (4) wind power generations
projects:





·           In
June, 2009, we filed an Application for Interconnection with Southwestern Public
Service Company, a subsidiary of XCEL Energy, for our 30 MW Blue Creek wind
power project located in Moore County, Texas. For further information, see our
Current Report on Form 8-K dated June 18, 2009, filed with the
Commission.


8





·           We
are engaged in completing necessary procedures to allow the filing of additional
applications for interconnection with other public utilities with respect to a
couple of our other wind power projects.





·           We
are engaged in efforts to enter into additional joint development agreements
with certain landowners which would, upon execution, result in our obtaining two
(2) additional wind power projects located in Texas and/or Arizona.





·           We are
continuing to collect wind data generated from the meteorological towers
installed at our various project sites and to further refine our wind energy
studies in preparation for structuring construction and project financing for
our wind power projects.





In
addition to the foregoing, we also assess our wind power project development
business regularly with regard to the need for capital equipment. During the
first three months of the period ending June 30, 2009, we acquired no additional
capital equipment.





Plan
of Operation





Since our
inception, we have been a development stage company and, accordingly, have
incurred losses from our operations. For the three months ended June 30, 2009,
we incurred net losses of $493,650 and have an accumulated deficit since
inception of $3,682,581. We currently have no revenues. The potential future
revenues from our wind power generation projects, if any, will not be generated
until after the end of our current fiscal year, March 31, 2010, and will require
the expenditure of substantial additional capital.





For the
foreseeable future, our operating plan is dependent upon both the ability to
conserve existing cash resources and the ability to obtain additional capital
through equity financing and/or debt financing in an effort to provide funds and
cash flow to meet our obligations on a timely basis and to support wind project
development activities. In the event that we are unable to conserve existing
cash resources and/or obtain the additional and necessary capital to pursue our
wind power generation development projects, we may have to cease or
significantly curtail our operations. This could materially impact our ability
to continue operations.





Liquidity
and Capital Resources





The
accompanying financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and satisfaction of liabilities in
the normal course of business.  Since our inception, we have been a
development stage company and, accordingly, have incurred losses from our
operations. For the three months ended June 30, 2009, we incurred net losses of
$493,650 and have an accumulated deficit since inception of $3,682,581. We
currently have no revenues. The potential future revenues from our wind power
generation projects, if any, will not be generated until after the end of our
current fiscal year, March 31, 2010, and will require the expenditure of
substantial additional capital. In addition, our shareholder line of credit in
the amount of $400,000 is due and payable on July 1, 2010, unless we are able to
obtain a further extension. These factors, among others, indicate that we may be
unable to continue as a going concern for a reasonable period of
time.




As of
June 30, 2009, we had cash of $189,218 and working capital of $231,978. This
compares to cash of $564,677 and working capital of $553,246 at March 31, 2009.
Based on commitments arising from the agreement with Regenerix Wind LLC, our
project development consultants, and other general and administrative expenses,
we anticipate that that operating expenses during each succeeding quarter will
be, at a minimum, approximately $200,000. This amount does not include any
capital requirements for our wind energy projects. Based on the foregoing and
additional debt financing obtained after June 30, 2009, we believe our cash
resources will be sufficient to finance our operations through December 31,
2009, being the end of our third quarter of our fiscal year. However, sometime
immediately thereafter, we believe that it will be necessary to raise additional
equity financing and/or debt financing. There are no assurances that we will be
able to obtain any additional financing and/or equity and, even if obtained,
that such financing will be in a sufficient amount to be able to continue
operations for a sufficient period until one or more of our wind power
generation facilities become operational or until we can generate sufficient
revenues to be profitable.


9





As of
March 31, 2009, our $250,000 shareholder line of credit was fully borrowed,
thereby leaving no additional amounts available for future borrowing. However,
on June 30, 2009, this line of credit was amended to increase from $250,000 up
to $400,000 the amount which we could borrow from the
shareholder.  The amended credit line provides for simple interest at
8% per annum on the outstanding balance, payable on the first day of the month
after each calendar quarter. The first payment under the amended credit line is
due on October 1. 2009. The unpaid principal amount and all accrued interest is
due and payable in full on July 1, 2010. As of June 30, 2009, we had borrowed
the entire $400,000 under this credit facility, which again leaves no additional
amounts available for future borrowing. There are no assurances that the
shareholder will agree to further extend the due date for repayment of the line
of credit balance or otherwise change any of the repayment terms. Accordingly,
if the repayment date of the line of credit remains unchanged, this could have a
material impact on the future liquidity of the Company and its future
operations.




In July,
2009, Nacel executed a new loan with a lender in the amount of $250,000, which
provides for simple interest of 10% to be paid in monthly installments of
interest only commencing on July 1, 2009 and the first day of each month
thereafter until the lender provides Nacel with written notice of demand for
payment. Upon such notice, the balance owing under this loan will be due and
payable within 15 days from such notice. The loan is unsecured.


Results of
Operations





Three
Months Ended June 30, 2009 compared to the Three Months Ended June 30,
2008





Overview.The net loss for the three months ended June 30, 2009 (“2009 Period”) was
$493,650 compared to a net loss of $1,353,953 for the three months ended June
30, 2008 (“2008 Period”), a decrease of $860,303.





Revenues.
We generated no revenues from our operations for the three months ended June 30,
2009 or for the three months ended June 30, 2008. Our operations have focused
upon various business planning and wind power project development activities
since inception, and have not generated any revenues.  Accordingly, we
are considered to be in the development stage as defined in Financial Accounting
Standards Board Statement No. 7.





Expenses.  Our
operating expenses were $490,115 for the 2009 Period compared to operating
expenses of $1,351,602 reported for the 2008 Period, a decrease of $861,487.
This decrease in operating expenses is primarily attributable to the issuance of
250,000 shares of our common stock to Mr. Daniel Leach, our former President and
CEO, as compensation during the 2008 Period, which shares were recorded at their
fair value of $1,007,500. Offsetting the foregoing amount was an increase of
$240,732 in wind project development costs for the 2009 Period as compared to
the 2008 Period.





Off
Balance Sheet Transactions, Arrangements, or Obligations.





We have
no material off balance sheet transactions, arrangements or
obligations.




Item
3. Quantitative and Qualitative Disclosures About Market Risk.




As a
“smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this item.


10





Item
4.  Controls and Procedures





Evaluation of Disclosure
Controls and Procedures





As of the
end of the period covered by this report on Form 10-Q, our Chief Executive
Officer and our Chief Financial Officer performed an evaluation of the
effectiveness of our disclosure controls and procedures as defined in Rule
13a-15(e) or Rule 15d-15(e) under the Exchange Act. Based on that evaluation,
our Chief Executive Officer and our Chief Financial Officer concluded that as of
the end of the period covered by this report on Form 10-Q, our disclosure
controls and procedures were effective in timely recording, processing,
summarizing and reporting material information required to be included in our
Exchange Act filings.





Changes in Internal Control
Over Financial Reporting





There
have been no changes in our internal control over financial reporting that
occurred during the quarter ended June 30, 2009 that have materially affected,
or were reasonably likely to materially affect, our internal control over
financial reporting.





PART
II. OTHER INFORMATION




Item
1.  Legal Proceedings




We know
of no material, active or pending legal proceedings against our company, nor are
we involved as a plaintiff in any material proceeding or pending litigation.
There are no proceedings in which any of our directors, officers or affiliates,
or any registered or beneficial shareholder, is an adverse party or has a
material interest adverse to our interest.





Item
1A.  Risk Factors





As
a “smaller reporting company” (as defined by §229.10(f)(1)), we are not required
to provide the information required by this item.




Item
2.  Unregistered Sales of Equity Securities and Use of
Proceeds





(a)    Unregistered
Sales of Equity Securities.





During
the three month period ending June 30, 2009, we issued 15,000 shares of
restricted common stock to Renergix Wind LLC, our project development
consultants, upon a specified milestone being achieved under the terms of a
Joint Development Agreement with respect to our Blue Creek wind power project.
For further details concerning the issuance of these shares, see our Form 8-K
dated June 18, 2009 as filed with the SEC.





Item
3.  Defaults Upon Senior Securities





None





Item
4.  Submission of Matters to a Vote of Security Holders




The
Registrant did not submit any matters to a vote of its security holders during
the three-months ended June 30, 2009.




Item
5.  Other Information




None


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Item
6.  Exhibits




a)
Exhibits.





Exhibit No.
                
                Document31.1
                
                Certification
      Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Brian. M.
      Lavery, President, Principal Executive Officer)31.2
                
                Certification
      Pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 (Murray
      Fleming, Principal Accounting Officer)32.1
                
                Certification
      Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (Brian. M. Lavery, President, Principal
      Executive Officer)32.2
                
                Certification
      Pursuant to 18 U.S.C. §1350, as Adopted Pursuant to Section 906 of the
      Sarbanes-Oxley Act of 2002 (Murray Fleming, Principal Accounting
      Officer)





SIGNATURES





In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.





NACEL
      ENERGY CORPORATIONBy:
                  /s/  Paul
      TurnerPaul
      TurnerChief
      Executive Officer
                    
                    Date:
      August 13, 2009By:
                  /s/  Mark
      SchaftleinMark
      SchaftleinChief
      Financial OfficerDate:
                  August
      13, 2009


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