UNITED STATES

FORM 10-K



(Mark One)

|[X] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
|--- | ------------------------------------------------------------------------------------------



For the fiscal year ended December 31, 2004



OR

|[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
|--- | ----------------------------------------------------------------------------------------------



For the transition period from ________________ to ___________________

|CommissionFile Number | Registrants; State of Incorporation;Address; and Telephone Number                                                                                                                   | IRS EmployerIdentification No.
|--------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------
|                      |                                                                                                                                                                                     |                               
|1-11337               | WPS RESOURCES CORPORATION
        (A Wisconsin Corporation)
        700 North Adams Street
        P. O. Box 19001
        Green Bay, WI 54307-9001
        920-433-4901            | 39-1775292                    
|                      |                                                                                                                                                                                     |                               
|1-3016                | WISCONSIN PUBLIC SERVICE CORPORATION
        (A Wisconsin Corporation)
        700 North Adams Street
        P. O. Box 19001
        Green Bay, WI 54307-9001
        920-433-1598 | 39-0715160                    

Securities registered pursuant to Section 12(b) of the Act:

|                          | Title of each class                                                                                                | Name of each exchangeon which registered
|------------------------- | ------------------------------------------------------------------------------------------------------------------ | ----------------------------------------
|                          |                                                                                                                    |                                         
|WPS RESOURCES CORPORATION | Common Stock,
      $1 par value                                                                                   | New York Stock Exchange                 
|                          |                                                                                                                    |                                         
|                          | Rights to purchase
      Common Stock pursuant to
      Rights Agreement dated
      December 12, 1996, as amended | New York Stock Exchange                 

<PAGE>

Securities registered pursuant to Section 12(g) of the Act:

|WISCONSIN PUBLIC SERVICE CORPORATION       
|-------------------------------------------
|                                           
|Preferred Stock, Cumulative, $100 par value
|                                           
|                                           

Indicate by check mark whether the Registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) have been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

Indicate by check mark whether the Registrants are accelerated filers (as
defined in Rule 12b-2 of the Act).



|WPS Resources Corporation            | Yes [X] No [ ]
|------------------------------------ | --------------
|Wisconsin Public Service Corporation | Yes [ ] No [X]



|State the aggregate market value
      of the voting and non-voting common equity held bynonaffiliates of the Registrants.
|--------------------------------------------------------------------------------------------------------------------------
|                                                                                                                          
|WPS RESOURCES CORPORATION                                                                                                 
|                                                                                                                          
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                      



|Number of shares outstanding of each classof common stock, as of February 28, 2005
|----------------------------------------------------------------------------------
|                                                                                  
|WPS RESOURCES CORPORATION                                                         
|                                                                                  
|WISCONSIN PUBLIC SERVICE CORPORATION                                              

DOCUMENT INCORPORATED BY REFERENCE

Definitive proxy statement for the WPS Resources Corporation Annual
Meeting of Shareholders to be held on May 19, 2005 is incorporated by reference
into Part III.

<PAGE>



WPS RESOURCES CORPORATION
and
WISCONSIN PUBLIC SERVICE CORPORATION

ANNUAL REPORT ON FORM 10-K
For the Year Ended December 31, 2004

TABLE OF CONTENTS

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|Forward-Looking Statements | 1                                                  
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|PART I                     | 3                                                  
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|ITEM 1.                    | BUSINESS                                           
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|ITEM 2.                    | PROPERTIES                                         
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|ii
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|ITEM 3.                    | LEGAL PROCEEDINGS                                  
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|ITEM 4.                    | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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|ITEM 4A.                   | EXECUTIVE OFFICERS OF THE REGISTRANTS              
|                           |                                                    
|                           | A.                                                 
|                           | B.                                                 



|PART II                                                                                                          | 34                                                                                                                
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|ITEM 5.                                                                                                          | MARKET FOR REGISTRANTS' COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
      ISSUER PURCHASES OF EQUITY SECURITIES
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|ITEM 6.                                                                                                          | SELECTED FINANCIAL DATA                                                                                           
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|ITEM 7.                                                                                                          | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATION                        
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|iii
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|iv
      <PAGE>                                                                                                 
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|ITEM 7A.                                                                                                         | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                        
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|ITEM 8.                                                                                                          | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                       
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|                                                                                                                 | WPS RESOURCES CORPORATION                                                                                         
|                                                                                                                 | A.                                                                                                                
|                                                                                                                 | B.                                                                                                                
|                                                                                                                 | C.                                                                                                                
|                                                                                                                 | D.                                                                                                                
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|                                                                                                                 | WISCONSIN PUBLIC SERVICE CORPORATION                                                                              
|                                                                                                                 | G.                                                                                                                
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|ITEM 9.                                                                                                          | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE                        
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|ITEM 9A.                                                                                                         | CONTROLS AND PROCEDURES                                                                                           
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|                                                                                                                 | Evaluation of Disclosure Controls and Procedures                                                                  
|                                                                                                                 | Changes in Internal Controls                                                                                      
|                                                                                                                 | Management Reports on Internal Controls over Financial Reporting                                                  
|                                                                                                                 | Reports of Independent Registered Public Accounting Firm                                                          
|                                                                                                                 |                                                                                                                   
|ITEM 9B.                                                                                                         | OTHER INFORMATION                                                                                                 
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|PART III                                                                                                         | 164                                                                                                               
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|ITEM 10.                                                                                                         | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS                                                               
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|ITEM 11.                                                                                                         | EXECUTIVE COMPENSATION                                                                                            
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|v
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|ITEM 12.                                                                                                         | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                    
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|ITEM 13.                                                                                                         | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                    
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|ITEM 14.                                                                                                         | PRINCIPAL ACCOUNTING FEES AND SERVICES                                                                            
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|PART IV                                                                                                          | 174                                                                                                               
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|ITEM 15.                                                                                                         | EXHIBITS AND, FINANCIAL STATEMENT SCHEDULES                                                                       
|                                                                                                                 |                                                                                                                   
|                                                                                                                 | Documents Filed as Part of this Report                                                                            
|                                                                                                                 |                                                                                                                   
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|SIGNATURES                                                                                                       | 180                                                                                                               
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|SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
      WPS RESOURCES CORPORATION (PARENT COMPANY ONLY) | 181                                                                                                               
|                                                                                                                 | A.                                                                                                                
|                                                                                                                 | B.                                                                                                                
|                                                                                                                 | C.                                                                                                                
|                                                                                                                 | D.                                                                                                                
|                                                                                                                 |                                                                                                                   
|SCHEDULE II - WPS RESOURCES CORPORATION VALUATION AND QUALIFYING
      ACCOUNTS                                  | 187                                                                                                               
|                                                                                                                 |                                                                                                                   
|SCHEDULE II - WISCONSIN PUBLIC SERVICE CORPORATION VALUATION AND
      QUALIFYING ACCOUNTS                       | 188                                                                                                               
|                                                                                                                 |                                                                                                                   
|EXHIBITS FILED HEREWITH                                                                                          | 189                                                                                                               



vi

<PAGE>





|Acronyms Used in this Annual Report -on Form 10-K
|-------------------------------------------------
|                                                 
|ATC                                              
|DOE                                              
|EPA                                              
|ESI                                              
|ESOP                                             
|FASB                                             
|FERC                                             
|MPSC                                             
|PDI                                              
|PSCW                                             
|SEC                                              
|SFAS                                             
|UPPCO                                            
|WDNR                                             
|WPSC                                             
|                                                 



vii

<PAGE>



Forward-Looking Statements

Except for historical data and statements of current fact, the information
  contained or incorporated by reference in this document constitutes
  forward-looking statements within the meaning of Section 21E of the Securities
  Exchange Act of 1934. Any references to plans, goals, beliefs or expectations
  in respect to future events and conditions or to estimates are forward-looking
  statements. Although we believe that statements of our expectations are based
  on reasonable assumptions, forward-looking statements are inherently uncertain
  and subject to risks and should be viewed with caution. Actual results or
  experience could differ materially from the forward-looking statements as a
  result of many factors.

In addition to statements regarding trends or estimates in Management's
  Discussion and Analysis of Financial Condition and Results of Operations,
  forward-looking statements included or incorporated in this report include,
  but are not limited to, statements regarding future:

- Revenues or expenses,
- Capital expenditure projections, and
- Financing sources.

Forward-looking statements involve a number of risks and uncertainties.
    There are many factors that could cause actual results to differ materially
    from those expressed or implied in this report. Some of those factors
    include:

- Resolution of pending and future rate cases and negotiations
        (including the recovery of deferred costs) and other regulatory
        decisions regarding WPSC and UPPCO;
- The impact of recent and future federal and state regulatory changes,
        including legislative and regulatory initiatives regarding deregulation
        and restructuring of the electric utility industry, changes in
        environmental, tax and other laws and regulations to which
        WPS Resources and its subsidiaries are subject, as well as changes
        in application of existing laws and regulations;
- Current and future litigation, regulatory investigations, proceedings
        or inquiries, including manufactured gas plant site cleanup and pending
        EPA investigations of WPSC generation facilities;
- Resolution of audits by the Internal Revenue Service and various state
        revenue agencies;
- The effects, extent and timing of additional competition in the
        markets in which WPS Resources' subsidiaries operate;
- The impact of fluctuations in commodity prices, interest rates and
        customer demand;
- Available sources and costs of fuels and purchased power;
- Ability to control costs (including costs of decommissioning
        generation facilities);
- Investment performance of employee benefit plans;
- Advances in technology;
- Effects of and changes in political, legal and economic conditions and
        developments in the United States;
- The performance of projects undertaken by nonregulated businesses and
        the success of efforts to invest in and develop new opportunities;

-1-

<PAGE>

- Potential business strategies, including acquisitions or dispositions of
      assets or businesses, which cannot be assured to be completed (such as the
      potential sale of the Sunbury plant, the potential sale of the Kewaunee
      plant, construction of the Weston 4 generation plant and construction of
      the Wausau, Wisconsin to Duluth, Minnesota transmission line);
- The direct or indirect effect resulting from terrorist incidents or
      responses to such incidents;
- Financial market conditions and the results of financing efforts,
      including credit ratings and risks associated with commodity prices,
      interest rates and counter-party credit;
- Weather and other natural phenomena; and
- The effect of accounting pronouncements issued periodically by
      standard-setting bodies.

Except to the extent required by the federal securities laws,
  WPS Resources and its subsidiaries undertake no obligation to publicly
  update or revise any forward-looking statements, whether as a result of new
  information, future events or otherwise after the date of this report.

-2-

<PAGE>



PART I

ITEM 1.     BUSINESS

> 

A. GENERAL

For purposes of this Annual Report on Form 10-K, unless the context
  otherwise indicates, when we refer to "us," "we,"
  "our" or "ours," we are describing WPS Resources.



WPS Resources Corporation

WPS Resources is domiciled in the United States and was
  incorporated in Wisconsin in 1993. WPS Resources is a holding company for
  regulated utility and nonregulated business units and is exempt from the
  Public Utility Holding Company Act of 1935. Approximate percentages of
  revenues and net income for the year ended 2004 and assets as of
  December 31, 2004 of WPS Resources and its principal operating
  subsidiaries are:

|                                     | Percent ofRevenues * | Percent of Net Income * | Percent ofAssets *
|------------------------------------ | -------------------- | ----------------------- | ------------------
|                                     |                      |                         |                   
|Wisconsin Public Service Corporation | 25%                  | 75%                     | 62%               
|Upper Peninsula Power Company        | 2%                   | 3%                      | 4%                
|WPS Energy Services, Inc.            | 73%                  | 26%                     | 24%               
|WPS Power Development, Inc.          | 1%                   | 4%                      | 9%                
|WPS Resources Corporation            | 0%                   | (8%)                    | 7%                

> * The percentages above may not total
>     100% due to intercompany transactions. Intercompany transactions largely
>     consist of energy sales and purchases between subsidiaries and related
>     intercompany receivables and payables.

For the last three years, the majority of WPS Resources' revenues were
  earned within the United States and the majority of long-lived assets
  were located within the United States.

|                            | 2004     | 2003     | 2002    
|--------------------------- | -------- | -------- | --------
|Domestic Revenues(millions) | $3,763.6 | $3,749.6 | $1,407.4
|Foreign Revenues(millions)  | 1,127.0  | 571.7    | 53.7    
|Total Revenues(millions)    | $4,890.6 | $4,321.3 | $1,461.1
|                            |          |          |         
|Domestic Assets(millions)   | $2,823.8 | $2,618.4 |         
|Foreign Assets(millions)    | 22.9     | 24.1     |         
|Total Assets(millions)      | $2,846.7 | $2,642.5 |         



Wisconsin Public Service Corporation

WPSC, a Wisconsin corporation, is domiciled in the United States and
  began operations in 1883. WPSC is a regulated electric and natural gas utility
  serving an 11,000 square mile service territory in northeastern Wisconsin and
  an adjacent portion of the Upper Peninsula of Michigan. It is also a
  holding company that is exempt from the Public Utility Holding Company Act of
  1935. In 2004, WPSC served 421,159 retail electric customers and 305,648
  natural gas retail customers. Wholesale electric service is provided to
  various customers, including municipal utilities, electric cooperatives,
  energy marketers, other investor-owned utilities and municipal joint action
  agencies. For the last three years, all WPSC revenues were earned within the
  United States and all assets were located within the United States.
  Total revenues consisted of 87% retail sales and 13% wholesale sales. For more
  information regarding revenues, net income and total assets for regulated
  electric operations, see Notes to Consolidated Financial Statements -
  Segments of Business.

-3-

<PAGE>



In December 2004, WPSC continued its efforts to sell its share of the
  Kewaunee nuclear power plant to Dominion Energy Kewaunee Inc. for
  approximately $130 million. WPSC continues to work with the PSCW to
  obtain regulatory approval of the sale. In 2004, WPSC disposed of
  approximately 5,634 acres of land along the Peshtigo River through sale and
  donation to the WDNR and at public auction. For more information regarding
  these sales, see Management's Discussion and Analysis of Financial Condition
  and Results of Operation.

Upper Peninsula Power Company

UPPCO, a Michigan corporation, is domiciled in the United States and
  began operations in 1884. UPPCO is a regulated electric utility serving a
  4,500 square mile area of Michigan's Upper Peninsula. At
  December 31, 2004, UPPCO provided retail electric service to 51,905
  customers and wholesale electric service to 36 customers. Total revenues
  consisted of 83% retail sales and 17% wholesale sales. For information
  regarding revenues, net income and total assets for regulated electric
  operations, see Notes to Consolidated Financial Statements - Segments of
  Business.

WPS Investments, LLC

WPS Investments, LLC is a nonutility company domiciled in the United
  States and was organized in 2000 under the laws of the State of
  Wisconsin. On December 31, 2004, WPS Investments was owned 36.36% by WPSC,
  10% by UPPCO, and 53.64% by WPS Resources. The principal business of
  WPS Investments is to hold the investment of WPS Resources and its
  subsidiaries in ATC and Guardian Pipeline, LLC. At December 31, 2004,
  WPS Investments owned approximately a 22.64% interest in ATC and a 33.33%
  interest in Guardian Pipeline, LLC.

WPS Resources Capital Corporation

WPS Resources Capital Corporation, a Wisconsin corporation, is
  domiciled in the United States and was created in 1999 as an
  intermediate holding company for the nonregulated subsidiaries of
  WPS Resources. At the end of 2004, WPS Resources Capital Corporation
  had total assets of $1.5 billion, consisting of its investments in ESI
  and PDI.

WPS Energy Services, Inc.

ESI, a Wisconsin corporation, is domiciled in the United States and
  was established in 1994. ESI is a nonregulated subsidiary of
  WPS Resources Capital Corporation. ESI offers nonregulated natural gas,
  electric and alternate fuel supplies, as well as energy management and
  consulting services, to retail and wholesale customers primarily in the
  northeastern quadrant of the United States and eastern portions of
  Canada. Although ESI has a widening array of products and services, revenues
  are primarily derived through sales of electricity and natural gas.

WPS Power Development, Inc.

PDI, a Wisconsin corporation, is domiciled in the United States and
  was established in 1995. PDI is a nonregulated subsidiary of
  WPS Resources Capital Corporation that owns and operates generation
  facilities in the United States and Canada primarily selling energy and
  capacity to ESI. Energy-related services provided by PDI include engineering
  and management services and operations and maintenance services. PDI currently
  owns, through its subsidiaries, electric generation facilities in Wisconsin,
  Maine, Pennsylvania and New York in the United States and
  New Brunswick in Canada, a 23.3% interest in a synthetic fuel processing
  facility located in Kentucky, and steam production facilities located in
  Arkansas and Oregon. PDI had revenues of $71.4 million, including
  intercompany revenues, in 2004, but excluding revenues from discontinued
  operations (the operations of the Sunbury generation plant, which is held for
  sale), and assets of $380.5 million at December 31, 2004, including
  $119.6 million of assets held for sale.

-4-

<PAGE>



For information regarding revenues, net income and total assets see Notes
  to Consolidated Financial Statements - Segments of Business.



B. REGULATED ELECTRIC OPERATIONS

WPS Resources' regulated electric utility operations are provided
  through WPSC and UPPCO. WPSC generates and distributes electric energy in
  northeastern Wisconsin. The cities of Green Bay, Oshkosh, Wausau and
  Stevens Point are the largest communities served at the electric retail level.
  UPPCO provides electric energy in Michigan's Upper Peninsula. The largest
  community served at the electric retail level is the Houghton/Hancock area.
  WPSC also provides retail electric energy to a small portion of Michigan's
  Upper Peninsula, primarily in the City of Menominee.

Revenues, volumes, customers and plant assets for electric
  operations of WPSC and UPPCO are as follows:



|                                                 | 2004     | 2003     | 2002    
|------------------------------------------------ | -------- | -------- | --------
|Electric Revenues(millions)                      |          |          |         
|Wisconsin                                        | $769.3   | $683.4   | $661.9  
|Michigan                                         | 127.3    | 130.7    | 101.2   
|Total                                            | $896.6   | $814.1   | $763.1  
|                                                 |          |          |         
|Electric Volumes(million
        megawatt-hours) |          |          |         
|Wisconsin                                        | 12.8     | 12.3     | 12.4    
|Michigan                                         | 1.6      | 2.0      | 2.1     
|Total                                            | 14.4     | 14.3     | 14.5    
|                                                 |          |          |         
|Customers                                        |          |          |         
|Wisconsin                                        | 412,246  | 405,415  | 398,841 
|Michigan                                         | 60,935   | 60,511   | 60,134  
|Total                                            | 473,181  | 465,926  | 458,975 
|                                                 |          |          |         
|Plant Assets(millions)                           |          |          |         
|Wisconsin                                        | $2,062.2 | $1,961.6 | $1,868.5
|Michigan                                         | 204.5    | 184.6    | 183.1   
|Total                                            | $2,266.7 | $2,146.2 | $2,051.6

In 2004, WPSC reached a firm net design peak of 1,869 megawatts on the
  afternoon of July 20. At the time of this summer peak, WPSC's total firm
  resources (i.e., generation plus firm purchases) totaled 2,297 megawatts.
  As a result of continually reaching demand peaks in the summer months,
  primarily due to air conditioning demand, the summer period is the most
  relevant for capacity planning purposes. We expect future supply reserves to
  meet the minimum 18% planning reserve margin criteria imposed by the PSCW
  through 2005.

In 2004, UPPCO purchased 86% of its total energy requirements. Remaining
  energy requirements were supplied by hydroelectric and combustion turbine
  facilities owned by UPPCO. During 2004, UPPCO purchased 65 megawatts of
  firm power from WPSC. UPPCO also purchased non-firm power from WPSC and
  Alliant Energy Corporation, among others. The purchases from WPSC represented
  43% of UPPCO's total energy requirements in 2004. UPPCO has contracted for 65
  megawatts of capacity and energy from WPSC for 2005.

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<PAGE>



Facilities

Weston Unit 4

On October 7, 2004, WPSC received the final PSCW order granting
  authority to proceed with construction of the 500-megawatt Weston 4 power
  plant contingent upon receipt of an air permit. The time allowed to challenge
  the order has expired making the PSCW decision final.

On October 19, 2004, the WDNR issued a construction air permit, which
  allows WPSC to proceed with construction of the Weston 4 generating station.

On November 15, 2004, a petition was filed by the Sierra Club with the WDNR
  under Section 285.61, Wis. Stats. contesting the air permit issued for
  Weston 4. On December 2, 2004, the WDNR granted the petition and
  forwarded the matter to the Division of Hearings and Appeals. It is
  anticipated that a contested case hearing will be held in the second half of
  2005. The appeal raised legal and factual issues with the permit and with the
  process used by the WDNR to develop the air emission limits and conditions.
  Under Wisconsin law, WPSC may proceed with construction unless the hearing
  examiner issues a stay of the permit or rules the permit to be invalid.
  Similar issues were raised in a challenge to the WDNR air permit issued to WE
  Energies for its Oak Creek generating station in Wisconsin. On February 3,
  2005, the court issued a decision affirming the WDNR's January 2004 issuance
  of an air pollution control and construction permit for WE Energies' expansion
  of the Oak Creek generating station. While the decision in the Oak Creek
  proceeding is not legally binding on the hearing examiner in the Weston 4
  proceeding, it may influence the outcome of the Weston 4 hearing.

The Weston 4 air permit is one of the most stringent in the nation and will
  make the plant one of the cleanest plants of its kind in the
  United States. WPSC began construction in October 2004 and expects
  the plant to be operational in June 2008.

WPSC entered into an agreement with Dairyland Power Cooperative, effective
  as of November 23, 2004. The agreement will allow Dairyland Power to
  acquire a 30% undivided interest in WPSC's Weston 4 electric generation plant.
  The transaction remains contingent on Dairyland Power obtaining acceptable
  financing for the transaction and adequate transmission capabilities to
  deliver its share of the power generated to its transmission network by
  January 16, 2006. The transaction is also contingent on both WPSC and
  Dairyland Power receiving all required permits and regulatory approvals. In
  return for its 30% interest in Weston 4, Dairyland Power will pay WPSC 30% of
  Weston 4's construction, operation (including administrative and indirect
  costs), fuel and maintenance costs.

Weston Units 1 through 3

WPSC currently operates three coal-fired generation facilities at its
  Weston location. The plants have a total nameplate capacity of 456.6
  megawatts. Weston unit 3 is the largest with a nameplate capacity of 321.6
  megawatts.

Pulliam

WPSC also operates six coal-fired generation units at its Pulliam plant
  located in Green Bay, Wisconsin. The units at the Pulliam site have a
  combined nameplate capacity of 370 megawatts with the largest unit having
  a nameplate capacity of 125 megawatts.

Kewaunee Nuclear Power Plant

The Kewaunee nuclear power plant is a pressurized water reactor plant with
  a nameplate capacity of 607.9 megawatts. The Kewaunee plant is
  jointly-owned by WPSC (59%) and Wisconsin Power and Light Company (41%).
  Nuclear Management Company, LLC, operates the Kewaunee plant.
  WPS Resources owns a 20% interest in Nuclear Management Company.

-6-

<PAGE>



On November 7, 2003, WPSC and Wisconsin Power and Light signed a
  definitive agreement to sell the jointly owned Kewaunee nuclear power plant to
  Dominion Energy Kewaunee, Inc., a subsidiary of Dominion Resources, Inc., for
  approximately $220 million.

The sale remains subject to the approval of the PSCW. Although the PSCW
  rejected the application for the sale of Kewaunee on November 19, 2004,
  WPSC, Wisconsin Power and Light and Dominion continue to work with the PSCW to
  obtain approval for the sale. On January 21, 2005, the PSCW issued an order
  reopening this proceeding. WPSC expects a final decision by the end of March
  2005.

Assuming the sale is completed, both WPSC and Wisconsin Power and Light
  will enter into power purchase agreements with Dominion Energy Kewaunee, Inc.,
  to purchase capacity and energy generated at Kewaunee, equivalent to the
  amounts that would have been received from the plant if current ownership had
  continued and at a cost approximating the expected costs of production had
  current ownership continued. The power purchase agreements, which also require
  regulatory approval, extend through 2013 when the plant's current operating
  license will expire.

Radioactive Waste Storage

The Midwest Compact Commission continues to monitor the availability of
  disposal facilities for the low-level radioactive waste created by all Midwest
  generators. A site at Barnwell, South Carolina, has been available for
  the storage of low-level radioactive waste from the Kewaunee plant in the
  past. The availability of this site for future waste storage is uncertain. As
  a result of technological advances, waste compaction and the reduction of
  waste generated, the Kewaunee plant has on-site low-level radioactive waste
  storage capacity sufficient to store all low-level waste expected at the plant
  through 2013 when the current plant operating license is set to expire.

Plant Capacity

On March 2, 2004, the Nuclear Regulatory Commission approved a 6%
  increase in generating capacity at the Kewaunee plant. The additional capacity
  was achieved primarily through minor component upgrades. The upgrades were
  completed during the scheduled Fall 2004 refueling outage to further increase
  plant capacity by 25 megawatts.

Depreciation and Decommissioning

At December 31, 2004, the net carrying amount of WPSC's investment in
  the Kewaunee plant, including construction work-in-progress, was approximately
  $87 million. The cost in current dollars for WPSC's 59% share of the
  estimated costs to decommission the Kewaunee plant is $350 million.
  WPSC's decommissioning trust assets at December 31, 2004, totaled
  $344.5 million on a net of tax basis. Due to the pending potential sale
  of the Kewaunee plant, all contributions to the decommissioning fund are
  currently suspended for 2005. If the sale is not completed, WPSC is required
  to contribute a pro-rated portion of its $1.1 million annual contribution for
  the wholesale jurisdiction. The proration would be based on the portion of the
  year remaining if and when pursuit of the sale is discontinued. Retail
  jurisdiction funding has been suspended indefinitely pending the outcome of
  the sale and would only be resumed after approval from the PSCW should the
  transaction not be completed. Annual contributions to the trust are subject to
  change based on future rate case filings. To date, the PSCW and the FERC have
  determined these costs to be reasonable and allowed their recovery in rates.

During 2004, $15.8 million of depreciation expense related to
  unrecovered plant investment was recognized, compared with $16.1 million
  recognized in 2003. The 2004 annual decommissioning funding requirement was
  $0.3 million.

Additional discussion of Kewaunee plant matters is included in Management's
  Discussion and Analysis of Financial Condition and Results of Operation and
  the Notes to WPS Resources' Consolidated Financial Statements.

-7-

<PAGE>

Other Generation Facilities

WPSC owns a 50% interest in Wisconsin River Power Company. Wisconsin River
  Power is the owner and operator of a combustion turbine and two hydroelectric
  plants on the Wisconsin River, which have an aggregate installed capacity in
  excess of 50 megawatts

Fox Energy Center

In 2003, WPSC entered into a power purchase agreement with Calpine
  Corporation for capacity and energy from a facility to be built near Kaukauna,
  Wisconsin.  The agreement calls for WPSC to purchase 150 megawatts of
  capacity beginning on June 1, 2005, escalating to 470 megawatts of
  capacity on June 1, 2006, until May 31, 2015, when it decreases to
  235 megawatts. On May 31, 2016, the agreement terminates.  Under the
  agreement, WPSC will also be responsible for fuel supply to the facility over
  the life of the agreement. Calpine began construction of the project in the
  fall of 2004.  At this time, WPSC believes Calpine will fulfill its
  contractual commitments, including a June 1, 2005 project
  in-service date.

Other Facilities

WPSC, Minnesota Power Company, and ATC are undertaking the construction of
  a 220-mile, 345-kilovolt-transmission line from Wausau, Wisconsin, to Duluth,
  Minnesota. Completion of the line is expected in 2008 at a total cost of
  approximately $420 million. ATC owns, maintains, monitors, and operates
  electric transmission assets in portions of Wisconsin, Michigan, and Illinois.

For additional information regarding our facilities, see Item 2. Properties
  in this Annual Report on Form 10-K.

Fuel Supply

Electric Supply Mix

WPSC's electric supply mix for 2004 and 2003 was:

> Energy Source
>           2004
>           2003Coal
>           61.7%
>           60.7%Purchased power
>           18.4%
>           17.4%Nuclear
>           16.1%
>           17.5%Natural gas/fuel oil
>           1.9%
>           2.6%Hydro
>           1.9%
>           1.8%

Fuel Costs

WPSC's fuel costs for 2004 and 2003 were:

|Fuel Cost by Source Cost (per million Btus) | 2004        | 2003 
|------------------------------------------- | ----------- | -----
|                                            | Coal        | $1.15
|                                            | Nuclear     | 0.44 
|                                            | Natural gas | 6.88 
|                                            | Fuel oil    | 6.45 

Coal

Coal is the primary fuel source for WPSC, most of which is from the Powder
  River Basin mines located in Wyoming. Powder River Basin coal is very low in
  sulfur and meets the standards of the 1990 Clean Air

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<PAGE>



Act for 2004 and future years. This coal has been our least-cost coal
  source from any of the subbituminous coal-producing regions in the
  United States.

Historically, WPSC has purchased coal directly from the producer. Most of
  the coal purchased by WPSC for its wholly owned plants and purchased by
  Wisconsin Power and Light for the jointly owned Edgewater and Columbia plants
  is done through relatively short-term contracts of up to five years duration.
  WPSC does have one contract, however, that runs through 2016. That contract,
  with Arch Coal Sales, is for our wholly owned plants and covers approximately
  23% of total wholly owned requirements and has take-or-pay obligations
  totaling $75.6 million over the remaining life of the contract.
  Take-or-pay obligations mean that WPSC is required to pay for annual
  contracted coal regardless of whether it takes delivery of the total amount of
  coal under contract. For 2005, 87% of the wholly owned and jointly owned plant
  requirements are under contract, with the remaining 13% to be purchased on the
  spot market. The contracts for coal are with five different suppliers, using
  seven different mine sources. Peabody COALSALES Company provides approximately
  33% of the total coal purchases, with 23% of the total coal purchased coming
  from the North Antelope Mine.

WPSC currently contracts for coal transportation for its wholly owned
  plants under contracts of up to five years duration. Over 90% of WPSC's coal
  transportation is under competitive transportation agreements.

For additional information, see Notes to WPS Resources' Consolidated
  Financial Statements -Commitments and Contingencies.

Nuclear Fuel Cycle

WPSC purchases uranium concentrates, conversion services, enrichment
  services and fabrication services for nuclear fuel assemblies at the Kewaunee
  plant either on the spot market, through a bidding process or by using
  existing contracts. WPSC removes and replaces approximately one-third of the
  121 fuel assemblies from the reactor every 18 months. WPSC stores spent
  fuel assemblies at the plant site pending permanent disposal by the DOE.

WPSC's uranium inventory policy is to maintain sufficient inventory for up
  to two reactor refuelings. Following completion of the plant refueling in
  November 2004, WPSC has approximately 500,000 pounds of yellowcake (a
  processed form of uranium ore), or its equivalent, held in inventory for the
  plant. Each refueling requires approximately 475,000 pounds of
  yellowcake. WPSC intends to purchase approximately 500,000 pounds of
  yellowcake in 2005 to meet the requirements of the inventory policy. Inventory
  includes uranium under contract as of December 31, 2004.

Conversion services will be complete for the nuclear fuel
  reload scheduled in 2006 following the completion of a small amount of
  contracted conversion services during the first half of 2005.

WPSC has contracted for 100% of the enrichment services required for the
  Kewaunee plant fuel reloads scheduled to occur in 2006 and 2007. WPSC has the
  option of purchasing enrichment services beyond 2007 by either using its
  existing contract or by purchasing from the spot market. WPSC has contracted
  for fuel fabrication services for the next four reloads. Assuming completion
  of the sale of the Kewaunee plant, Dominion will assume WPSC's obligations
  under the enrichment services and fuel fabrication services contracts.

If, for any reason, the Kewaunee plant is forced to terminate operations,
  we do not expect the maximum exposure to the co-owners related to fuel
  contracts to exceed $3.5 million. This exposure is due to a long-term
  fuel fabrication contract with Westinghouse. No financial penalties associated
  with the present uranium supply, conversion service or enrichment agreements
  exist. WPSC believes uranium inventories could be sold on the spot market.

-9-

<PAGE>





Spent Nuclear Fuel Disposal

The federal government is responsible for the disposal or permanent storage
  of spent nuclear fuel. The DOE is currently preparing an application to
  license a permanent spent nuclear fuel storage facility in the Yucca Mountain
  area of Nevada.

Spent nuclear fuel is currently being stored at the Kewaunee plant. At
  current production levels, the plant has sufficient storage for all fuel
  assemblies until 2009 with full core offload. Additional capacity will be
  needed by 2010 to maintain full core offload capability.

The United States government through the DOE is under contract with
  WPSC for the pick up and long-term storage of Kewaunee's spent nuclear fuel.
  Because the DOE has failed to begin scheduled pickup of the spent nuclear
  fuel, WPSC incurred and will continue to incur costs for the storage of the
  spent nuclear fuel. WPSC is a participant in a suit filed against the federal
  government for breach of contract and failure to pick up and store the spent
  nuclear fuel. The case was filed on January 22, 2004, in the
  United States Court of Federal Claims. The case has been temporarily
  stayed until June of 2005.

In November 2003, WPSC reached an agreement to sell its interest in
  Kewaunee to Dominion Energy Kewaunee, Inc, a subsidiary of Dominion Resources,
  Inc. Assuming regulatory approval and closing of the sale, Dominion will have
  the right to pursue the spent nuclear fuel claim and WPSC will retain the
  contractual right to an equitable share of any future settlement or verdict.
  The total amount of damages sought is unknown at this time. Because WPSC is
  just one of many owners of nuclear plants who have brought similar suits
  against the federal government, resolution of the suit may take several
  years.

Funding Decontamination and Decommissioning of Federal Facilities

The Energy Policy Act of 1992 requires nuclear power companies to fund the
  decontamination and decommissioning of DOE facilities relating to the
  processing of nuclear fuel. As a result, WPSC is required to pay a surcharge
  for uranium enrichment services purchased from the federal government prior to
  October 23, 1992. On an inflation-adjusted basis, WPSC's portion of the
  obligation related to the Kewaunee plant is approximately $0.6 million per
  year through the DOE fiscal year 2007, at which time the payments end. Madison
  Gas and Electric Company, a former 17.8% owner of the Kewaunee plant, has
  agreed to continue to pay its portion of this annual assessment through DOE
  fiscal year 2007. Assuming completion of the sale of the Kewaunee plant, WPSC
  will continue to be responsible for its portion of this obligation through
  2007. The last payment will be due near the end of October 2006.

Regulatory Matters

The PSCW and the MPSC regulate electric retail rates for WPSC. The MPSC
  regulates electric retail rates for UPPCO. The FERC regulates wholesale
  electric rates of both utility companies.

Wisconsin Regulatory Matters

On December 21, 2004, the PSCW issued a final written order
  authorizing a retail electric rate increase of $60.7 million (8.6%),
  effective January 1, 2005. The new rates reflect an 11.5% return on
  equity, with equity constituting 57.35% of the regulatory capital structure.
  The rate increase was necessary to recover the costs associated with the
  construction of Weston 4, increased fuel and purchased power costs, and
  increased employee benefit costs.

On November 26, 2002, WPSC, along with Minnesota Power Company and ATC,
  filed a joint application with the PSCW regarding an increase in the estimated
  cost to complete the Wisconsin portion of the Wausau, Wisconsin, to Duluth,
  Minnesota, transmission line. The PSCW originally approved the 220-mile,
  345-kilovolt transmission line on October 30, 2001, at an estimated cost
  of $166 million. On December 19, 2003, the PSCW issued an order
  re-approving the project at a revised cost of $420.3 million. The revised
  cost includes an increase in the scope of the project and other facilities not
  included in the original application. This decision was appealed to the Dane
  County Circuit Court by

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<PAGE>



certain landowners. The court affirmed the PSCW's decision.  It is
  unknown whether the court decision will be appealed.  In addition,
  Douglas County in Wisconsin continues to oppose the line and refuses to engage
  in negotiations relating to easement access to county owned land for the
  project. As a result of this opposition, the PSCW reopened the docket and
  ordered the applicants to submit an amended application identifying
  alternative routes and other options for the project in Douglas County. 
  In addition, various WDNR permit related decisions are currently the subject
  of a contested case hearing in Wisconsin.  A decision on the contested
  case is expected in the third quarter of 2005.  For more information on
  ATC, see Notes to WPS Resources' Consolidated Financial Statements -
  Investments In Affiliates, At Equity Method.

The amount of fuel and purchased power costs WPSC is authorized to recover
  in rates is established in its general rate filings. If the actual fuel and
  purchased power costs vary from the authorized level by more than 2% on a
  year-to-date basis, WPSC is allowed, or may be required, to file an
  application adjusting rates for the remainder of the year to reflect actual
  costs for the year to date plus remaining costs projected for the year.

As a result of the Kewaunee nuclear power plant unplanned outage in late
  January and early February 2004 and other fuel cost increases in
  2004, WPSC filed for a fuel cost increase of $7.4 million on
  February 27, 2004. The PSCW approved an interim rate increase of
  $6.0 million on April 1, 2004, subject to refund. On
  September 24, 2004, the PSCW approved the final fuel order allowing
  recovery of $3.2 million. In the fourth quarter of 2004, WPSC refunded to
  customers $1.8 million recovered in excess of the $3.2 million provided in the
  final order.

The PSCW also allowed WPSC to defer unanticipated replacement fuel,
  purchased power and operation and maintenance costs directly associated with
  the extension of the scheduled Kewaunee refueling outage in the fourth quarter
  of 2004. The Kewaunee outage was extended an additional three weeks due
  primarily to difficulties encountered with lifting equipment related to the
  removal of internal vessel components to complete a required 10-year
  inspection and procedures to perform the lifts. At December 31, 2004,
  $5.4 million of incremental fuel and purchased power costs and $1.8
  million of operation and maintenance costs related to the outage being
  extended were deferred. The recovery of these deferred costs is anticipated in
  2006, pending approval by the PSCW.

Michigan Regulatory Matters

Michigan authorizes a one-for-one fuel and purchased power recovery
  mechanism for prudently incurred costs. Under the mechanism, the difference
  between actual and authorized fuel and purchased power costs is deferred until
  year-end. By March 31 of the following year, WPSC and UPPCO must each
  individually file a reconciliation of actual costs to authorized costs. Any
  under or over recovery is then recovered from or returned to the ratepayer by
  the end of the following year. The reconciliation is subject to review and
  intervention by interested parties. At December 31, 2003, UPPCO had
  significant under recovered fuel and purchased power costs due to the high
  costs of purchased power. On October 14, 2004, the MPSC approved the full
  recovery of the deferred 2003 fuel costs ratably through December 31,
  2005 (excluding those associated with Wisconsin Electric Power Company's
  Presque Isle outage). A decision on $1.8 million of deferred Presque Isle
  outage costs along with other Dead River flood issues is expected in the
  next rate case.

In December 2004, UPPCO filed a proposal with the MPSC to defer a base rate
  request until January 1, 2006, contingent on the MPSC's approval of
  recognition of any gains on the sale of certain land sales occurring before
  December 31, 2014 as nonutility gains. The maximum gain to be treated in this
  manner would be $30 million. One half of the gains realized before December
  31, 2014, in excess of $30 million would have been returned to customers with
  the other half considered nonutility gain. Under the proposal, UPPCO would
  have been allowed to request deferred accounting treatment during the proposed
  moratorium for any governmental mandates and for any unusual and extraordinary
  events that would cause serious financial harm to UPPCO. UPPCO's Power Supply
  Cost Recovery clause also would not have been subject to the proposed
  moratorium. At this time, the MPSC has not accepted the proposal.  Final
approval or denial from the MPSC is still pending.  As a result,
  on February 4,

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<PAGE>



request to increase base rates by $5.7 million (7.6%
  increase). UPPCO also requested interim rate relief of $4.5 million. A
  prehearing has been scheduled for March 16, 2005.

Federal Energy Regulatory Commission Matters

On April 30, 2003, WPSC received a draft order from FERC approving a
  21%, or $4.1 million, interim increase in wholesale electric rates,
  effective May 11, 2003, subject to refund. On March 4, 2004, WPSC,
  the customer groups and FERC reached a settlement regarding the final rate
  increase. The settlement includes formula rates going forward, which allows
  WPSC to bill FERC tariff customers the actual costs incurred during the year.
  In addition, the settlement allows a return on 100% of the construction work
  in progress related to Weston 4 and an 11.0% return on equity with the PSCW
  authorized regulatory capital structure, which is comprised of 57.35% equity
  for 2005. The settlement was approved by FERC on November 19, 2004. No
  material refunds were required as a result of the settlement. This is WPSC's
  first rate increase for its wholesale electric customers in 17 years.

Hydroelectric Licenses

WPSC, UPPCO and Wisconsin River Power have long-term licenses from FERC for
  all of their hydroelectric facilities.

On January 31, 2005, UPPCO announced its decision to restore Silver Lake as
  a reservoir for power generation, pending approval of a design by FERC. For
  information on Dead River Flooding, see Note 17 - Commitments and
  Contingencies to our Notes to Consolidated Financial Statements.

Other Matters

Research and Development

The only business segment of WPS Resources' consolidated entity that
  might incur significant research and development costs is WPSC. Electric
  research and development expenditures for WPSC totaled $0.7 million for
  2004, $0.6 million for 2003 and $0.3 million for 2002. These
  expenditures were primarily charged to electric operations as incurred.

Customer Segmentation

In 2004, 29 paper mills and one wholesale customer (a private utility) that
  primarily provides power to other paper mills accounted for 14.9% of WPSC's
  electric revenues. There is no single customer, the loss of which would have a material adverse effect on the electric
  business of WPSC in the current regulatory environment.

Seasonality

The electric sales of WPSC and UPPCO follow a seasonal pattern due to the
  air conditioning requirements of customers that are primarily impacted by the
  variability of summer temperatures.

Competition

The electric energy market in Wisconsin continues to be
  regulated by the PSCW. Retail electric customers currently do not have the
  ability to choose their electric supplier. However, in order to increase
  sales, utilities work to attract new commercial/industrial customers into
  their service territory. As a result, there is competition among utilities to
  keep energy rates low. Wisconsin utilities have continued to refine regulated
  tariffs in order to provide customers with the true cost of electric energy to
  each class of customer, by reducing or eliminating rate subsidies among
  different ratepayer classes. Although Wisconsin electric energy markets are
  regulated, utilities still face competition from other energy sources.



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<PAGE>



Although Michigan electric energy markets are open to
  competition, a competitive market has not yet developed in the upper peninsula
  of Michigan primarily due to a lack of excess generation and transmission
  system capacity.

WPS Resources regulated electric subsidiaries are members of the Midwest
  Independent System Operator. The Midwest Independent System Operator is in the
  process of restructuring the bulk electric power market in the Midwest portion
  of the United States. The implementation of market restructuring by the
  Midwest Independent System Operation is currently expected to occur April 1,
  2005. Such restructuring could have an impact on competition in the WPS
  Resources' regulated electric markets, the dispatch of generating facilities
  and the costs associated with serving utility customers' energy requirements.

Working Capital Requirements

For information on capital requirements related to WPSC, see Management's
  Discussion and Analysis of Financial Condition and Results of Operation -
  Liquidity and Capital Resources - Wisconsin Public Service Corporation.

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<PAGE>

|                                                       |            |            |           
|------------------------------------------------------ | ---------- | ---------- | ----------
|Electric Operating Statistics                         
|                                                       |            |            |           
|                                                       |            |            |           
|WISCONSIN PUBLIC SERVICE CORPORATION                   | 2004       | 2003       | 2002      
|Operating revenues (Millions)                          |            |            |           
|Residential and farm                                   | $286.0     | $261.7     | $249.9    
|Small commercial and industrial                        | 227.8      | 205.9      | 197.7     
|Large commercial and industrial                        | 174.7      | 155.5      | 152.4     
|Resale and other                                       | 112.7      | 101.8      | 96.9      
|Total                                                  | $801.2     | $724.9     | $696.9    
|Kilowatt-hour sales (Millions)                         |            |            |           
|Residential and farm                                   | 2,999.6    | 3,037.3    | 3,028.9   
|Small commercial and industrial                        | 3,521.0    | 3,496.4    | 3,442.9   
|Large commercial and industrial                        | 4,225.9    | 4,135.1    | 4,095.1   
|Resale and other                                       | 2,746.9    | 2,742.6    | 3,012.8   
|Total                                                  | 13,493.4   | 13,411.4   | 13,579.7  
|Customers served (End of period)                       |            |            |           
|Residential and farm                                   | 374,961    | 368,702    | 362,718   
|Small commercial and industrial                        | 45,108     | 44,508     | 43,915    
|Large commercial and industrial                        | 263        | 257        | 241       
|Resale and other                                       | 908        | 903        | 894       
|Total                                                  | 421,240    | 414,370    | 407,768   
|Average kilowatt-hour price (Cents)                    |            |            |           
|Residential and farm                                   | 9.53       | 8.61       | 8.25      
|Small commercial and industrial                        | 6.47       | 5.89       | 5.74      
|Large commercial and industrial                        | 4.13       | 3.76       | 3.72      
|Production capacity (Summer - kilowatts)               |            |            |           
|Coal                                                   | 1,334,300  | 1,326,700  | 1,339,000 
|Nuclear                                                | 332,800    | 315,600    | 312,700   
|Hydroelectric                                          | 40,000     | 40,000     | 43,300    
|Combustion turbine                                     | 485,000    | 449,200    | 378,120   
|Other                                                  | 9,900      | 9,900      | 8,000     
|Purchased capacity                                     | 469,500    | 267,600    | 14,900    
|Total system capacity                                  | 2,671,500  | 2,409,000  | 2,096,020 
|Generation and purchases (Thousands of kilowatt-hours) |            |            |           
|Coal                                                   | 8,781,165  | 8,573,305  | 8,056,530 
|Nuclear                                                | 2,284,101  | 2,451,896  | 2,638,284 
|Hydroelectric                                          | 262,536    | 252,961    | 337,480   
|Purchases and other                                    | 2,847,279  | 2,771,870  | 3,256,898 
|Total                                                  | 14,175,081 | 14,050,032 | 14,289,192
|Steam fuel costs (Cents per million Btu)               |            |            |           
|Fossil                                                 | 116.881    | 110.747    | 112.993   
|Nuclear                                                | 44.212     | 42.922     | 44.156    
|Total                                                  | 102.239    | 95.959     | 96.369    
|System peak - firm (Kilowatts)                         | 1,869,300  | 1,888,000  | 1,961,200 
|Annual load factor                                     | 79.30%     | 72.00%     | 71.10%    
|                                                       |            |            |           
|                                                       |            |            |           

-14-

<PAGE>



|                                                                     |           |           |          
|-------------------------------------------------------------------- | --------- | --------- | ---------
|Electric Operating Statistics                                       
|                                                                     |           |           |          
|                                                                     |           |           |          
|UPPER PENINSULA POWER COMPANY                                        | 2004      | 2003      | 2002     
|Operating revenues (Millions)                                        |           |           |          
|Residential and farm                                                 | $34.4     | $31.5     | $25.3    
|Small commercial and industrial                                      | 26.4      | 24.0      | 18.9     
|Large commercial and industrial                                      | 15.0      | 11.6      | 9.9      
|Resale and other                                                     | 19.6      | 22.1      | 12.1     
|Total                                                                | $95.4     | $89.2     | $66.2    
|Kilowatt-hour sales (Millions)                                       |           |           |          
|Residential and farm                                                 | 273.8     | 277.0     | 277.9    
|Small commercial and industrial                                      | 250.3     | 252.5     | 257.7    
|Large commercial and industrial                                      | 231.2     | 211.1     | 227.4    
|Resale and other                                                     | 217.0     | 194.7     | 204.9    
|Total                                                                | 972.3     | 935.3     | 967.9    
|Customers served (End of period)                                     |           |           |          
|Residential and farm                                                 | 45,954    | 45,613    | 45,279   
|Small commercial and industrial                                      | 5,644     | 5,613     | 5,479    
|Large commercial and industrial                                      | 5,657     | 13        | 12       
|Resale and other                                                     | 330       | 317       | 437      
|Total                                                                | 57,585    | 51,556    | 51,207   
|Average kilowatt-hour price (Cents)                                  |           |           |          
|Residential and farm                                                 | 12.58     | 11.38     | 9.10     
|Small commercial and industrial                                      | 10.55     | 9.49      | 7.34     
|Large commercial and industrial                                      | 6.48      | 5.48      | 4.31     
|Production capacity (Summer - kilowatts)                             |           |           |          
|Natural gas                                                          | 18,800    | 18,800    | 17,700   
|Hydroelectric                                                        | 21,700    | 25,900    | 30,000   
|Combustion turbine                                                   | 36,200    | 41,800    | 55,000   
|Purchased capacity                                                   | 77,000    | 80,700    | 65,000   
|Total system capacity                                                | 153,700   | 167,200   | 167,700  
|Generation and purchases (Thousands of kilowatt-hours)               |           |           |          
|Natural gas                                                          | -         | 7,021     | 5,062    
|Hydroelectric                                                        | 118,752   | 150,398   | 162,542  
|Purchases and other                                                  | 943,779   | 876,885   | 884,612  
|Total                                                                | 1,062,531 | 1,034,304 | 1,052,216
|Steam fuel costs (Cents per million Btu)                             |           |           |          
|Fossil *                                                             | -         | 652.999   | 368.410  
|System peak - firm (Kilowatts)                                       | 148,038   | 153,691   | 160,869  
|Annual load factor                                                   | 68.44%    | 67.73%    | 67.27%   
|                                                                     |           |           |          
|* Upper Peninsula Power Company had no steam generation during 2004.
|                                                                     |           |           |          

-15-

<PAGE>



C.

WPSC provides regulated natural gas service to nearly 300 municipalities in
  northeastern Wisconsin and adjacent portions of Michigan's Upper Peninsula.

Revenues, volumes, customers and plant assets for natural gas operations of
  WPSC are as follows:



|                                            | 2004    | 2003    | 2002   
|------------------------------------------- | ------- | ------- | -------
|Natural Gas Revenues(millions)              |         |         |        
|Wisconsin                                   | $414.7  | $397.9  | $306.3 
|Michigan                                    | 6.2     | 6.3     | 4.4    
|Total                                       | $420.9  | $404.2  | $310.7 
|                                            |         |         |        
|Natural Gas Volumes(million
        therms) |         |         |        
|Wisconsin                                   | 750.7   | 789.4   | 800.6  
|Michigan                                    | 16.6    | 17.9    | 17.4   
|Internal electric generation                | 34.0    | 47.2    | 27.4   
|Total                                       | 801.3   | 854.5   | 845.4  
|                                            |         |         |        
|Customers                                   |         |         |        
|Wisconsin                                   | 300,297 | 295,513 | 290,480
|Michigan                                    | 5,351   | 5,346   | 5,336  
|Total                                       | 305,648 | 300,859 | 295,816
|                                            |         |         |        
|Plant Assets(millions)                      |         |         |        
|Wisconsin                                   | $300.3  | $451.2  | $421.4 
|Michigan                                    | 5.3     | 6.0     | 5.9    
|Total                                       | $305.6  | $457.2  | $427.3 



Facilities

WPSC has nearly completed its project to install automated meter reading
  equipment for its customers, having installed 724,000 electric and natural gas
  meters. Approximately 14,000 meters remain to be installed. Completion of the
  project is expected in 2005 at a cost of less than $93 million.

For more information regarding our natural gas facilities, see Item 2.
  Properties in this Annual Report on Form 10-K.

Natural Gas Supply

WPSC manages a portfolio of natural gas supply contracts, storage services
  and pipeline transportation services designed to meet its varying load pattern
  at the lowest reasonable cost.

WPSC contracts for fixed-term firm natural gas supplies with approximately
  13 natural gas suppliers each year (in the United States and Canada)
  to meet the December through February peak day demand of firm system
  sales customers. WPSC purchases additional natural gas supplies on the monthly
  spot market through fixed-term firm contracts as required to supplement
  natural gas supplies. As of December 31, 2004, the domestic natural gas
  supply contracts had remaining terms of up to two months and the Canadian
  natural gas supply contracts had remaining terms of up to three months. WPSC
  intends to contract for domestic natural gas supplies for terms of two years
  or less to minimize potential stranded natural gas supply contract costs if
  retail natural gas deregulation should proceed in Wisconsin.

Under current regulatory practice, the PSCW and the MPSC allow WPSC to pass
  increases or decreases in the cost of natural gas on to customers on a
  dollar-for-dollar basis through a purchased gas adjustment

-16-

<PAGE>



clause. Changes in the cost of natural gas are reflected in both gas
  revenues and gas purchases, thus having little or no impact on net income.

WPSC contracts with ANR Pipeline Company for firm underground storage
  capacity located in Michigan and with Nexen and People's Energy Resources
  Corporation located in Illinois. WPSC has approximately 116 million
  therms of firm storage capacity with ANR Pipeline and approximately 8 million
  therms of firm storage capacity in Illinois. Besides providing the ability to
  manage significant changes in daily natural gas demand, storage also provides
  WPSC with the ability to purchase natural gas at high load factors on a
  year-round basis, thus lowering supply cost volatility. Natural gas from
  storage provides approximately 61% of WPSC's supply on winter peak days,
  approximately 30% of its winter sales volumes and approximately 21% of its
  total annual sales volumes under normal weather conditions. WPSC also
  contracts with third-party natural gas suppliers for high deliverability
  storage. This high deliverability storage capacity is designed to deliver
  natural gas when other supplies cannot be delivered during extremely cold
  weather in the producing areas, which can temporarily limit wellhead natural
  gas supplies.

WPSC holds firm long-term transportation capacity contracts on the ANR
  Pipeline. The majority of these contracts expire in 2010. WPSC also holds firm
  transportation capacity with Viking Gas Transmission Company to deliver
  natural gas from its interconnection with TransCanada Pipelines near Emerson,
  Manitoba to the interconnection of Viking Gas Transmission with ANR Pipeline
  near Marshfield, Wisconsin. The Canadian natural gas suppliers at Emerson hold
  firm capacity on TransCanada Pipelines from Emerson back into the Canadian
  production areas in Alberta, Canada.

Regulatory Matters

The PSCW and the MPSC regulate WPSC's natural gas retail rates.

On December 21, 2004, the PSCW issued a final written order
  authorizing a natural gas rate increase of $5.5 million (1.1%), effective
  January 1, 2005. The new rates reflect an 11.5% return on equity, with
  equity constituting 57.35% of the regulatory capital structure. The rate
  increase was necessary to recover the costs associated with upgrading the
  existing natural gas infrastructure, increased costs of mandated conservation
  programs and increased employee benefits costs.

Other Matters

Research and Development

The only business segment of WPS Resources' consolidated entity that
  might incur significant research and development costs is WPSC's electric
  operations. Research and development costs incurred for the gas segment of
  WPSC's business in 2004 were approximately $17,000.

Customer Segmentation

WPSC has no single customer that accounts for a significant portion of
  natural gas throughput. The largest industry segment among WPSC's natural gas
  customers is the paper industry.

Seasonality

The gas throughput of WPSC follows a seasonal pattern due to the heating
  requirements of customers that is primarily impacted by the variability of
  winter temperatures. WPSC currently has 128.5 million therms of natural gas
  storage under contract. The availability of natural gas storage capacity
  allows WPSC to purchase natural gas supplies at times of lower demand, which
  results in lower energy costs and provides for more assurance of availability
  of supply in high demand periods.

-17-

<PAGE>



Competition

WPSC's natural gas operations face competition with other entities and
  forms of energy in varying degrees, particularly for large commercial and
  industrial customers who have the ability to switch between natural gas and
  alternate fuels. Due to the volatility of natural gas prices, WPSC has seen
  its customers with dual fuel capability switch to alternate fuels for short
  periods of time, then switch back to natural gas as market rates change. WPSC
  offers interruptible natural gas sales and natural gas transportation service
  for these customers to enable them to reduce their energy costs.
  Transportation customers purchase their natural gas from third-party natural
  gas suppliers at market prices and contract with WPSC to transport the natural
  gas from ANR Pipeline to their facilities. Additionally, some customers still
  purchase their natural gas commodity directly from WPSC, but have elected to
  do so on an interruptible basis, as a means to reduce their costs. Customers
  continue to switch between firm system supply, interruptible system supply and
  transportation service each year as the economics and service options change.

Working Capital Requirements

For information on capital requirements related to WPSC, see Management's
  Discussion and Analysis of Financial Condition and Results of Operation -
  Liquidity and Capital Resources - Wisconsin Public Service Corporation.

-18-

<PAGE>

|Natural Gas Operating Statistics    
|------------------------------------
|                                    
|                                    
|Wisconsin Public Service Corporation
|Operating revenues (Millions)       
|Residential                         
|Small commercial and industrial     
|Large commercial and industrial     
|Other                               
|Total                               
|Therms delivered (Millions)         
|Residential                         
|Small commercial and industrial     
|Large commercial and industrial     
|Other                               
|Total therm sales                   
|Transportation                      
|Total                               
|Customers served (End of period)    
|Residential                         
|Small commercial and industrial     
|Large commercial and industrial     
|Other                               
|Transportation customers            
|Total                               
|Average therm price (Cents)         
|Residential                         
|Small commercial and industrial     
|Large commercial and industrial     
|                                    
|                                    

-19-

<PAGE>



D. NONREGULATED ENERGY SERVICES

WPS Resources' nonregulated
  energy services operations are provided through ESI. ESI is a diversified,
  energy supply and services company with principal operations in the
  northeastern quadrant of the United States, eastern portions of Canada
  and a natural gas supply presence in Alberta, Canada. ESI operates in the
  retail and wholesale nonregulated energy marketplace. In addition, ESI's three
  subsidiaries (Advantage Energy, Quest Energy and WPS Energy Services of
  Canada) market energy products in the retail market. Its emphasis is on
  serving commercial, industrial and wholesale customers, as well as
  "aggregated" small commercial and residential customers and standard
  offer service. Aggregated customers are associations or groups of customers
  which have joined together to negotiate purchases of electric or natural gas
  energy as a larger group. These associations and groups, in turn,
  may consist of individuals, municipalities or other types of natural gas
  or electric aggregation customers. Standard offer electric service is provided
  in areas where the energy market has been deregulated. In these markets,
  customers are allowed to choose their own supplier of electric energy. If they
  do not chose a specific supplier, their energy needs will be supplied by a
  standard offer provider. Generally, the public utility commission of the state
  selects the standard offer service provider. ESI serves as a standard offer
  service provider in the northern part of the state of Maine.

ESI provides individualized energy supply options and
  strategies that allow customers to manage energy needs while capitalizing on
  opportunities resulting from deregulation. ESI provides natural gas, electric
  and alternate fuel products, real-time energy management services and energy
  utilization consulting

Energy revenues, volumes and assets are as follows:

|                                               | 2004   | 2003   | 2002
|---------------------------------------------- | ------ | ------ | ----
|Electric Revenues(millions)                    |        |        |     
|United States                                  | $519   | $382   | $114
|Canada                                         | -      | -      | -   
|Total                                          | $519   | $382   | $114
|                                               |        |        |     
|Gas Revenues(millions)
      *                 |        |        |     
|United States                                  | $1,913 | $2,131 | $194
|Canada                                         | 1,122  | 566    | 51  
|Total                                          | $3,035 | $2,697 | $245
|                                               |        |        |     
|Electric Volumes(million
      megawatt hours) |        |        |     
|United States                                  | 10     | 9      | 7   
|Canada                                         | -      | -      | -   
|Total                                          | 10     | 9      | 7   
|                                               |        |        |     
|Gas Volumes(billion
      cubic feet)          |        |        |     
|United States                                  | 322    | 371    | 353 
|Canada                                         | 191    | 122    | 17  
|Total                                          | 513    | 493    | 370 
|                                               |        |        |     
|Assets(millions)                               |        |        |     
|United States                                  | $ 685  | $ 727  | $656
|Canada                                         | 402    | 436    | 221 
|Total                                          | $1,087 | $1,163 | $877

> * Gas revenues increased approximately $997 million in 2003 due to
>       a change in accounting in how revenues are reported. For more information,
>       see Notes to WPS Resources Consolidated Financial Statements -
>       Summary of Significant Accounting Policies -

-20-

<PAGE>





> Cumulative Effect of Change in Accounting Principle. Gas revenues also
>       increased approximately $500 million in 2003, as a result of the
>       acquisition of a retail natural gas business in Canada.

ESI's policy is to secure supply for sales commitments through purchase
  contracts with entities that have been determined to be creditworthy pursuant
  to the credit policies of ESI. The price risk between supply and sales
  commitments is managed in compliance with our risk policy through transaction
  specific supply commitments or through management of the overall portfolio.
  This policy provides more stable results and reduces ESI's exposure to market
  price fluctuations.

For more information on the trading and risk management activities of ESI
  see Item 7 - Management's Discussion and Analysis of Financial Condition and
  Results of Operation Introduction, WPS Resources - WPS Energy
  Services and Market Price Risk Management Activities - WPS Resources.

Facilities

ESI has an 81.5% interest in a 3 billion cubic foot natural
  gas storage field in Kimball, Michigan. The storage field allows for
  additional flexibility in supplying retail and wholesale customers, sale of
  storage services to the market and potential power peaking services.

Licenses

ESI is a FERC licensed marketer. ESI and its subsidiaries are registered to
  sell retail electric service in Maine, Massachusetts, Michigan, New York,
  Ohio, and Pennsylvania in the United States and the province of Ontario
  in Canada. ESI is registered to sell natural gas in Michigan, Ohio and New
  Brunswick Canada. ESI also sells natural gas in Wisconsin where no license is
  required. ESI's subsidiary, WPS Energy Services of Canada, is registered
  in the Canadian provinces of Alberta, British Columbia, Manitoba,
  Nova Scotia, Ontario, Quebec and Saskatchewan. ESI is also a member of
  the following regional transmission operators and North American Electric
  Reliability Council reliability regions:

- Independent Electricity Market Operator
      (located in Ontario),
- ISO New England,
- Mid-America Interconnected Network,
- Mid-Continent Area Power Pool,
- Midwest Independent System Operator,
- Northern Maine Independent System
      Administrator,
- New York Independent System Operator and
- PJM Interconnection.

Other Matters

Customer Segmentation

Although ESI is not dependent on any one customer, a significant percentage
  of its retail sales volume is derived from the paper and allied products and
  food and kindred products industries. ESI's concentration of sales in any
  single market sector is decreasing as it expands into the northeast
  United States retail electric and eastern Canada retail natural gas
  markets.

-21-

<PAGE>



Seasonality

ESI believes that its business, in the aggregate, is not seasonal, even
  though certain products sell more heavily in some seasons than in others.
  Sales of natural gas generally peak in the winter months, while sales of
  electric energy generally peak in the summer months. ESI's business is
  volatile as a result of market conditions and the related market opportunities
  available to its customers. In 2004, 50.7% of ESI gross margin came from
  natural gas operations, 47.3% from electric operations and 2.0% from other
  operations.

Competition

ESI is a nonregulated energy marketer that competes against regulated
  utilities, large energy trading companies and other energy marketers. ESI
  competes with other energy providers on the basis of price, reliability,
  service, financial strength, consumer convenience, performance and reputation.
  Although the nonregulated energy market has seen a decrease in the number of
  large energy providers, there continues to be consolidation of small energy
  marketers. The liquidity in the nonregulated energy market continues to
  improve with the increase of well-capitalized wholesale market participants.
  Although this increases competition, it also allows ESI to operate more
  efficiently.

The status of nonregulated energy markets also impacts the competitiveness
  of ESI. Legislation proposed in Michigan in 2004 that would have substantially
  harmed the electric choice market and returned Michigan to a model of a
  regulated supply monopoly was proposed but not passed. In addition,
  legislation has been introduced in Ohio to change the nonregulated energy
  market. If passed, this could affect the ability of ESI to compete in the Ohio
  retail electric market. For more information on the legislative activity in
  Michigan and Ohio and its impact on ESI, see the discussion on Industry
  Restructuring in Item 7 Management's Discussion and Analysis of Financial
  Condition and Results of Operation.

Working Capital

Currently, capital requirements of ESI are provided by its parent company,
  WPS Resources. The working capital needs of ESI vary significantly over
  time due to volatility in commodity prices, the structure of wholesale
  transactions, the price of natural gas and the other energy opportunities
  available to its customers. WPS Resources provides guarantees for ESI's
  supply contracts. These guarantees provide the financial strength needed to
  participate in the nonregulated energy market.

See Management's Discussion and Analysis of Financial Condition and Results
  of Operation for additional information regarding working capital needs of
  nonregulated operations.

-22-

<PAGE>



E. NONREGULATED ELECTRIC GENERATION

WPS Resources' nonregulated
  electric generation operations are provided through PDI. PDI owns and operates
  nonregulated electric generation facilities in the northeastern quadrant of
  the United States and adjacent portions of Canada. PDI also operates
  cogeneration facilities and generation from renewable resources.

PDI 's revenues, volumes and assets are as follows:



|                                               | 2004   | 2003   | 2002  
|---------------------------------------------- | ------ | ------ | ------
|Electric Revenues(millions)                    |        |        |       
|United States *                                | $70.0  | $81.4  | $58.7 
|Canada                                         | 1.4    | 1.0    | 0.7   
|Total                                          | $71.4  | $82.4  | $59.4 
|                                               |        |        |       
|Electric Volumes(million
      megawatt hours) |        |        |       
|United States                                  | 2.2    | 2.4    | 2.4   
|Canada                                         | 0.1    | 0.1    | 0.1   
|Total                                          | 2.3    | 2.5    | 2.5   
|                                               |        |        |       
|Plant Assets(millions)                         |        |        |       
|United States                                  | $229.1 | $239.4 | $246.6
|Canada                                         | 26.2   | 23.6   | 24.8  
|Total                                          | $255.3 | $263.0 | $271.4

> * Excludes revenues
>       from discontinued operations (the operation of the Sunbury generation
>       plant, which is held for sale, and certain other related assets).

In 2004, PDI entered into tolling agreements with ESI to market electric
    production from its facilities and to manage natural gas costs for its
    gas-fired generation facilities. PDI continues to manage costs of fuel for
    its coal-fired facilities. The tolling agreements allow ESI to operate PDI
    facilities at its discretion, when market conditions and fuel costs are
    advantageous. In 2003, ESI began to manage the market risk associated with
    sales related to the production from PDI's facilities. These agreements
    allow PDI to focus on the operation of the generation facilities and ESI to
    focus on the management of the market risk associated with energy production
    from these plants.

By including the tolling agreements in ESI's electric portfolio, PDI is
    able to match generation capabilities with customer demand. The improved
    economic dispatch of PDI's facilities resulted in $2.3 million of
    margin in excess of tolling fees paid to PDI and reduced the overall risk to
    the organization by more than 40 percent, as measured by Value-at-Risk (see
    Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for
    more information about value-at-risk).

Facilities

In 2003, PDI entered into a definitive agreement to sell
    its Sunbury generation facility to a subsidiary of Duquesne Light Holdings
    for approximately $120 million, subject to certain working capital
    adjustments and regulatory approval. On September 30, 2004, PDI
    received a letter of termination from Duquesne related to this sale. As a
    result of the termination of the sale, PDI entered into a settlement
    agreement with Duquesne on December 30, 2004. Under a provision of the
    settlement agreement, PDI retained a $4.4 million escrow deposit associated
    with the initial sales agreement. PDI has retained an investment banking
    firm to conduct an auction to sell the Sunbury plant.

For information regarding facilities of PDI, see Item 2, Properties, in
    this Annual Report on Form 10-K.

-23-

<PAGE>



Fuel Supply

Fuel requirements for PDI owned plants (excluding gas-fired plants) are
    estimated at 1.5 million tons annually. Fuel for these facilities
    includes coal, fluid coke, tire-derived fuel and wood. Of this amount,
    approximately 99% will be met through the burning of coal products,
    including bituminous coal, culm, silt and fluid coke (a petroleum product).
    In 2004, PDI purchased all of its fuel supplies through the spot market and
    short-term contracts. In 2005, PDI expects to supply approximately 50% of
    its annual fuel needs through short-term fuel contracts. The remaining 50%
    of fuel requirements will be purchased through the spot market. At
    December 31, 2004, PDI had an estimated six-year reserve of coal silt
    for its Westwood facility.

As part of tolling agreements with ESI, all natural gas supply for the
    natural gas-fired facilities will be supplied by ESI.

In 2004, 46% of annual coal transportation for Sunbury was supplied by
    Norfolk Southern Railroad. The remaining coal transportation is contracted
    through short-term agreements with a variety of transportation providers.

Licenses

All the FERC hydroelectric facility licenses held by PDI or its
    subsidiaries are current. The 33-megawatt hydroelectric facility owned in
    New Brunswick, Canada, is not subject to licensing.

Other Matters

Customer Segmentation

As a participant in the nonregulated electric generation market, PDI
    sells its production in the wholesale market either through outtake
    contracts or to ESI under tolling agreements. In 2004, 336 megawatts (36%)
    of sales were from outtake contracts. Included in the 336 megawatts related
    to outtake contracts are 200 megawatts from the outtake contract related to
    the Sunbury plant.

PDI is not dependent on any one industry, customer or group of customers
    for a significant portion of its revenues.

Seasonality

Although identifiable price peaks do not occur at any certain time of the
    year, PDI believes the nonregulated energy market is subject to seasonal
    impacts. Generally in the summer months, the demand for electric energy is
    high, which increases the price at which energy can be sold. In periods of
    high residential fuel consumption, (generally the winter months) the
    purchase price of oil and natural gas increases, which increases the
    production costs at PDI 's gas- and oil-fired facilities.

Competition

PDI competes for sales of electric production with both regulated and
    nonregulated energy producers.

> PDI operates in the wholesale markets of the following regional
>       transmission areas:
>     
>     ISO New England,
>       
>       Midwest Independent System Operator,
>       
>       New York Independent System Operator and



-24-

<PAGE>



> PJM Interconnection.

Of PDI's 829.8 megawatts of existing rated summer capacity (including 404
    megawatts at Sunbury), fixed price contracts are in place to sell
    approximately 136 megawatts in 2005. All 136 megawatts are firm
    commitments. The remainder of PDI's energy production is sold under tolling
    agreements with ESI.

Working Capital

Equity and working capital requirements of PDI are generally provided
    through WPS Resources. Nonrecourse project debt financing of
    approximately $82.3 million was in place for the Sunbury, Maine and
    Canadian generation plants owned by PDI as of December 31, 2004.

See Management's Discussion and Analysis of Financial Condition and
    Results of Operation for additional information regarding working capital
    needs of nonregulated operations.

F. ENVIRONMENTAL MATTERS

For information on environmental matters related to WPS Resources and
  any of its subsidiaries, see Note 17 - Commitments and Contingencies to
  our Notes to Consolidated Financial Statements.

G. CAPITAL REQUIREMENTS

For information on capital requirements related to WPS Resources, see
  Management's Discussion and Analysis of Financial Condition and Results
  of Operation - Liquidity and Capital Resources - WPS Resources.

For information on capital requirements related to WPSC, see Management's
  Discussion and Analysis of Financial Condition and Results of Operation -
  Liquidity and Capital Resources - Wisconsin Public Service Corporation.

H. EMPLOYEES

At December 31, 2004, WPS Resources and its subsidiaries had the
  following employees:

|                    | Wisconsin Public Service | Upper 
        Peninsula Power | WPS Energy Services | WPS Power Development | WPS Resources | TOTAL
|------------------- | ------------------------ | ------------------------------ | ------------------- | --------------------- | ------------- | -----
|Electric Utility    | 251                      | 174                            | -                   | -                     | -             | 425  
|Natural Gas Utility | 160                      | -                              | -                   | -                     | -             | 160  
|Common Utility      | 2,051                    | -                              | -                   | -                     | -             | 2,051
|Nonregulated        | -                        | -                              | 204                 | 180                   | 44            | 428  
|TOTAL               | 2,462                    | 174                            | 204                 | 180                   | 44            | 3,064

Local 310 of the International Union of Operating Engineers represents
  1,273 WPSC employees. The current Local 310 collective bargaining agreement
  expires on October 21, 2006.

Local 510 of the International Brotherhood of Electrical Workers, AFL-CIO,
  represents 135 UPPCO employees. The current Local 510 collective
  bargaining agreement expires on April 23, 2005.

Local 1600 of the International Brotherhood of Electrical Workers, AFL-CIO,
  represents approximately 95 employees at the Sunbury generation station
  owned and operated by a subsidiary of PDI. The current collective bargaining
  agreement with Local 1600 expires on May 10, 2005.

-25-

<PAGE>



I. Available Information

WPS Resources and WPSC file with the SEC:

> Annual Reports on Form 10-K,
>       
>       Quarterly Reports on Form 10-Q,
>       
>       WPS Resources Proxy statements,
>       
>       Registration statements, including
>         prospectuses,
>       
>       Statements for public utility holding
>         company exemption,
>       
>       Current Reports on Form 8-K and
>       
>       Any Amendments to these documents.

WPS Resources and WPSC make these reports available free of charge,
    on WPS Resources' Internet Web site, as soon as reasonably practicable
    after they are filed with the SEC. WPS Resources' Internet address is
    www.wpsr.com. Statements and amendments posted on WPS Resources' Web
    site do not include access to exhibits and supplemental schedules
    electronically filed with the reports or amendments. WPS Resources and
    WPSC are not including the information contained on or available through
    their Web sites as a part of, or incorporating such information by reference
    into, this Annual Report on Form 10-K.

You may also obtain materials filed with the SEC by
    WPS Resources and WPSC at the SEC Public Reference Room at
    450 Fifth Street, N.W., Washington, DC 20549. To obtain information on
    the operation of the Public Reference Room, you may call
    1-800-SEC-0330. You may also view reports, proxy and information
    statements and other information regarding WPS Resources and WPSC
    (including exhibits), filed with the SEC, at their Web site at www.sec.gov.

-26-

<PAGE>



ITEM 2.     PROPERTIES

A. UTILITY

Wisconsin Public Service
  Facilities

The following table summarizes information on the electric generation
  facilities of WPSC, including owned or jointly owned facilities as of December
  31, 2004:

|Type                                  | Name                                                                                                                                                                                                                                                                                                                                 | Location                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Fuel                                                                                                                                                                                                                                  | Rated
        Capacity (a)(Megawatts)                                                                                                                                                         |                
|------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------
|                                      |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       |                                                                                                                                                                                               |                
|Steam                                 | Pulliam (6 units)                                                                                                                                                                                                                                                                                                                    | Green Bay, WI                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Coal                                                                                                                                                                                                                                  | 385.8                                                                                                                                                                                         |                
|                                      | Weston (3 units)                                                                                                                                                                                                                                                                                                                     | Wausau, WI                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Coal                                                                                                                                                                                                                                  | 477.5                                                                                                                                                                                         |                
|                                      | Kewaunee                                                                                                                                                                                                                                                                                                                             | Kewaunee, WI                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Nuclear                                                                                                                                                                                                                               | 338.4                                                                                                                                                                                         | (b)            
|                                      | Columbia Units 1 and 2                                                                                                                                                                                                                                                                                                               | Portage, WI                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Coal                                                                                                                                                                                                                                  | 347.5                                                                                                                                                                                         | (b)            
|                                      | Edgewater Unit 4                                                                                                                                                                                                                                                                                                                     | Sheboygan, WI                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Coal                                                                                                                                                                                                                                  | 102.9                                                                                                                                                                                         | (b)            
|Total Steam                           |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       | 1,652.1                                                                                                                                                                                       |                
|                                      |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       |                                                                                                                                                                                               |                
|Hydroelectric                         | Alexander
        Caldron Falls
        Castle Rock
        Grand Rapids
        Grandfather Falls
        Hat Rapids
        High Falls
        Jersey
        Johnson Falls
        Merrill
        Otter Rapids
        Peshtigo
        Petenwell
        Potato Rapids
        Sandstone Rapids
        Tomahawk
        Wausau | Lincoln County, WI
        Marinette County, WI
        Adams County, WI
        Menominee County, WI
        Lincoln County, WI
        Oneida County, WI
        Marinette County, WI
        Lincoln County, WI
        Marinette County, WI
        Lincoln County, WI
        Vilas County, WI
        Marinette County, WI
        Adams County, WI
        Marinette County, WI
        Marinette County, WI
        Lincoln County, WI
        Marathon County, WI | Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro | 2.3
        6.8
        12.8
        3.4
        16.9
        0.6
        1.1
        0.2
        0.9
        1.0
        0.3
        0.2
        13.5
        0.4
        0.8
        2.43.1 | (b)
        (b)
|Total
        Hydroelectric           |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       | 66.7                                                                                                                                                                                          |                
|                                      |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       |                                                                                                                                                                                               |                
|Combustion
        Turbine and Diesel | De Pere Energy Center
        Eagle River
        Oneida Casino
        Juneau #J31
        West Marinette #31
        West Marinette #32
        West Marinette #33
        Weston #31
        Weston #32
        Pulliam #31                                                                                                       | De Pere, WI
        Eagle River, WI
        Green Bay, WI
        Adams County, WI
        Marinette, WI
        Marinette, WI
        Marinette, WI
        Marathon County, WI
        Marathon County, WI
        Green Bay, WI                                                                                                                                                                                                                                         | Natural Gas
        Distillate Fuel Oil
        Distillate Fuel Oil
        Distillate Fuel Oil
        Natural Gas
        Natural Gas
        Natural Gas
        Natural Gas
        Natural Gas
        Natural Gas               | 181.0
        4.1
        3.9
        7.0
        44.5
        42.2
        50.2
        20.0
        51.872.6                                                                                | (b)
        (b)
|Total Combustion Turbine and Diesel   |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 477.3                                                                                                                                                                                                                                 |                                                                                                                                                                                              
|                                      |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       |                                                                                                                                                                                               |                
|Wind                                  | Lincoln                                                                                                                                                                                                                                                                                                                              | Kewaunee County, WI                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Wind                                                                                                                                                                                                                                  | 1.8                                                                                                                                                                                           |                
|                                      |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       |                                                                                                                                                                                               |                
|Total System                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                       | 2,197.9                                                                                                                                                                                       |                

> 

(a) Based on capacity ratings for July 2005. As a result of
  continually reaching demand peaks in the summer months, primarily due to air
  conditioning demand, the summer period is the most relevant for capacity
  planning purposes.

(b) These facilities are jointly owned by WPSC and various other utilities.
  Nuclear Management Company operates the Kewaunee plant. Wisconsin Power and
  Light operates the Columbia and Edgewater units. Wisconsin River Power Company
  operates the Castle Rock, Petenwell, and Juneau units. WPSC operates the
  West Marinette 33 unit. The capacity indicated is our portion of total
  plant capacity based on the percent of ownership or capacity under contract.

-27-

<PAGE>



As of December 31, 2004, WPSC owned 122 distribution substations
  and 20,897 miles of electric distribution lines. Effective January 1,
  2001, all transmission property of WPSC was transferred to ATC.

Natural gas properties include approximately 7,483 miles of main, 86 gate
  and city regulator stations and 284,104 lateral services. All natural gas
  facilities are located in Wisconsin except for distribution facilities in and
  near the City of Menominee, Michigan.

Substantially all of WPSC's utility plant is subject to a first mortgage
  lien.

Upper Peninsula Power Facilities

The following table summarizes information on the electric generation
  facilities of UPPCO as of December 31, 2004:

|Type               | Name                                                                                                                                                                                                   | Location                                                                                                                                                                                                                                    | Fuel                                                                                                                  | Rated
        Capacity (a)(Megawatts)                                                               
|------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                        |                                                                                                                                                                                                                                             |                                                                                                                       |                                                                                                     
|Steam              | Warden                                                                                                                                                                                                 | L'Anse, MI                                                                                                                                                                                                                                  | Gas                                                                                                                   | 18.8 (b)                                                                                            
|                   |                                                                                                                                                                                                        |                                                                                                                                                                                                                                             |                                                                                                                       |                                                                                                     
|Hydroelectric      | Victoria (2 units)
        Hoist (3 units)
        McClure (2 units)
        Prickett (2 units)
        Autrain (2 units)
        Cataract
        Escanaba #1
        Escanaba #3
        Boney Falls | Ontonagon County, MI
        Marquette County, MI
        Marquette County, MI
        Houghton County, MI
        Alger County, MI
        Marquette County, MI
        Delta County, MI
        Delta County, MI
        Delta County, MI | Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro
        Hydro | 10.6
        1.3
        3.2
        0.5
        0.4
        0.4
        1.6
        2.4
        4.2
|                   |                                                                                                                                                                                                        |                                                                                                                                                                                                                                             |                                                                                                                       |                                                                                                     
|Combustion Turbine | Portage
        Gladstone                                                                                                                                                                              | Houghton, MI
        Gladstone, MI                                                                                                                                                                                                          | Oil
        Oil                                                                                                       | 16.5
         18.2                                                                                  
|                   |                                                                                                                                                                                                        |                                                                                                                                                                                                                                             |                                                                                                                       | _____                                                                                               
|Total System       |                                                                                                                                                                                                        |                                                                                                                                                                                                                                             |                                                                                                                       | 78.1                                                                                                

> (a) Based on July 2005 rated capacity.
>     (b) The J. H. Warden station was taken out of service on January 1,
>     1994. The facility was put into service for a short period after the Dead
>     River Flood in 2003 and is now once again in standby or inactive reserve
>     status.

UPPCO owns 3,070 miles of electric distribution lines.

Effective June 28, 2001, all transmission property of UPPCO was
  transferred to ATC.

Substantially all of UPPCO's utility plant is subject to a first mortgage
  lien.



B. NONREGULATED

WPS Resources Corporation

Asset Management Strategy

The asset management strategy for WPS Resources consists of the
  evaluation of all properties and businesses held by WPS Resources to
  identify their best use. WPS Resources will determine if the best use of
  the property or business is in current operations or if sale and reinvestment
  of proceeds is in the best interest of WPS Resources, its shareholders and
  customers.

As part of this strategy, in 2001 WPSC entered into an agreement with the
  WDNR for the sale of land and alternatives for additional land purchases in
  2003 and 2004. On December 15, 2004, WPSC completed

-28-

<PAGE>



the agreement with the WDNR with the $5 million sale of 179 acres and
  the donation of an additional 5,176 acres along the Peshtigo River.

In addition, on October 5, 2004, WPSC sold 279 acres of land
  along the Peshtigo River at public auction for approximately
  $12.2 million.

WPS Resources has identified approximately 7,300 acres of excess land
  associated with its UPPCO hydroelectric facilities. UPPCO is currently working
  with various interested parties to develop a sales strategy for these
  properties.

WPS Energy Services Facilities

ESI has an 81.5% interest in a 3 billion cubic foot natural gas storage
  field in Kimball, Michigan.

WPS Power Development Facilities

The following table summarizes information on the electric generation
  facilities owned by PDI, including jointly owned facilities as of December 31,
  2004:

|Type                                  | Name                                                                                    | Location                                                                                                                                      | Fuel                                                                           | Rated
        Capacity(Megawatts) (a)                                     
|------------------------------------- | --------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------ | --------------------------------------------------------------------------
|                                      |                                                                                         |                                                                                                                                               |                                                                                |                                                                           
|Steam                                 | Sunbury
        Niagara Falls
        Stoneman
        Westwood
        Wyman           | Shamokin Dam, PA
        Niagara Falls, NY
        Cassville, WI
        Tremont, PA
        Yarmouth, ME                                     | Coal
        Coal
        Coal
        Culm
        Oil                        | 362.0
          48.3
          48.0
          30.0
          20.7 (b)     
|                                      |                                                                                         |                                                                                                                                               |                                                                                |                                                                           
|Combined Cycle                        | Syracuse
        Beaver Falls
        Combined Locks                                    | Syracuse, NY
        Beaver Falls, NY
        Combined Locks, WI                                                                              | Gas/Oil
        Gas/Oil
        Gas                                            | 91.6
          87.3
          47.0 (c)                                    
|                                      |                                                                                         |                                                                                                                                               |                                                                                |                                                                           
|Hydroelectric                         | Tinker
        Squa Pan
        Caribou                                                 | New Brunswick,
        Canada
        Ashland, ME
        Caribou, ME                                                                         | Hydro
        Hydro
        Hydro                                              | 33.5
          1.4
          0.8                                          
|                                      |                                                                                         |                                                                                                                                               |                                                                                |                                                                           
|Combustion
        Turbine and Diesel | Sunbury
        Sunbury
        Caribou
        Tinker
        Flo's Inn
        Loring | Shamokin Dam, PA
        Shamokin Dam, PA
        Northern Maine
        New Brunswick, Canada
        Presque Isle, ME
        Limestone, ME | Oil
        Diesel
        Diesel
        Diesel
        Diesel
        Diesel | 36.0
          6.0
          7.0
          1.0
          4.2
          5.0
|                                      |                                                                                         |                                                                                                                                               |                                                                                | _____                                                                     
|Total System                          |                                                                                         |                                                                                                                                               |                                                                                | 829.8                                                                     

> (a) Based on summer rated capacity.
>     (b) PDI owns a 3.3455% interest in the Wyman plant. The plant is a
>     619-megawatt oil-fired facility.
>     (c) PDI also has an additional five megawatts of capacity available at
>     this facility through the lease of an additional steam turbine.

-29-

<PAGE>



ITEM 3.    LEGAL PROCEEDINGS

Stray Voltage Claims

For information on stray voltage claims related to WPS Resources and
  any of its subsidiaries, see Note 17 - Commitments and Contingencies
  to our Notes to Consolidated Financial Statements.

Dead River Flooding

For information on Dead River Flooding, see
  Note 17 - Commitments and Contingencies to our Notes to
  Consolidated Financial Statements.

Kewaunee Spent Nuclear Fuel
  Lawsuit

See the section titled Spent Nuclear Fuel Disposal under Item 1B
  above for a description of a lawsuit involving the DOE regarding the disposal
  of spent nuclear fuel at the Kewaunee generating facility.

Environmental

For information on environmental matters related to WPS Resources and
  any of its subsidiaries, see Note 17 - Commitments and Contingencies to
  our Notes to Consolidated Financial Statements.



-30-

<PAGE>



ITEM 4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
  HOLDERS

No matters were submitted to a vote of the security holders of either
  WPS Resources or WPSC during the fourth quarter 2004.

-31-

<PAGE>





ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANTS

|A. Executive Officers of WPS Resources
        Corporation
        as of January 1, 2005                                                                                                                                                                                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Name and Age                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Larry L. Weyers                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Thomas P. Meinz                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Phillip M. Mikulsky                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Joseph P. O'Leary *                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Bernard J. Treml                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Diane L. Ford                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Richard E. James                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Barbara A. Nick                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Bradley A. Johnson                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Barth J. Wolf                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|* Prior to joining WPS Resources, Joseph P. O'Leary's
          responsibilities at United Stationers included leading the finance,
          treasury and accounting functions. United Stationers was the largest
          provider of wholesale business office products in North America.                                                                                                                           
|NOTE: All ages are as of December 31, 2004. None of the
          executives listed above are related by blood, marriage, or adoption to
          any of the other officers listed or to any director of the
          Registrants. Each officer holds office until his or her successor has
          been duly elected and qualified, or until his or her death,
          resignation, disqualification, or removal.



-32-

<PAGE>



|B. Executive Officers of Wisconsin Public Service
        Corporation
        as of January 1, 2005                                                                                                                                                                                                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Name and Age                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Larry L. Weyers                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Lawrence T. Borgard                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Charles A. Schrock                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Thomas P. Meinz                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Joseph P. O'Leary *                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Bernard J. Treml                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|David W. Harpole                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Diane L. Ford                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Bradley A. Johnson                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|Barth J. Wolf                                                                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                        
|* Prior to joining WPS Resources, Joseph P. O'Leary's
          responsibilities at United Stationers included leading the finance,
          treasury and accounting functions. United Stationers was the largest
          provider of wholesale business office products in North America.                                                                                                                           
|NOTE: All ages are as of December 31, 2004. None of the
          executives listed above are related by blood, marriage, or adoption to
          any of the other officers listed or to any director of the
          Registrants. Each officer holds office until his or her successor has
          been duly elected and qualified, or until his or her death,
          resignation, disqualification, or removal.

-33-

<PAGE>



PART II

ITEM 5.     MARKET FOR REGISTRANTS' COMMON
  EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
  SECURITIES

> 

WPS Resources Corporation Common Stock Two-Year
  Comparison



|                   |                    |                     |       
|------------------ | ------------------ | ------------------- | ------
|Share
        Data | DividendsPer Share | Price
        Range
|High               | Low               
|                   |                    |                     |       
|2004               |                    |                     |       
|1st Quarter        | $ .545             | $48.93              | $44.99
|2nd Quarter        | .545               | 48.70               | 43.50 
|3rd Quarter        | .555               | 48.81               | 44.85 
|4th Quarter        | .555               | 50.53               | 45.35 
|Total              | $2.200             |                     |       
|                   |                    |                     |       
|2003               |                    |                     |       
|1st Quarter        | $
      .535       | $41.18              | $36.80
|2nd Quarter        | .535               | 44.28               | 39.53 
|3rd Quarter        | .545               | 41.60               | 38.28 
|4th Quarter        | .545               | 46.80               | 40.94 
|Total              | $2.160             |                     |       
|                   |                    |                     |       

WPS Resources common stock is traded on the New York Stock
  Exchange. WPS Resources is the sole holder of WPSC's common stock.

Dividend Restrictions

For information on dividend restrictions related to WPS Resources and
  any of its subsidiaries, see Note 20 - Common Equity to WPS
  Resources' Notes to Consolidated Financial Statements.

Common Stock

|Listed:                       | New York Stock Exchange                                                                    
|----------------------------- | -------------------------------------------------------------------------------------------
|                              |                                                                                            
|Ticker Symbol:                | WPS                                                                                        
|                              |                                                                                            
|Transfer Agent and Registrar: | American Stock Transfer and Trust Company
        59 Maiden Lane
        New York, NY 10038



As of February 28, 2005, there were 21,244 common stock shareholders
  of record.

See Item 11 of this Annual Report on Form 10-K for
  information regarding our equity compensation plans.

-34-

<PAGE>

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------- | -------- | -------- | -------- | --------
|ITEM 6. SELECTED FINANCIAL DATA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |          |          |          |          |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|WPS RESOURCES CORPORATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|COMPARATIVE FINANCIAL
        STATEMENTS AND                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|FINANCIAL STATISTICS (2000
        TO 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|As of or for Year Ended December 31                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |          |          |          |         
|(Millions, except per share amounts,
        stock price, return on average equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |          |         
|and number of shareholders and
        employees)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 2004     | 2003     | 2002     | 2001     | 2000    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Total revenues *                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | $4,890.6 | $4,321.3 | $1,461.1 | $1,345.4 | $1,094.1
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Income from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 156.2    | 110.6    | 118.5    | 87.6     | 75.6    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Income available for common shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 139.7    | 94.7     | 109.4    | 77.6     | 67.0    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 4,445.6  | 4,292.3  | 3,671.2  | 3,346.5  | 3,202.7 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Preferred stock of subsidiaries                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 51.1     | 51.1     | 51.1     | 51.1     | 51.1    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Long-term debt and capital lease
        obligation (excluding current portion)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 865.7    | 871.9    | 824.4    | 727.8    | 660.0   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Shares of common stock (less treasury
        stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |          |          |          |         
|and shares in deferred compensation
        trust)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |          |          |          |          |         
|Outstanding                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 37.3     | 36.6     | 31.8     | 31.1     | 26.4    
|Average                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 37.4     | 33.0     | 31.7     | 28.2     | 26.5    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Earnings per common share (basic)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |          |          |          |          |         
|Income from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $4.09    | $3.26    | $3.64    | $3.00    | $2.74   
|Earnings per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 3.74     | 2.87     | 3.45     | 2.75     | 2.53    
|Earnings per common share (diluted)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |          |          |          |         
|Income from continuing operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 4.07     | 3.24     | 3.61     | 2.99     | 2.74    
|Earnings per common share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | 3.72     | 2.85     | 3.42     | 2.74     | 2.53    
|Dividend per share of common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 2.20     | 2.16     | 2.12     | 2.08     | 2.04    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Stock price at year-end                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $49.96   | $46.23   | $38.82   | $36.55   | $36.8125
|Book value per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | $29.30   | $27.40   | $24.62   | $23.02   | $20.76  
|Return on average equity                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 13.5%    | 11.5%    | 14.6%    | 12.8%    | 12.3%   
|Number of common stock shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 21,358   | 22,172   | 22,768   | 23,478   | 24,029  
|Number of employees                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 3,048    | 3,080    | 2,963    | 2,856    | 3,030   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|* Revenues increased $2,860.2 million in
        2003 compared to 2002. Approximately $1,127 million of the increase
        relates to ESI's required adoption of Issue No. 02-03, "Issues
        Involved in Accounting for Derivative Contracts Held for Trading
        Purposes and Contracts Involved in Energy Trading and Risk Management
        Activities," effective January 1, 2003. Volume growth driven by
        ESI's acquisition of a retail natural gas business in Canada accounted
        for another $500 million of the increase. The remaining increase in
        revenues was primarily related to increased natural gas prices at WPSC
        and ESI and electric rate increases at the utilities.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|WISCONSIN PUBLIC SERVICE
        CORPORATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|COMPARATIVE FINANCIAL
        STATEMENTS AND                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|FINANCIAL STATISTICS (2000
        TO 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|As of or for Year Ended December 31                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |          |          |          |         
|(Millions, except weather information)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | 2004     | 2003     | 2002     | 2001     | 2000    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Operating revenues                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | $1,222.1 | $1,129.1 | $1,007.6 | $932.3   | $840.5  
|Earnings on common stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | 104.8    | 78.9     | 83.1     | 80.6     | 70.4    
|Total assets                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | 2,768.6  | 2,577.7  | 2,324.2  | 2,196.3  | 1,871.3 
|Long-term debt (excluding current
        portion)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 508.0    | 507.8    | 442.5    | 415.6    | 370.1   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|Weather information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |          |          |          |          |         
|Cooling degree days                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 328      | 351      | 586      | 546      | 330     
|Cooling degree days as a percent of
        normal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 66.7%    | 72.2%    | 122.9%   | 116.9%   | 70.7%   
|Heating degree days                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | 7,546    | 7,883    | 7,509    | 7,139    | 7,841   
|Heating degree days as a percent of
        normal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | 97.6%    | 102.2%   | 96.9%    | 91.9%    | 98.2%   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |          |          |          |          |         

-35-

<PAGE>

ITEM 7.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL
                
CONDITION AND RESULTS OF OPERATION

INTRODUCTION - WPS RESOURCES

WPS Resources is a holding company that is exempt from the Public
Utility Holding Company Act of 1935. Our wholly owned subsidiaries include two
regulated utilities, WPSC (which is an operating entity as well as a holding
company exempt from the Public Utility Holding Company Act of 1935) and UPPCO.
Another wholly owned subsidiary, WPS Resources Capital Corporation, is a
holding company for our nonregulated businesses, including ESI and PDI.

Our regulated and nonregulated businesses have distinct competencies and
business strategies, offer differing products and services, experience a wide
array of risks and challenges, and are viewed uniquely by management. The
following summary provides a strategic overview and insight into the operations
of our subsidiaries.

Strategic Overview

The focal point of WPS Resources' business plan is the creation of
long-term value for our shareholders (through growth, operational excellence,
and asset management) and the continued emphasis on reliable, competitively
priced, and environmentally sound energy services for our customers. We are
seeking a balanced portfolio of utility and nonregulated growth, but we are
placing emphasis on regulated growth.

Maintain a Strong Utility Base-As discussed above, we are focusing on
growth in our utility operations. A strong utility base is important in
order to maintain quality credit ratings, which are critical to our success. In
2004, WPSC signed contracts with several wholesale customers in order to bolster
growth beyond our normal utility growth rate, and WPSC is also expanding its
generation fleet in order to meet growing electric demand and ensure the
continued reliability of our energy services.

- WPSC entered into long-term power sale
    agreements with two wholesale customers in 2004. One is for Consolidated
    Water Power Company's full requirements service (between 65 and 125
    megawatts of firm load) through December 31, 2017. The other is a
    50-megawatt agreement with Wisconsin Public Power Inc. beginning May 1,
    2006, and ending April 30, 2021.
- In October 2004, WPSC began construction of
    its 500-megawatt coal-fired Weston 4 base-load power plant near Wausau,
    Wisconsin, and announced in May 2004 that it would pursue plans to build a
    jointly owned 500-megawatt base-load electric plant with Wisconsin Power and
    Light. The Weston 4 power plant is expected to be operational in 2008.
- Calpine Corporation's 560-megawatt, combined
    cycle, natural gas-fired generating facility (Fox Energy Center) in
    Kaukauna, Wisconsin, is expected to be placed in service in June 2005. WPSC
    has contracted for approximately 470 megawatts of this plant's output over a
    10-year period. WPSC also contracted to purchase 70 megawatts of wind
    generation over a 20-year period from the Forward Energy Wind Project in
    Brownsville, Wisconsin. Both of these agreements were signed as a means of
    seeking the most cost effective mix of energy resources to meet growing
    electric demand.

Integrate Resources to Provide Operational
Excellence-WPS Resources
is committed to integrating the resources of its business units (in accordance
with any applicable regulatory restrictions) by leveraging their individual
capabilities and expertise across the company.

- Effective August 2004, in an effort to better
    manage the market risks associated with PDI's merchant generation plants, we
    restructured the management of our two nonregulated business units (ESI and
    PDI) and currently have one executive management team overseeing the
    operations of these two business units.

-36-

<PAGE>



- In January 2004, ESI implemented strategies to
    optimize the value of PDI's merchant generation fleet and has reduced the
    market price risk while extracting additional value from these plants,
    through the use of various financial and physical instruments (such as
    forward contracts, options, and swaps). Prior to leveraging ESI's energy
    marketing expertise, PDI sold uncontracted energy into liquid financial
    markets at spot prices or day ahead prices, which provided less predictable
    revenue and margin.

Strategically Grow Nonregulated Businesses-ESI looks to grow its electric and natural gas business, targeting growth
in the northeastern United States and adjacent portions of Canada (through
strategic acquisitions, market penetration of existing businesses, and new
product offerings), which is where ESI has the most market expertise. As
discussed above, our utilities are our core businesses and as such we are
placing a strong emphasis on growth of utility operations in order to balance
our regulated and nonregulated growth. PDI focuses on optimizing the operational
efficiency of its existing portfolio of assets and pursues compatible power
development projects and the acquisition of generation assets that
"fit" in well with ESI's customer base and market expertise.

- In July 2004, ESI completed the acquisition of
    Advantage Energy, a privately held nonregulated electric power marketer
    based in Buffalo, New York. This acquisition provides ESI with enhanced
    opportunities to participate in the New York market, where we believe there
    is good opportunity for further penetration and the sale of new products.
- ESI continues to grow its business in the
    energy management sector by providing customers the expertise needed to
    manage their energy needs in volatile energy markets.

Place Strong Emphasis on Asset Management-Our asset management strategy calls for the continuing disposition and
acquisition of assets in a manner that enhances our earnings capability. The
acquisition portion of this strategy calls for the acquisition of assets that
compliment our existing assets and strategy such as Advantage Energy. Another
portion of the asset management strategy calls for the disposition of assets,
including plants and entire business units, which are no longer required for
operations.

- We continue to pursue the sale of Sunbury and
    expect to have a completed sale in 2005. The sale of Sunbury fits well
    within our asset management strategy. Included in this strategy is the
    desire to reduce risk associated with uncontracted merchant exposure.
- We continue to pursue the sale of Kewaunee to
    a subsidiary of Dominion Resources.
- Our Peshtigo River land sale initiative (which
    included land sales and donations to the WDNR and the sale of land at public
    auction) was completed in 2004. We continue to identify alternatives for the
    sale of the balance of our identified excess real-estate holdings.

Regulated Utilities

Our regulated utilities include WPSC and UPPCO. WPSC derives its revenues
  primarily from the production, distribution, and sale of electricity, and the
  purchase, distribution, and sale of natural gas to retail customers in a
  service area of approximately 11,000 square miles in northeastern Wisconsin
  and an adjacent portion of the Upper Peninsula of Michigan. The PSCW and the
  MPSC regulate these retail sales. WPSC also provides wholesale electric
  service to numerous utilities and cooperatives for resale. FERC regulates
  wholesale sales. UPPCO derives revenues from the sale of electric energy in a
  service area of approximately 4,500 square miles in the Upper Peninsula of
  Michigan and is regulated by the MPSC.

The regulatory commissions allow the utilities to earn a return on common
  stock equity that is commensurate with an investor's desired return,
  compensating for the risks investors face when providing funds to the utility.
  The return on common stock equity approved by the PSCW, FERC, and the MPSC was
  12.0%, 11.0%, and 11.4%, respectively, in 2004. Generally, consumers bear the
  price risk for fuel

-37-

<PAGE>



and purchased power costs as regulators allow the utility to recover
  substantially all of these costs (to the extent they are prudently incurred),
  through various cost recovery mechanisms, but utilities bear volume risk as
  rates are based upon normal sales volumes as projected by the utility. The
  utilities may also be able to defer certain unexpected costs that are incurred
  during the year for recovery in future rate proceedings (examples include
  WPSC's deferral of costs associated with the extended Kewaunee outage in 2004
  and deferral of costs incurred by UPPCO related to the Dead River flood);
  however, these costs must be prudently incurred as determined by the
  regulatory commissions. As such, the ability of our regulated utilities to
  earn their approved return on equity is dependent upon accurate forecasting
  techniques, their ability to obtain timely rate increases to account for
  rising cost structures (while minimizing the required rate increases in order
  to maintain the competitiveness of our core industrial customer base and keep
  these customers in our service area), and certain conditions that are outside
  of their control, such as macroeconomic factors and weather conditions.
  Unfavorable weather conditions compared to normal for both electric and
  natural gas utility operations and increased operating expenses contributed to
  WPSC's inability to earn its approved rate of return in 2004.

Uncertainties related to the deregulation process are a risk for our
  regulated utilities. Deregulation of natural gas service has begun in
  Wisconsin. Currently, the largest natural gas customers can purchase natural
  gas from suppliers other than their local utility.  Efforts are underway
  to make it easier for smaller natural gas customers to do the same. We believe
  electric deregulation inside Wisconsin is at least several years off as the
  state is focused on improving reliability by building more generation and
  transmission facilities and creating fair market rules. If electric choice
  occurs, we believe we could lose some generation load but would retain the
  delivery revenues and margin. Also, the capacity that would be freed up should
  be competitive in our marketplace. Deregulation of electricity is present in
  Michigan; however, in the Upper Peninsula of Michigan, no customers have
  chosen an alternative electric supplier and no alternative electric suppliers
  have offered to serve any customers in Michigan's Upper Peninsula due to the
  lack of excess transmission and generation system capacity in the areas we
  serve, which is a barrier to competitive suppliers entering the market.

The utilities are also exposed to costs associated with increasingly
  stringent environmental rules and regulations to the extent recovery of these
  costs is disallowed in rate proceedings. WPSC and UPPCO are also members of
  the Midwest Independent System Operator, which is in the process of
  restructuring the electric market in its footprint. For further discussion of
  environmental risks, see Note 17 to WPS Resources' Notes to
  Consolidated Financial Statements and for further discussion of the Midwest
  Independent System Operator, see Trends - WPS Resources.

WPS Energy Services

ESI offers nonregulated natural gas, electric, and alternate fuel supplies,
  as well as energy management and consulting services, to retail and wholesale
  customers primarily in the northeastern quadrant of the United States and
  adjacent portions of Canada. Although ESI has a widening array of products and
  services, revenues are primarily derived through sales of electricity and
  natural gas to retail and wholesale customers.

ESI's marketing and trading operations manage power and natural gas
  procurement as an integrated portfolio with its retail and wholesale sales
  commitments. ESI strives to maintain a low risk portfolio with relatively few
  open positions, balancing natural gas and electricity purchase commitments
  with corresponding sales commitments. In 2004, ESI purchased electricity
  required to fulfill these sales commitments primarily from independent
  generators, energy marketers, and organized electric power markets and
  purchased natural gas from a variety of producers and suppliers under daily,
  monthly, seasonal, and long-term contracts, with pricing delivery and volume
  schedules to accommodate customer requirements. ESI's customers include
  utilities, municipalities, cooperatives, commercial and industrial consumers,
  aggregators, and other marketing and retail entities. ESI uses derivative
  financial instruments to provide flexible pricing to customers and suppliers,
  manage purchase and sales commitments, and reduce exposure relative to
  volatile market prices.

-38-

<PAGE>



The table below discloses future natural gas and electric sales volumes
  under contract as of December 31, 2004. Contracts are generally one to
  three years in duration. ESI expects that its ultimate sales volumes in 2005
  and beyond will exceed the volumes shown in the table below as it continues to
  seek growth opportunities and existing customers who do not have long-term
  contracts continue to buy their short-term requirements from ESI.

|Forward Contracted Volumes at 12/31/2004(1)      | 2005  | 2006 to 2008 | 2009 to 2010
|------------------------------------------------ | ----- | ------------ | ------------
|                                                 |       |              |             
|Wholesale sales volumes - billion cubic feet     | 98.1  | 10.2         | -           
|Retail sales volumes - billion cubic feet        | 184.8 | 39.6         | 2.0         
|Total natural gas sales volumes                  | 282.9 | 49.8         | 2.0         
|                                                 |       |              |             
|Wholesale sales volumes - million kilowatt-hours | 5,981 | 1,665        | -           
|Retail sales volumes - million kilowatt-hours    | 3,413 | 1,575        | 73          
|Total electric sales volumes                     | 9,394 | 3,240        | 73          

> 

(1) These tables represent physical sales contracts for natural gas and
electric power for delivery or settlement in future periods. Management has no
reason to believe that gross margins that will be generated by these contracts
will vary significantly from those experienced historically.

For comparative purposes, future natural gas and electric sales volumes under
contract at December 31, 2003 are shown below. Actual electric and natural
gas sales volumes for 2004 are disclosed within Results of Operations -
WPS Resources, ESI Segment Operations.

|Forward Contracted Volumes at 12/31/2003(1)      | 2004  | 2005 to 2007 | 2008 to 2009
|------------------------------------------------ | ----- | ------------ | ------------
|                                                 |       |              |             
|Wholesale sales volumes - billion cubic feet     | 95.8  | 15.1         | -           
|Retail sales volumes - billion cubic feet        | 173.4 | 63.2         | -           
|Total natural gas sales volumes                  | 269.2 | 78.3         | -           
|                                                 |       |              |             
|Wholesale sales volumes - million kilowatt-hours | 3,176 | 238          | -           
|Retail sales volumes - million kilowatt-hours    | 5,133 | 3,623        | 37          
|Total electric sales volumes                     | 8,309 | 3,861        | 37          

> 

(1) These tables represent physical sales contracts for natural gas and
electric power for delivery or settlement in future periods. Management has no
reason to believe that gross margins that will be generated by these contracts
will vary significantly from those experienced historically.

ESI has experienced steady increases in electric and natural gas sales
volumes since its inception, and expects this trend to continue as it continues
to look for opportunities that fit within its growth strategy. In 2004, ESI grew
its retail electric business through the acquisition of retail operations in New
York and through portfolio optimization strategies utilized to maximize the
value of PDI's merchant generation fleet and ESI's retail supply portfolio.
Natural gas volumes increased as a result of the continued expansion of ESI's
retail natural gas business in Canada. ESI expects to continue to target
acquisitions and participate in generation service programs within the area it
serves.

As a company that participates in energy commodity markets, ESI is exposed to
a variety of risks, including market, operational, liquidity, and credit risks.
Market risk is measured as the potential gain or loss of a portfolio that is
associated with a price movement within a given probability over a specific
period of time, known as value-at-risk. Through the use of derivative financial
instruments, we believe we have reduced our value-at-risk to acceptable levels
(see Item 7A, Quantitative and Qualitative Disclosures About Market Risk, for
more information about value-at-risk). Operational risk is the risk of loss from
less than flawless execution of transactions, forecasting, scheduling, or other
operational activities and is common to all companies participating in the
energy marketing industry. ESI's continued investment in computational
infrastructure, business process improvement, employee training, and internal
controls has

-39-

<PAGE>



helped mitigate operational risk to date. Liquidity risk is an emerging risk
and one that has historically been less applicable to ESI than many industry
participants because of the financial support provided by WPS Resources in
the form of guarantees to counterparties. A significant downgrade in
WPS Resources' credit ratings, however, could cause counterparties to
demand additional assurances of payment. WPS Resources' Board of Directors
imposes restrictions on the amount of guarantees WPS Resources is allowed
to provide to these counterparties in order to protect its credit ratings, and
ESI believes it would have adequate capital to continue core operations unless
WPS Resources' credit ratings fell below investment grade (Standard &
Poor's rating of BBB- and Moody's rating of Baa3).

The other category of risk mentioned above that ESI faces is credit risk from
retail and wholesale counterparties. In order to mitigate its exposure to credit
risk, ESI has implemented stringent credit policies. As a result of these credit
policies, ESI has not experienced significant write-offs from its large
wholesale counterparties to date. Write-offs pertaining to retail counterparties
were $0.7 million, or 0.0%, in 2004, compared to $3.1 million, or
0.2%, in 2003. ESI believes its write-off percentage is within the range
experienced by most energy companies. The table below summarizes wholesale
counterparty credit exposure, categorized by maturity date, as of
December 31, 2004 (in millions):

|Counterparty
      Rating (Millions)(1)   | Exposure(2) | Exposure Less Than 1 Year | Exposure 
      1 to 3 Years | Net Exposure of
       Counterparties
       Greater Than
       10% of NetExposure
|----------------------------------------- | ----------- | ------------------------- | ---------------------------- | -----------------------------------------------------------------------------------
|                                          |             |                           |                              |                                                                                    
|Investment grade -- regulated utility     | $ 18.8      | $ 13.7                    | $ 5.1                        | $ -                                                                                
|Investment grade -- other                 | 86.6        | 79.1                      | 7.5                          |                                                                                    
|                                          |             |                           |                              |                                                                                    
|Non-investment grade -- regulated utility | -           | -                         | -                            | -                                                                                  
|Non-investment grade -- other             | 4.0         | 4.0                       | -                            | -                                                                                  
|                                          |             |                           |                              |                                                                                    
|Non-rated -- regulated utility            | -           | -                         | -                            | -                                                                                  
|Non-rated -- other                        | 36.3        | 28.2                      | 8.1                          | -                                                                                  
|                                          |             |                           |                              |                                                                                    
|Total Exposure                            | $145.7      | $125.0                    | $20.7                        | $ -                                                                                

> (1) The investment and non-investment grade categories are determined by
>   publicly available credit ratings of the counterparty or the rating of any
>   guarantor, whichever is higher. Investment grade counterparties are those with
>   a senior unsecured Moody's rating of Baa3 or above or a Standard & Poor's
>   rating of BBB- or above.
>   (2) Exposure considers netting of accounts receivable and accounts payable
>   where netting agreements are in place as well as netting mark-to-market
>   exposure. Exposure is before consideration of collateral from counterparties.
>   Collateral, in the form of cash and letters of credit, received from
>   counterparties totaled $11.7 million at December 31, 2004,
>   $3.2 million from non-investment grade counterparties and
>   $8.5 million from non-rated counterparties.

A risk that became more prevalent in 2004 is industry restructuring. There is
some concern over the status of the nonregulated energy market in Michigan and
Ohio, which are two states in which ESI operates. ESI is also a member of the
Midwest Independent System Operator, which is in the process of restructuring
the electric power market in its footprint. For more information on these risks,
see Trends - WPS Resources.

WPS Power Development

PDI competes in the wholesale merchant electric power generation industry,
primarily in the midwest and northeastern United States and adjacent
portions of Canada. PDI's core competencies include power plant operation and
maintenance and material condition assessment of assets. In order to enable PDI
to focus on its core competencies and improve the efficiency and reliability of
its existing fleet of power

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<PAGE>



plants, ESI has assumed much of the market price risk associated with these
plants. Through several tolling agreements and power purchase agreements, ESI
has contracted for approximately 330 of PDI's 425 megawatts of total capacity
(these capacity numbers exclude Sunbury, which is recorded in discontinued
operations). ESI utilizes power from PDI's New England and Canadian assets
primarily to serve its firm load commitments in northern Maine and certain other
sale agreements with customers. For the remaining capacity contracted from PDI,
ESI utilizes financial tools, including forwards, options, and swaps to limit
exposure, as well as to extract additional value from PDI's merchant generation
fleet. These activities had a positive impact on ESI's margin in 2004 and
benefited PDI by providing more stable revenue streams.

PDI has power purchase agreements in place with third-party customers for the
95 megawatts of capacity that is not contracted to ESI, which includes its
Stoneman facility in Cassville, Wisconsin, and its Combined Locks facility in
Combined Locks, Wisconsin.

Oversupply of capacity, low spark spreads (spark spread is the difference
between the market price of electricity and its cost of production), and high
fuel costs have led to lower than anticipated results for PDI's merchant
generation business in recent years. In response to these market conditions, PDI
has taken steps to adjust to the current wholesale merchant environment. As
discussed above, beginning in January 2004, ESI began assuming much of the
market price risk for PDI's merchant generation fleet. Prior to the capacity and
power contracts with ESI, risk management activities (i.e., hedging activities)
were sparsely utilized, leaving PDI's generation fleet more exposed to market
price risk. PDI also continues to pursue the sale of Sunbury and anticipates
that the plant will be sold in 2005. The Sunbury sale will allow PDI to reduce
its uncontracted merchant exposure and enable WPS Resources to redeploy
capital into business opportunities with different risk profiles.

PDI, through its subsidiary ECO Coal Pelletization #12 LLC, also owns an
interest in a synthetic fuel producing facility. See Trends -
WPS Resources, Synthetic Fuel Operation for more information on the risks
related to PDI's investment in this synthetic fuel operation.

PDI is subject to clean air regulations enforced by the EPA and state and
local governments. New legislation could require significant capital
outlays. See Note 17 to WPS Resources' Notes to Consolidated Financial
Statements for more information on PDI's environmental exposure.

RESULTS OF OPERATIONS - WPS RESOURCES

2004 Compared with 2003

WPS Resources Overview

WPS Resources' 2004 and 2003 results of operations are shown in the
following table:

|WPS Resources' Results(Millions, except share amounts) | 2004     | 2003     | Change
|------------------------------------------------------ | -------- | -------- | ------
|                                                       |          |          |       
|Consolidated operating revenues                        | $4,890.6 | $4,321.3 | 13.2% 
|Income available for common shareholders               | $139.7   | $94.7    | 47.5% 
|Basic earnings per share                               | $3.74    | $2.87    | 30.3% 
|Diluted earnings per share                             | $3.72    | $2.85    | 30.5% 

The $569.3 million increase in consolidated operating revenue for the
year ended December 31, 2004, compared to the same period in 2003, was
largely driven by a $475.1 million, or 15.4%, increase in revenue at ESI
and an $82.5 million, or 10.1%, increase in electric utility revenue.
Higher natural gas prices, portfolio optimization strategies (implemented in
2004), and expansion of the Canadian retail natural gas business were the
primary contributors to increased revenue at ESI. Higher electric utility
revenue was primarily the result of authorized retail electric rate increases
for WPSC's Wisconsin and Michigan customers. Revenue changes by reportable
segment are discussed in more detail below.

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Income available for common shareholders was $139.7 million ($3.74 basic
earnings per share) for the year ended December 31, 2004, compared to
$94.7 million ($2.87 basic earnings per share) for the year ended
December 31, 2003. Significant factors impacting the change in earnings and
earnings per share are as follows (and are discussed in more detail below).

- Approved rate increases (including the impact
    of timely retail electric rate relief in 2004, compared to the delay in
    receiving retail electric rate relief in 2003) favorably impacted
    year-over-year margin at the utilities.
- Natural gas utility throughput volumes were
    6.2% lower in 2004 due to weather that was 4.3% warmer during the heating
    season, compared to 2003.
- Higher throughput volumes and improved supply
    management in Ohio favorably impacted ESI's year-over-year retail natural
    gas margin.
- Portfolio optimization strategies, better
    management of retail operations in Ohio and positive operating results from
    Advantage Energy contributed to improved year-over-year electric margins at
    ESI.
- As part of our overall asset management
    strategy, WPS Resources realized earnings of $15.0 million from
    the sale and donation of land in 2004, compared to $6.5 million in
    2003.
- Earnings from equity method investments
    (primarily from ATC) increased in 2004, compared to 2003.
- Earnings were negatively impacted by higher
    operating and maintenance expenses in 2004.
- Synthetic fuel related tax credits recognized
    were higher in 2004 when compared to 2003.
- The weighted average number of shares of
    WPS Resources common stock increased by 4.4 million shares for the
    year ended December 31, 2004, compared to the same period in 2003. The
    increase was largely due to issuing 4,025,000 additional shares of common
    stock through a public offering in November 2003. Additional shares were
    also issued under the Stock Investment Plan and certain stock-based employee
    benefit plans.

Overview of Utility Operations

Utility operations include the electric utility segment, consisting of the
  electric operations of WPSC and UPPCO and the gas utility segment comprising
  the natural gas operations at WPSC. Income available for common shareholders
  attributable to the electric utility segment was $68.8 million for the
  year ended December 31, 2004, compared to $60.0 million for the year
  ended December 31, 2003. Income available for common shareholders
  attributable to the gas utility segment was $17.3 million for the year
  ended December 31, 2004, compared to $15.7 million for the year
  ended December 31, 2003.

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<PAGE>



Electric Utility Segment Operations

|WPS Resources' Electric Utility Segment Results (Millions) | 2004     | 2003     | Change
|---------------------------------------------------------- | -------- | -------- | ------
|                                                           |          |          |       
|Revenues                                                   | $896.6   | $814.1   | 10.1% 
|Fuel and purchased power costs                             | 295.5    | 266.3    | 11.0% 
|Margins                                                    | $601.1   | $547.8   | 9.7%  
|                                                           |          |          |       
|Sales in kilowatt-hours                                    | 14,465.7 | 14,346.7 | 0.8%  

Electric utility revenue increased $82.5 million, or 10.1%, for the year
ended December 31, 2004, compared to the same period in 2003. Electric
utility revenue increased largely due to authorized retail and wholesale
electric rate increases for WPSC's Wisconsin and Michigan customers (as
summarized below) to recover higher fuel and purchased power costs, increased
operating expenses, and expenditures incurred for infrastructure improvements.

- Effective March 21, 2003, the PSCW approved a
    retail electric rate increase of $21.4 million, or 3.5%.
- Effective May 11, 2003, FERC approved a
    $4.1 million, or 21%, interim increase in wholesale electric rates.
- Effective July 22, 2003, the MPSC approved a
    $0.3 million, or 2.2%, increase in retail electric rates for WPSC's
    Michigan customers and authorized recovery of $1.0 million of increased
    transmission costs through the power supply cost recovery process.
- Effective January 1, 2004, the PSCW approved a
    retail electric rate increase of $59.4 million, or 9.3%.

Electric utility sales volumes were also slightly higher in 2004,
  increasing 0.8% over 2003 sales volumes. A 1.6% increase in sales volumes to
  commercial and industrial customers was partially offset by a 1.2% decrease in
  sales volumes to residential customers. Higher sales volumes to our commercial
  and industrial customers reflect an improving economy and growth within our
  service area, while the decrease in sales volumes to residential customers
  reflects weather that was 6.6% cooler during the 2004 cooling season, compared
  to 2003.

The electric utility margin increased $53.3 million, or 9.7%, for the
  year ended December 31, 2004, compared to 2003. The majority of this
  increase can be attributed to a $52.3 million, or 10.5%, increase in
  WPSC's electric margin. The increase in WPSC's electric margin is primarily
  related to the retail and wholesale electric rate increases, partially offset
  by a $20.4 million increase in purchased power costs. The quantity of
  power purchased in 2004 increased 9.3% over 2003 purchases, and purchased
  power costs were 17.4% higher (on a per-unit basis) in 2004, compared to 2003.
  The PSCW allows WPSC to adjust prospectively the amount billed to Wisconsin
  retail customers for fuel and purchased power if costs are in excess of plus
  or minus 2% from approved levels. In response to a request for additional fuel
  cost recovery filed early in 2004, WPSC was allowed to recover
  $3.2 million of its increased fuel and purchased power costs during 2004.
  The PSCW also allowed WPSC to defer $5.4 million of unanticipated fuel
  and purchased power costs directly associated with the extension of the
  Kewaunee refueling outage in the fourth quarter of 2004. The Kewaunee outage
  was extended three weeks due primarily to an unexpected problem encountered
  with equipment used for lifting internal vessel components to perform a
  required ten-year in-service inspection. It is anticipated that these costs
  will be recovered in 2006, pending final approval.

Electric utility earnings increased $8.8 million, or 14.7%, for the
  year ended December 31, 2004, compared to 2003. The increased earnings
  were largely driven by the higher margin at WPSC (including

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<PAGE>



the effect of timely retail electric rate relief in 2004 compared to a
  delay in receiving retail electric rate relief in 2003), partially offset by
  higher operating and maintenance expenses.

Gas Utility Segment Operations

|WPS Resources'Gas Utility Segment Results (Millions) | 2004   | 2003   | Change
|---------------------------------------------------- | ------ | ------ | ------
|                                                     |        |        |       
|Revenues                                             | $420.9 | $404.2 | 4.1%  
|Purchased gas costs                                  | 301.9  | 291.0  | 3.7%  
|Margins                                              | $119.0 | $113.2 | 5.1%  
|                                                     |        |        |       
|Throughput in therms                                 | 801.3  | 854.5  | (6.2%)

Gas utility revenue increased $16.7 million, or 4.1%, for the year ended
December 31, 2004, compared to 2003. Higher revenue was driven by an
authorized rate increase and an increase in the per-unit cost of natural gas,
partially offset by an overall 6.2% decrease in natural gas throughput volumes.
The PSCW issued a final order authorizing a retail natural gas rate increase of
$8.9 million, or 2.2%, effective January 1, 2004. Natural gas
prices increased 14.2% per unit in 2004. Higher natural gas prices reflect
higher marketplace natural gas costs in 2004. The PSCW and the MPSC allow WPSC
to pass changes in the total cost of natural gas on to customers. As a result,
changes in the price of the natural gas commodity do not have a direct impact on
WPSC's margin. The decrease in natural gas throughput volumes was driven by
weather that was 4.3% warmer during the heating season for the year ended
December 31, 2004, compared to 2003.

The natural gas utility margin increased $5.8 million, or 5.1%, for the
year ended December 31, 2004, compared to 2003. The higher natural gas
utility margin is largely due to the authorized rate increase mentioned above.
The ability of WPSC to realize the full benefit of an authorized rate increase
is dependent upon normal throughput volumes; therefore, the decrease in natural
gas throughput volumes negatively impacted WPSC's ability to benefit from the
full amount of the rate increase.

The higher margin drove a $1.6 million, or 10.2% increase in natural gas
utility earnings for the year ended December 31, 2004.

Overview of Nonregulated Operations

Nonregulated operations consist of natural gas, electric, and other sales at
ESI, a diversified energy supply and services company, and the operations of PDI,
an electric generation company. ESI and PDI are both reportable segments.

Income available for common shareholders attributable to ESI was
$36.7 million for the year ended December 31, 2004, compared to
$29.0 million for the same period in 2003. Higher overall margins were
offset by an increase in operating expenses and a $3.3 million after-tax
cumulative effect of change in accounting principles that was recorded at ESI in
2003.

PDI reported income available for common shareholders of $5.0 million
for the year ended December 31, 2004, compared to a $7.9 million net
loss for the year ended December 31, 2003, largely due to an increase in
the amount of tax credits recognized and a lower loss from discontinued
operations, partially offset by higher operating and maintenance expenses and a
lower overall margin.

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ESI's Segment Operations

Total segment revenues at ESI were $3,556.3 million for the year ended
December 31, 2004, compared to $3,081.2 million for the year ended
December 31, 2003. The total margin at ESI was $111.6 million for the
year ended December 31, 2004 compared to $86.8 million for the year
ended December 31, 2003. ESI's nonregulated natural gas and electric
operations are the primary contributors to revenues and margins and are
discussed below.

|ESI's Natural Gas Results(Millions except sales volumes) | 2004      | 2003      | Change
|-------------------------------------------------------- | --------- | --------- | ------
|                                                         |           |           |       
|Nonregulated natural gas revenues                        | $3,035.1  | $2,696.6  | 12.5% 
|Nonregulated natural gas cost of sales                   | 2,978.5   | 2,652.5   | 12.3% 
|Margins                                                  | $    56.6 | $    44.1 | 28.3% 
|                                                         |           |           |       
|Wholesale sales volumes in billion cubic feet *          | 236.3     | 252.4     | (6.4%)
|Retail sales volumes in billion cubic feet *             | 276.7     | 240.6     | 15.0% 

* Represents gross physical volumes

Natural gas revenue increased $338.5 million, driven by higher natural
gas prices and the expansion of the Canadian retail natural gas business (due to
obtaining new customers), partially offset by lower sales volumes from physical
wholesale transactions. Sales volumes from physical wholesale transactions
declined as a result of reduced price volatility of natural gas during the first
half of 2004 (volatility provides more opportunity for profitable physical
wholesale transactions).

The natural gas margin at ESI increased $12.5 million, or 28.3%, for the
year ended December 31, 2004, compared to 2003. The margin related to
retail natural gas operations increased $12.3 million, primarily driven by
higher natural gas throughput volumes in Ohio (driven by the addition of new
customers), operational improvements, and better management of supply for
residential and small commercial customers. Customer growth in Canada also
contributed to the increase in the retail natural gas margin. The margin
attributed to wholesale natural gas operations increased $0.2 million. The
increase in wholesale natural gas margin was driven by a $4.6 million
margin increase related to the natural gas storage cycle, a $2.2 million
increase in the Canadian wholesale natural gas margin, and increased margins
from other structured wholesale natural gas transactions. Favorable settlements
of liabilities with several counterparties in 2003 (in the amount of
$8.4 million) largely offset these increases in the wholesale natural gas
margin. For the year ended December 31, 2004, the natural gas storage cycle
had a $2.0 million positive impact on margin, compared with a
$2.6 million negative impact on margin for the same period in 2003. The
increase in the Canadian wholesale natural gas margin is related to higher
volumes (more structured wholesale transactions) as ESI continues to increase
its wholesale natural gas operations in this region.

ESI experiences earnings volatility associated with the natural gas storage
cycle, which runs annually from April through March of the next year. Generally,
injections of natural gas into storage inventory take place in the summer months
and natural gas is withdrawn from storage in the winter months. ESI's policy is
to hedge the value of natural gas storage with sales in the over-the-counter and
futures markets, effectively locking in a margin on the natural gas in storage.
However, fair market value hedge accounting rules require the natural gas in
storage to be marked-to-market using spot prices, while the future sales
contracts are marked-to-market using forward prices. When the spot price of
natural gas changes disproportionately to the forward price of natural gas, ESI
experiences volatility in its earnings. Consequently, earnings volatility may
occur within the contract period for natural gas in storage. The accounting
treatment does not impact the underlying cash flows or economics of these
transactions. At December 31, 2004, there was a $0.6 million
difference between the market value of natural gas in storage and the market
value of future sales contracts (net risk management liability), related to the
2004/2005 natural gas storage cycle. At December 31, 2003, there was a
$2.6 million difference (net risk management liability) related to the
2003/2004 natural gas storage cycle. The difference between the market value of
natural gas in storage and the market value of future sales contracts related to
the

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2004/2005 storage cycle is expected to vary with market conditions, but will
reverse entirely when all of the natural gas is withdrawn from storage.

|ESI's Electric Results(Millions)           | 2004    | 2003    | Change
|------------------------------------------ | ------- | ------- | ------
|                                           |         |         |       
|Nonregulated electric revenues             | $518.9  | $382.2  | 35.8% 
|Nonregulated electric cost of sales        | 466.1   | 341.8   | 36.4% 
|Margins                                    | $ 52.8  | $ 40.4  | 30.7% 
|                                           |         |         |       
|Wholesale sales volumes in kilowatt-hours* | 3,181.5 | 2,768.0 | 14.9% 
|Retail sales volumes in kilowatt-hours*    | 7,202.9 | 6,435.3 | 11.9% 

* Represents gross physical volumes

Electric revenue increased $136.7 million, largely due to an
$83.7 million increase resulting from higher volumes from portfolio
optimization strategies. In the first quarter of 2004, ESI first implemented the
portfolio optimization strategies to optimize the value of PDI's merchant
generation fleet and its own retail supply portfolios to reduce market price
risk and extract additional value from these assets through the use of various
financial and physical instruments (such as forward contracts and options).
Electric revenue also increased as a result of the July 1, 2004, acquisition of
Advantage Energy and higher energy prices compared to the prior year. These
increases were partially offset by lower sales volumes from participation in the
New Jersey Basic Generation Services Program, as ESI's participation in this
program ended in May 2004.

ESI's electric margin increased $12.4 million, or 30.7%, for the year
ended December 31, 2004, compared to 2003. The 2004 retail electric margin
increased $7.8 million compared to 2003. The margin related to retail
electric operations in Ohio increased $7.6 million, which can be attributed
to better management of retail operations and improved supply procurement. Also
contributing to the increase in retail electric margin was a $2.6 million
favorable settlement of a counterparty pricing dispute and positive operating
results from Advantage Energy. The increase in the retail electric margin was
partially offset by a decrease in margin from retail electric operations in
Maine. The lower margin in Maine was anticipated due to the sales price and
supply cost associated with the new provider of last resort in northern Maine
(which became effective in March 2004). The margin from retail electric
operations in Michigan also decreased, driven by higher wholesale electricity
prices, higher transmission related charges, and an increase in competition. The
margin attributed to wholesale electric operations increased $4.6 million.
The higher wholesale electric margin was driven by a $10.3 million increase
from the portfolio optimization strategies discussed above. This increase was
partially offset by a $5.7 million decrease in margin from ESI's
participation in the New Jersey Basic Generation Services Program, which began
in August 2003 and ended in May 2004. Under the program, ESI realized greater
margins in 2003, compared to 2004.

PDI's Segment Operations

All revenues and costs of PDI's discontinued operations (Sunbury) are
combined and reported on a net basis in WPS Resources' Consolidated
Statements of Income for all periods presented. Accordingly, the table below
does not include revenues and cost of sales of discontinued operations, which
are discussed separately within Discontinued Operations below.

|PDI's Production Results (Millions) | 2004  | 2003  | Change 
|----------------------------------- | ----- | ----- | -------
|                                    |       |       |        
|Nonregulated other revenues         | $71.4 | $82.4 | (13.4%)
|Nonregulated other cost of sales    | 48.1  | 57.9  | (16.9%)
|Margins                             | $23.3 | $24.5 | (4.9%) 

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PDI's revenue decreased $11.0 million, or 13.4%, for the year ended
December 31, 2004, compared to 2003, largely due to reduced generation from
its Beaver Falls facility in New York, lower revenue from its Combined Locks
Energy Center in Wisconsin, lower revenue from its steam boiler in Oregon, and
lower revenue from its Wyman generation facility in Maine. The Beaver Falls
facility experienced an unplanned plant outage that began in October 2003, with
the facility returning to service in April 2004. This facility continued to
experience lower volumes after returning to service as PDI has been more
conservative in the dispatch of this unit to preserve the limited remaining
service life of the turbine blades for higher margin opportunities. The decrease
in revenue at the Combined Locks Energy Center was driven by lower demand for
energy by the counterparty to a power purchase agreement in place at this
facility and an unplanned plant outage that began in March 2004, and
continued through May 2004. The decrease in revenue from the steam boiler in
Oregon was largely due to a 30-day planned outage to perform repairs on the
boiler, which took place in the second quarter of 2004. A power purchase
agreement in place at the Wyman facility in 2003 was not renewed in 2004. As a
result, energy from the Wyman facility was sold into short-term power markets in
2004, but unfavorable energy prices and lack of demand for capacity resulted in
a decline in the amount of power generated at this facility in 2004, compared to
2003. The decline in revenue was partially offset by higher sales volumes at the
Stoneman generation facility in Cassville, Wisconsin, related to a new power
purchase agreement in place at this facility.

PDI's margin for the year ended December 31, 2004, decreased
$1.2 million, or 4.9%, compared to 2003. This margin does not include the
results of PDI's discontinued operations, which are reported separately in the
Consolidated Statements of Income (Discontinued Operations are discussed below).
The Niagara, Beaver Falls, and Wyman generating facilities experienced a
combined $4.6 million decrease in margin. The lower margin at the Niagara
generating facility was largely due to an increase in the per ton cost of coal
utilized in the generation process. The unplanned plant outage experienced at
the Beaver Falls facility and lower volumes related to PDI's decision to only
dispatch the facility at times when energy prices are at a very favorable level,
drove the decrease in margin at this facility. Unfavorable energy prices and
lack of demand for capacity negatively impacted sales volumes at the Wyman
generation facility (there was a power purchase agreement in place at this
facility in 2003). These decreases were partially offset by a combined
$2.9 million increase in margins at the Combined Locks Energy Center and
the Stoneman generation facility. The higher margin at the Combined Locks Energy
Center was driven by a negotiated increase in the dispatch flexibility of steam
sold under a supply agreement with a counterparty, resulting in an increase in
the value of electricity produced from this facility. The increase in margin at
the Stoneman generation facility was due to higher sales volumes.

Overview of Holding Company and Other Segment Operations

Holding Company and Other operations include the operations of
WPS Resources and WPS Resources Capital as holding companies and the
nonutility activities at WPSC and UPPCO. Holding Company and Other operations
had income available for common shareholders of $11.9 million for the year
ended December 31, 2004, compared to a net loss of $2.1 million for
the year ended December 31, 2003. This favorable variance can be attributed
to an increase in earnings recognized from the sale of Wisconsin land located
along the Peshtigo River and an increase in equity earnings from ATC and
Wisconsin River Power Company. Equity earnings from ATC were $16.0 million
in 2004, compared to $10.1 million in 2003. WPSC nonutility operations
recognized a $13.3 million pre-tax gain on the sale of land located near
the Peshtigo River in the fourth quarter of 2004, compared to a
$6.2 million pre-tax gain that was recognized on the sale of land in the
fourth quarter of 2003. WPSC also realized an income tax benefit in the fourth
quarter of 2004 from the donation of land to the WDNR.

Operating Expenses

|WPS Resources' Operating Expenses (Millions) | 2004   | 2003   | Change 
|-------------------------------------------- | ------ | ------ | -------
|                                             |        |        |        
|Operating and maintenance expense            | $513.2 | $459.5 | 11.7%  
|Depreciation and decommissioning expense     | 107.0  | 138.4  | (22.7%)
|Taxes other than income                      | 46.1   | 43.8   | 5.3%   

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Operating and Maintenance Expense

Operating and maintenance expenses increased $53.7 million, or 11.7%,
for the year ended December 31, 2004, compared to 2003. Utility operating
and maintenance expenses increased $36.3 million. Electric transmission and
distribution costs were up $15.2 million at the utilities due primarily to
an increase in transmission rates. Pension and postretirement medical costs
incurred at the utilities increased $11.0 million. Additionally,
$6.8 million of the increase was driven by amortization of costs incurred
in conjunction with the implementation of the automated meter reading system and
the purchase of the De Pere Energy Center (previously deferred as
regulatory assets). Maintenance expenses at WPSC's coal-fired generation
facilities were $4.2 million higher in 2004, compared to 2003, driven by an
extension of the annual planned outage at the Pulliam 6 generation facility in
2004. Higher payroll and other benefit costs also contributed to the increase in
operating and maintenance expenses. The fall refueling outage at Kewaunee did
not significantly impact the year-over-year change in operating and maintenance
expenses as there was also a refueling outage at Kewaunee in spring 2003, and
the PSCW approved the deferral of incremental operating and maintenance expenses
that were incurred as a direct result of the refueling outage extension
($1.8 million of operating and maintenance expenses were deferred in the
fourth quarter of 2004 and collection is anticipated in 2006). Operating
expenses at ESI increased $10.5 million mostly due to higher payroll,
benefits, and other costs associated with continued business expansion.
Operating and maintenance expenses at PDI were $1.5 million higher as a
result of repairs and maintenance expenses incurred in conjunction with outages
at its Beaver Falls generation facility, the Combined Locks Energy Center, and
the Westwood Generation Station.

Depreciation and Decommissioning Expense

Depreciation and decommissioning expense decreased $31.4 million, or
22.7%, for the year ended December 31, 2004, compared to 2003, due
primarily to a decrease of $35.9 million resulting from lower realized
gains on decommissioning trust assets and because the decommissioning trust was
not funded in 2004 in anticipation of selling Kewaunee. Realized gains on
decommissioning trust assets are substantially offset by depreciation expense
pursuant to regulatory practice (see detailed discussion in "Miscellaneous
Income" below). An increase in depreciation expense from plant asset
additions at WPSC partially offset the decrease in decommissioning expense.

Other Income (Expense)

|WPS Resources' Other Income (Expense) (Millions)           | 2004    | 2003   | Change  
|---------------------------------------------------------- | ------- | ------ | --------
|                                                           |         |        |         
|Miscellaneous income                                       | $ 47.7  | $ 63.6 | (25.0%) 
|Interest expense and distributions of preferred securities | (54.2)  | (55.6) | (2.5%)  
|Minority interest                                          | 3.4     | 5.6    | (39.3%) 
|Other income (expense)                                     | $ (3.1) | $ 13.6 | (122.8%)

Miscellaneous Income

Miscellaneous income decreased $15.9 million, or 25.0%, for the year
ended December 31, 2004, compared to 2003. The decrease in miscellaneous
income is largely due to a decrease in realized gains on decommissioning trust
assets of $33.5 million. There were significant realized gains recognized
on decommissioning trust assets in the fourth quarter of 2003, which were driven
by a change in the investment strategy for WPSC's qualified nuclear
decommissioning trust assets. Qualified decommissioning trust assets were placed
in more conservative investments in anticipation of the sale of Kewaunee.
Pursuant to regulatory practice, realized gains on decommissioning trust assets
are substantially offset by depreciation expense. A $1.5 million write-off
of previously deferred financing costs associated with the redemption of our
trust preferred securities in the first quarter of 2004 also unfavorably
impacted miscellaneous income. Partially offsetting the decreases discussed
above were an $8.7 million increase in equity earnings from investments, a
$7.1 million increase in income recognized from the sale of Wisconsin land
located along the Peshtigo River (discussed previously), and a combined
$3.1 million increase related to higher royalties and a decrease in
operating losses realized from our

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investment in a synthetic fuel producing facility. The increase in equity
earnings was primarily related to our investments in ATC, Wisconsin River Power
Company, and Wisconsin Valley Improvement Company. Equity earnings from ATC were
$16.0 million in 2004, compared to $10.1 million in 2003. Royalty
income recognized from the synthetic fuel facility increased as a result of
higher production levels at this facility.

Minority Interest

The decrease in minority interest is related to the fact that PDI's partner
in its subsidiary, ECO Coal Pellitization #12 LLC, was allocated more production
from the synthetic fuel operation in 2003 compared to 2004. PDI's partner was
not allocated any production from the synthetic fuel facility in the first
quarter of 2004 as they requested additional production in the fourth quarter of
2003.

Provision for Income Taxes

The effective tax rate was 16.1% for the year ended December 31, 2004,
compared to 23.4% for the year ended December 31, 2003. The decrease in the
effective tax rate was driven by tax deductions pertaining to items that exceed
the related book expense (including land donated to the WDNR in the fourth
quarter of 2004), resulting in a $5.7 million decrease in the 2004
provision for income taxes compared to 2003, a $9.6 million increase in the
amount of tax credits recognized in 2004 (related to an increase in synthetic
fuel tax credits produced in 2004 and the favorable settlement of several
federal tax audits and refund claims related to prior tax years).

Our ownership interest in the synthetic fuel operation resulted in the
recognition of $27.8 million of Section 29 federal tax credits for the year
ended December 31, 2004, and $18.2 million of tax credits for 2003.
The increase in synthetic fuel related tax credits was primarily due to an
increase in tax credits produced and allocable to PDI, an increase in the value
of the credits produced resulting from the higher Btu content of coal and the
annual inflation adjustment allowed, and the favorable settlement of several tax
audits and refund claims related to prior tax years.

Discontinued Operations

The after-tax loss from discontinued operations (Sunbury) was
$13.4 million for the year ended December 31, 2004, compared to
$16.0 million in 2003. The decrease in the loss from discontinued
operations was driven by a $4.4 million termination payment that was
received from Duquesne Power in December 2004 as a result of Duquesne's
termination of the asset sale agreement for Sunbury, a $3.7 million
decrease in operating and maintenance expenses, and a $0.7 million
reduction in interest expense. The decrease in operating and maintenance
expenses was driven by lower depreciation expense resulting from the
discontinuance of depreciation on those assets classified as held for sale
effective December 2003. In addition, repair and maintenance expenses were
higher in 2003 because of mechanical difficulties related to fuel delivery
systems. Sunbury's margin decreased in 2004, compared to 2003, partially
offsetting the favorable variances discussed above. The margin was negatively
impacted by an increase in the per ton cost of coal utilized to service a fixed
price outtake contract and a decrease in opportunities to sell power into the
spot market. In anticipation of the sale, Sunbury did not enter into staggered
term coal contracts in accordance with its normal procurement practice.

Cumulative Effect of Change in Accounting Principles

On January 1, 2003, WPS Resources recorded a positive after-tax
cumulative effect of a change in accounting principle of $3.5 million
(primarily related to the operations of ESI) to income available for common
shareholders as a net result of removing from its balance sheet the
mark-to-market effects of contracts that do not meet the definition of a
derivative. This change in accounting resulted from the decision of the Emerging
Issues Task Force to preclude mark-to-market accounting for energy contracts
that are not derivatives. The required change in accounting had no impact on the
underlying economics or cash flows of the contracts.

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In addition, the adoption of SFAS No. 143, "Accounting for Asset
Retirement Obligations," at PDI resulted in a $0.3 million negative
after-tax cumulative effect of a change in accounting principle in the first
quarter of 2003, related to recording a liability for the closure of an ash
basin at Sunbury.

2003 Compared with 2002

WPS Resources Overview

WPS Resources' 2003 and 2002 results of operations are shown in the
following table:

|WPS Resources' Results(Millions, except share amounts) | 2003      | 2002      | Change
|------------------------------------------------------ | --------- | --------- | ------
|                                                       |           |           |       
|Consolidated operating revenues                        | $4,321.30 | $1,461.10 | 196%  
|Income available for common shareholders               | $ 94.70   | $ 109.40  | (13%) 
|Basic earnings per share                               | $ 2.87    | $ 3.45    | (17%) 
|Diluted earnings per share                             | $ 2.85    | $ 3.42    | (17%) 

Total revenues increased significantly due to the required reclassification
of previously reported 2002 revenues and cost of sales (see ESI's Segment
Operations below for further information). Total revenues also increased due to
sales volume growth at ESI, electric utility rate increases, and higher natural
gas prices.

Income available for common shareholders was $94.7 million ($2.87 basic
earnings per share) for the year ended December 31, 2003, compared to
$109.4 million ($3.45 basic earnings per share) for the year ended
December 31, 2002. Significant factors impacting the change in earnings and
earnings per share are as follows (and are discussed in more detail below):

- Approved rate increases and a change in
    electric utility sales mix favorably impacted margins at the utilities.
- Cooler weather during the cooling season in
    2003 negatively impacted electric utility margins.
- Colder weather during the heating season in
    2003 positively impacted natural gas throughput volumes.
- Rising operating expenses (primarily pension
    and medical costs), together with a delay in receiving 2003 retail electric
    rate relief, negatively impacted electric utility earnings.
- ESI's November 2002 acquisition of a retail
    natural gas business in Canada and favorable settlements with several
    counterparties drove an increased year-over-year retail natural gas margin.
- ESI's electric margin improved as a result of
    acquisition synergies, improved management of retail operations in Michigan,
    and participation in the New Jersey Basic Generation Service Program.
- PDI's earnings were significantly lower in
    2003, primarily as a result of an $18.2 million decrease in after-tax
    gains recognized from sales of portions of its interest in a synthetic fuel
    operation, a $10.0 million increased loss from discontinued operations,
    and a $5.1 million reduction in tax credits recognized from the
    synthetic fuel operation.
- Consolidated operating expenses increased in
    2003.

-

<PAGE>



- 

Overview of Utility Operations

Income available for common shareholders attributable to the electric utility
segment was $60.0 million in 2003 compared to $61.0 million in 2002.
Income available for common shareholders attributable to the gas utility segment
was $15.7 million in 2003 compared to $18.4 million in 2002.

Electric Utility Segment Operations

|WPS Resources' Electric Utility Segment Results (Millions) | 2003     | 2002     | Change
|---------------------------------------------------------- | -------- | -------- | ------
|                                                           |          |          |       
|Revenues                                                   | $814.1   | $763.1   | 7%    
|Fuel and purchased power costs                             | 266.3    | 242.7    | 10%   
|Margins                                                    | $547.8   | $520.4   | 5%    
|                                                           |          |          |       
|Sales in kilowatt-hours                                    | 14,346.7 | 14,547.6 | (1%)  

Electric utility segment revenues increased $51.0 million, or 7%, for
the year ended December 31, 2003, compared to the year ended
December 31, 2002. The increase was largely due to retail and wholesale
electric rate increases for our Wisconsin and Michigan customers in accordance
with new rate orders.

The electric utility margin increased $27.4 million, or 5%, in 2003
compared to 2002. Due primarily to the electric rate increases, electric margins
at WPSC increased $20.2 million, or 4%. Electric margins at WPSC were also
impacted favorably by a change in sales mix in 2003. While total sales volumes
remained basically unchanged in 2003 compared to 2002, sales volumes to higher
margin residential, and commercial and industrial customers increased slightly.
The increase in sales volumes to these higher margin customer classes reflects
growth within WPSC's service area and changes in the economy. These increases
were partially offset by cooler weather during the cooling season for the year
ended December 31, 2003, compared to the year ended December 31, 2002.
Electric margins at UPPCO increased $7.2 million, or 17%, due primarily to
retail electric rate increases, partially offset by a 3% decrease in sales
volumes. The decrease in sales volumes was attributed to less favorable weather
conditions for the year ended December 31, 2003, compared to the year ended
December 31, 2002, and customer conservation of electricity made necessary
due to a flood that occurred earlier in 2003.

Although the electric utility margin increased, electric utility segment
earnings for the year ended December 31, 2003, decreased $1.0 million
compared to the year ended December 31, 2002. The primary reason for the
decrease in electric utility segment earnings was due to a decrease in earnings
at WPSC attributed to a delay in receiving 2003 retail electric rate relief,
together with rising operating expenses (primarily pension and medical costs).
Rate relief for our increasing operating costs was expected on January 1, 2003;
however, the increase in retail electric rates granted by the PSCW was not
effective until March 21, 2003. The delay in receiving rate relief was a
significant factor in our inability to achieve our authorized 12% return on
equity in 2003. The decrease in earnings experienced by WPSC was partially
offset by a modest increase in earnings at UPPCO due to the increase in rates.

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Gas Utility Segment Operations

|WPS Resources'Gas Utility Segment Results (Millions) | 2003   | 2002   | Change
|---------------------------------------------------- | ------ | ------ | ------
|                                                     |        |        |       
|Revenues                                             | $404.2 | $310.7 | 30%   
|Purchased gas costs                                  | 291.0  | 198.6  | 47%   
|Margins                                              | $113.2 | $112.1 | 1%    
|                                                     |        |        |       
|Throughput in therms                                 | 854.5  | 845.4  | 1%    

Gas utility segment revenues increased $93.5 million, or 30%, for the
year ended December 31, 2003, compared to the year ended December 31,
2002. The increase in gas utility revenues is mostly due to a 39% increase in
the average cost of natural gas for the year ended December 31, 2003,
compared to the prior year, partially offset by the 0.3% decrease in retail
natural gas rates ordered by the PSCW, effective March 21, 2003.

The natural gas utility margin for the year ended December 31, 2003,
increased $1.1 million, or 1%, compared to the year ended December 31,
2002. The increase in the natural gas utility margin can be attributed to a 1%
increase in natural gas throughput volumes in 2003 compared to 2002. Natural gas
throughput volumes to our higher margin residential and commercial and
industrial customers increased 6% in the aggregate, mostly as a result of colder
weather in 2003 compared to 2002. Natural gas throughput volumes to our lower
margin transport customers decreased 5% due to the rising price of natural gas
together with their ability to use alternate fuel sources.

Despite the modest increase in gas utility margins, gas utility earnings for
the year ended December 31, 2003, decreased $2.7 million compared to
2002. The decline is primarily due to rising operating expenses (primarily
pension and medical costs) together with the decrease in natural gas rates
mentioned above.

Overview of Nonregulated Operations

ESI's income available for common shareholders increased to
$29.0 million in 2003 compared with $11.0 million in 2002, primarily
as a result of increased electric and natural gas margins discussed below.

PDI recognized a net loss of $7.9 million in 2003 compared to income
available for common shareholders of $24.0 million in 2002. Despite an
increase in margins, PDI's earnings were impacted by a decrease in gains
recognized from the sale of portions of its interest in a synthetic fuel
operation, increased losses from discontinued operations, and a decrease in the
amount of tax credits recognized.

ESI's Segment Operations

Total segment revenues at ESI were $3,081.2 million in 2003 compared to
$361.2 million in 2002. The total margin at ESI was $86.8 million in
2003 compared to $48.4 million in 2002. ESI's nonregulated natural gas and
electric operations are the primary contributors to revenues and margins and are
discussed below.

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|ESI's Natural Gas Results(Millions except sales volumes) | 2003      | 2002   | Change
|-------------------------------------------------------- | --------- | ------ | ------
|                                                         |           |        |       
|Nonregulated natural gas revenues                        | $2,696.6  | $245.1 | 1,000%
|Nonregulated natural gas cost of sales                   | 2,652.5   | 210.2  | 1,162%
|Margins                                                  | $    44.1 | $ 34.9 | 26%   
|                                                         |           |        |       
|Wholesale sales volumes in billion cubic feet *          | 252.4     | 233.8  | 8%    
|Retail sales volumes in billion cubic feet *             | 240.6     | 135.7  | 77%   

* Represents gross physical volumes

ESI's nonregulated natural gas revenues increased $2,451.5 million for
the year ended December 31, 2003, compared to the prior year. Approximately
$997 million of the increase related to the required adoption of Issue No.
02-03, effective January 1, 2003 (see Trends - WPS Resources for more
information about this accounting change). Volume growth driven by the
acquisition of a retail natural gas business in Canada accounted for
approximately $500 million of the increase in revenues in 2003. Most of the
remaining increase was attributed to higher natural gas prices compared to the
prior year.

Natural gas margins at ESI increased $9.2 million, or 26%, in 2003
compared to 2002. Approximately $6 million of the increase related to the
November 1, 2002, acquisition of a retail natural gas business in Canada. The
remaining increase related to favorable settlements of pending liabilities with
several counterparties, partially offset by the change in accounting prescribed
by the required adoption of Issue 02-03. See Cumulative Effect of Change in
Accounting Principles below for further discussion.

|ESI's Electric Results(Millions)           | 2003    | 2002    | Change
|------------------------------------------ | ------- | ------- | ------
|                                           |         |         |       
|Nonregulated electric revenues             | $382.2  | $113.7  | 236%  
|Nonregulated electric cost of sales        | 341.8   | 102.6   | 233%  
|Margins                                    | $ 40.4  | $ 11.1  | 264%  
|                                           |         |         |       
|Wholesale sales volumes in kilowatt-hours* | 2,768.0 | 4,250.0 | (35%) 
|Retail sales volumes in kilowatt-hours*    | 6,435.3 | 2,703.6 | 138%  

* Represents gross physical volumes

ESI's nonregulated electric revenues increased $268.5 million for the
year ended December 31, 2003, compared to the prior year. Approximately
$130 million of the increase related to the required adoption of Issue
02-03. Another $88 million of the increase was attributed to participation
in the New Jersey Basic Generation Services Program. ESI acquired 700
megawatts of fixed price load and 250 megawatts of variable priced load for the
period from August 1, 2003, to May 31, 2004, as a result of its participation in
this program. The remaining increase in nonregulated electric revenues was
attributed to increased prices and expansion within existing service
territories. ESI also acquired retail electric operations in Michigan in 2003.
Prior to the acquisition, this operation was an electric wholesale customer of
ESI; therefore, the acquisition did not have a significant impact on total
revenues in 2003 compared to 2002. The acquisition did, however, account for
most of the increase in retail sales volumes and related decrease in wholesale
sales volumes in 2003 compared to 2002.

ESI's electric margin increased $29.3 million, or 264%, in 2003 compared
to 2002. Approximately $26 million of the increase was due to acquisition
synergies and improved management of retail operations in Michigan and
participation in the New Jersey Basic Generation Service Program. The
remaining increase in ESI's electric margins was largely due to the impact of
the change in accounting prescribed by the required adoption of Issue 02-03,
which precluded mark-to-market accounting for nonderivative trading contracts.

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PDI's Segment Operations

All revenues and costs of PDI's discontinued operations are combined and
reported on a net basis in WPS Resources' Consolidated Statements of Income
for all periods presented. Accordingly, the table below does not include the
results of discontinued operations, which are discussed separately within
Discontinued Operations below.

|PDI's Production Results (Millions) | 2003  | 2002  | Change
|----------------------------------- | ----- | ----- | ------
|                                    |       |       |       
|Nonregulated other revenues         | $82.4 | $59.4 | 39%   
|Nonregulated other cost of sales    | 57.9  | 37.8  | 53%   
|Margins                             | $24.5 | $21.6 | 13%   

PDI's revenues increased $23.0 million, or 39%, in 2003 compared to
2002. PDI's margin increased $2.9 million, or 13%, in 2003 compared to
2002. The increase in revenues and margin was primarily the result of increased
generation from generating assets acquired in New York on June 1, 2002,
revenues from the Combined Locks Energy Center that became fully operational in
the second quarter of 2002, and an increase in generation at the hydroelectric
plants in Maine and Canada as a result of increased rainfall, higher capacity
revenues, and increased pricing on a renegotiated outtake contract. Partially
offsetting these increases was a decrease in revenues and margins at PDI's
Stoneman generating facility in Cassville, Wisconsin, as a result of the
expiration of an energy and capacity outtake contract that was not renewed.

Overview of Holding Company and Other Segment Operations

Holding Company and Other operations experienced a net loss of
$2.1 million in 2003 compared to a net loss of $5.0 million in 2002.
The decrease in the net loss experienced was largely related to an increase in
gains recognized on hydroelectric land sales in 2003 compared to 2002 (recorded
as a component of miscellaneous income), primarily due to a $6.2 million
pre-tax gain recognized in 2003 from land sales to the WDNR. The sale of these
hydroelectric lands was part of our asset management strategy, which was
initiated in 2001, and was intended to optimize shareholder return from the
sale, development, or use of certain assets or entire business units.

Operating Expenses

|WPS Resources' Operating Expenses (Millions) | 2003   | 2002   | Change
|-------------------------------------------- | ------ | ------ | ------
|                                             |        |        |       
|Operating and maintenance expense            | $459.5 | $412.5 | 11%   
|Depreciation and decommissioning expense     | 138.4  | 94.8   | 46%   
|Taxes other than income                      | 43.8   | 39.9   | 10%   

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Operating and Maintenance Expense

Operating expenses increased $47.0 million, or 11%, for the year ended
December 31, 2003, compared to the year ended December 31, 2002.
Utility operating expenses increased $30.7 million, or 9%, in 2003 compared
to 2002. Approximately $18 million of the increase reflects higher pension,
postretirement medical, and active medical costs. The remaining increase
pertains to costs incurred for plant maintenance related to Kewaunee's scheduled
refueling outage in 2003 (there was no refueling outage in 2002), additional
operating expenses at Kewaunee, and wage increases. Operating expenses at ESI
increased $12.0 million, or 40%, in 2003 compared to 2002, largely due to
costs associated with business expansion, including the acquisition of a retail
natural gas business in Canada and a retail electric business in Michigan. The
remaining increase was largely due to higher incentive compensation costs and
the costs associated with a full year of operation of generation assets in New
York that were purchased by PDI in June 2002.

Depreciation and Decommissioning Expense

Depreciation and decommissioning expense increased $43.6 million, or
46%, due primarily to an increase of $37.4 million from increased realized
gains on the decommissioning trust assets that resulted in recording
decommissioning expense approximately equal to the gains recognized in
miscellaneous income pursuant to regulatory practice. The increase in realized
gains was due primarily to the change in investment strategy for WPSC's
qualified nuclear decommissioning trust assets. Qualified decommissioning trust
assets were transferred to more conservative investments in 2003 pending the
sale of Kewaunee, thus triggering realized gains. Most of the remaining increase
resulted from plant asset additions at WPSC and PDI.

Taxes Other Than Income

Taxes other than income increased $3.9 million, or 10%, primarily due to
an increase in gross receipts taxes paid by WPSC as a result of increased
revenues.

Other Income (Expense)

|WPS Resources' Other Income (Expense) (Millions)           | 2003   | 2002    | Change
|---------------------------------------------------------- | ------ | ------- | ------
|                                                           |        |         |       
|Miscellaneous income                                       | $63.6  | $47.8   | 33%   
|Interest expense and distributions of preferred securities | (55.6) | (55.8)  | -%    
|Minority interest                                          | 5.6    | -       | -     
|Other income (expense)                                     | $13.6  | $ (8.0) | -     

Miscellaneous Income

Miscellaneous income increased $15.8 million for the year ended
December 31, 2003, compared to the year ended December 31, 2002. The
increase in miscellaneous income was largely due to an increase in realized
gains on the decommissioning trust assets of $36.4 million, which was
primarily the result of the change in investment strategy for the qualified
nuclear decommissioning trust assets. The realized gains were offset by
increased decommissioning expense, as discussed above. Miscellaneous income also
increased $6.2 million as a result of the sale of land to the WDNR and
$8.1 million resulting from an increase in earnings from equity
investments.

The increases in miscellaneous income were partially offset by lower gains
from sales of ownership interests in PDI's synthetic fuel operation. PDI
recognized a $7.6 million pre-tax gain in 2003 compared with a
$38.0 million pre-tax gain in 2002 related to these sales. An increase in
operating losses generated by the synthetic fuel operation due to increased
production decreased miscellaneous income by approximately $3.5 million in
2003. The increased operating losses were driven by our partner's ability to
utilize tax credits in 2003 and were offset by minority interest, which is
discussed below. In the

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aggregate, the items mentioned above relating to the synthetic fuel operation
resulted in a $33.9 million decrease in miscellaneous income.

The 2003 gain resulted from the 2002 sale of a portion of PDI's interest in
its synthetic fuel operation. Similar gains from the 2002 sale are expected to
be recognized annually through 2007, dependent upon production at the synthetic
fuel facility. The gain reported in 2002 resulted from a 2001 sale of a portion
of PDI's interest in a synthetic fuel operation, which was recognized in its
entirety by December 31, 2002.

Minority Interest

As a result of PDI's sale of an approximate 30% interest in its subsidiary,
ECO Coal Pelletization #12 LLC, on December 19, 2002, $5.6 million of
losses related to the synthetic fuel operation and reported in miscellaneous
income were allocated to PDI's partner and reported as a minority interest.

Provision for Income Taxes

The effective tax rate was 23.4% in 2003 compared to 19.5% in 2002. The
increase in the effective tax rate in 2003 compared to 2002 was largely due to a
decrease in tax credits that could be recognized from our ownership interest in
a synthetic fuel operation. Tax credits recognized during the year ended
December 31, 2003, decreased $5.1 million compared to the prior year,
due to the sale of a portion of our interest in the synthetic fuel operation on
December 19, 2002. Lower taxable income in 2003 also reduced the amount of
tax credits that could be claimed. Our ownership interest in the synthetic fuel
operation resulted in the recognition of $18.1 million of Section 29 tax
credits as a reduction of federal income tax expense in 2003 compared to
$23.2 million in 2002.

Discontinued Operations

The after-tax loss from discontinued operations increased to
$16.0 million for the year ended December 31, 2003, from
$6.0 million for the year ended December 31, 2002. The increased loss
was largely due to a decrease in capacity sales in 2003 due to the expiration of
a sales contract, an increase in variable production expenses related to
increased emission costs, and an increase in operating costs. Operating costs
increased in 2003 as a result of issues related to fuel quality and associated
mechanical difficulties involving fuel delivery systems early in 2003,
operational issues related to newly installed environmental equipment in various
boilers, and turbine outages. The increase in the loss from discontinued
operations was partially offset by decreases in payroll and employee benefits as
a result of a restructuring that took place at the end of 2002.

BALANCE SHEET - WPS RESOURCES

2004 Compared with 2003

Current assets from risk management activities decreased $78.6 million,
or 15.2%, at December 31, 2004, compared to December 31, 2003, and
current liabilities from risk management activities decreased
$115.7 million, or 22.4%. Long-term assets from risk management activities
decreased $23.9 million, or 22.9%, at December 31, 2004, compared to
December 31, 2003, and long-term liabilities from risk management
activities decreased $23.9 million, or 25.9%. The decrease in short-term
risk management assets and liabilities was primarily related to changes in the
forward price curve of natural gas. The decrease in long-term risk management
assets and liabilities was driven by lower natural gas volumes under contract
beyond one year and changes in the forward price curve for natural gas.

Property, plant, and equipment, net, increased $173.9 million to
$2,002.6 million at December 31, 2004, compared to
$1,828.7 million at December 31, 2003. This increase was mostly due to
a $174.3 million increase in property, plant, and equipment at WPSC
primarily related to capital expenditures associated with the construction of
Weston 4 and the installation of automated meter reading.

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Regulatory assets increased $33.2 million, from $127.7 million at
December 31, 2003, to $160.9 million at December 31, 2004,
largely due to the increase in environmental remediation liabilities related to
manufactured gas plants at WPSC, as discussed below. WPSC expects to recover
cleanup costs related to the manufactured gas plants, net of insurance
recoveries, in future rates.

Short-term debt increased $254.4 million, from $38.0 million at
December 31, 2003, to $292.4 million at December 31, 2004.
Retirements of long-term debt and increased capital expenditures (primarily
related to Weston 4) drove the increase in short-term debt.

Current portion of long-term debt decreased from $56.6 million at
December 31, 2003, to $6.7 million at December 31, 2004. On
January 19, 2004, WPSC retired early $49.9 million of its 7.125% series
first mortgage bonds. These bonds had an original maturity date of July 1, 2023.

Accounts payable increased $78.7 million, from $510.7 million at
December 31, 2003, to $589.4 million at December 31, 2004.
Accounts payable at WPSC increased $40.2 million, driven by expenditures
related to Weston 4. Accounts payable at ESI increased $38.0 million,
primarily as a result of higher natural gas prices compared to the prior year.

The environmental remediation liability increased $30.5 million from
December 31, 2003, to December 31, 2004. This liability primarily
relates to clean-up costs associated with several manufactured gas plant sites
at WPSC (see Note 17 to WPS Resources' Consolidated Financial
Statements - Commitments and Contingencies, for more information). WPSC's
estimate of future clean-up costs required to remediate these sites increased
significantly to reflect the WDNR's application of sediment guidance that was
recently issued.

Pension and postretirement benefit obligations decreased $43.1 million,
or 31.3%, from December 31, 2003, to December 31, 2004, primarily due
to a reduction in the minimum pension liability. The decrease in the minimum
pension liability was driven by WPS Resources' merger of its two
non-contributory qualified retirement plans. On a combined basis, the minimum
pension liability and related pension asset were reduced pursuant to generally
accepted accounting principles.

LIQUIDITY AND CAPITAL RESOURCES - WPS RESOURCES

We believe that our cash balances, liquid assets, operating cash flows,
access to equity capital markets and borrowing capacity made available because
of strong credit ratings, when taken together, provide adequate resources to
fund ongoing operating requirements and future capital expenditures related to
expansion of existing businesses and development of new projects. However,
our operating cash flow and access to capital markets can be impacted by
macroeconomic factors outside of our control. In addition, our borrowing costs
can be impacted by short- and long-term debt ratings assigned by independent
rating agencies. Currently, we believe these ratings are among the best in the
energy industry (see Financing Cash Flows, Credit Ratings below).

Operating Cash Flows

During 2004, net cash provided by operating activities was
$243.0 million, compared to $62.4 million in 2003. The increase was
driven by operating activities at ESI and WPSC. In 2003, operating activities at
ESI used cash due primarily to increasing working capital requirements resulting
from business growth and gas storage opportunities near the end of the year.
ESI's natural gas operations did not experience the same level of growth in 2004
as they did in 2003, and storage opportunities were similar at the end of both
years, which enabled ESI to generate additional operating cash flow in 2004. The
increase in net cash provided by operating activities at WPSC was driven by
improved operating results.

During 2003, net cash provided by operating activities was
$62.4 million, compared with $188.5 million in 2002. The decrease was
primarily due to increased working capital requirements, specifically at ESI and
WPSC. Inventories increased due to high natural gas prices at both ESI and WPSC,
as well as business growth at ESI. The inventory increase was also the result of
ESI taking advantage of opportunities to put

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additional gas into storage at favorable relationships to forward prices. The
change in receivables and payables was also attributable to the high natural gas
prices as well as the business growth at ESI.

Investing Cash Flows

Net cash used for investing activities was $312.6 million in 2004,
compared to $244.0 million in 2003. The increase was largely related to a
$114.0 million increase in utility capital expenditures (see Capital
Expenditures below), partially offset by a $50.4 million decrease in
cash used for the purchase of equity investments and other acquisitions.
Purchase of equity investments and other acquisitions consisted primarily of
additional investments in ATC, capital contributions to ECO Coal Pelletization
#12 LLC, and the acquisition of Advantage Energy in 2004. In 2003, purchase of
equity investments and other acquisitions consisted primarily of WPSC's final
payment for the purchase of the De Pere Energy Center, WPSC's purchase of a
one-third interest in Guardian Pipeline, additional investments in ATC, and
capital contributions to ECO Coal Pelletization. WPS Resources contributed
capital of $15.7 million to ECO Coal Pelletization in 2004 and
$14.0 million in 2003. See WPS Resources' Notes to Consolidated
Financial Statements, Note 6 - Acquisitions and Sales of Asset for more
information.

Net cash used for investing activities was $244.0 million in 2003
compared to $265.4 million in 2002, a decrease of $21.4 million. The
decrease is largely attributed to a $34.1 million decrease in capital
expenditures, mainly at the utilities (see Capital Expenditures below),
as well as a $24.3 million increase in cash received from the sale of
property, plant, and equipment. The majority of the increase in the sale of
property, plant, and equipment was the result of WPSC's sale of
$20.1 million of assets at book value related to the Wausau, Wisconsin, to
Duluth, Minnesota, transmission line to ATC in June 2003. Partially offsetting
this decrease was a $30.4 million increase in cash used for the purchase of
equity investments and other acquisitions. The composition of purchase of equity
investments and other acquisitions in 2003 is discussed above. In 2002, the
purchase of equity investments and other acquisitions primarily related to PDI's
acquisition of CH Resources and a $11.7 million capital contribution to ECO
Coal Pelletization. See WPS Resources' Notes to Consolidated Financial
Statements, Note 6 - Acquisitions and Sales of Assets for more information.

Capital Expenditures

Capital expenditures by business segment for the years ended
December 31, 2004, 2003, and 2002 are as follows:



|Millions                   |  | Years Ended
      December 31,
|-------------------------- |  | ------------------------------
|                           |  | 2004                          
|Electric utility           |  | $223.0                        
|Gas utility                |  | 62.7                          
|ESI                        |  | 1.6                           
|PDI                        |  | 2.4                           
|Other                      |  | 0.3                           
|WPS Resources Consolidated |  | $290.0                        

The increase in capital expenditures at the electric utility in 2004 as
compared to 2003 is mainly due to higher capital expenditures associated with
the construction of a 500-megawatt coal-fired Weston 4 generation facility
located near Wausau, Wisconsin. Gas utility capital expenditures increased
primarily due to the installation of automated meter reading. Capital
expenditures at PDI and ESI remained fairly consistent between 2004 and 2003.

Capital expenditures in the electric utility were higher in 2002, as compared
to 2003, mainly due to the construction of portions of the Pulliam combustion
turbine at WPSC in 2002. Gas utility capital expenditures increased due to the
installation of automated meter reading in 2003. PDI's capital expenditures were
higher in 2002 compared to 2003 due to the conversion of the Combined Locks

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Energy Center to a combined cycle system in 2002. Capital expenditures at ESI
remained fairly consistent between 2003 and 2002.

Financing Cash Flows

Net cash provided by financing activities was $76.8 million in 2004,
compared to $198.6 million in 2003. Less cash was required from financing
activities as a result of the increase in cash generated from operating
activities in 2004, partially offset by higher capital expenditures incurred in
2004.

Net cash provided by financing activities was $198.6 million in
2003, compared to $93.1 million in 2002. The $105.5 million increase
in cash provided by financing activities in 2003 is primarily related to the
decrease in cash provided by operating activities in 2003 compared to 2002. A
larger amount of investing activities was financed through common stock and debt
issuances in 2003 as compared to the prior year.

Significant Financing Activities

WPS Resources had outstanding commercial paper borrowings of
$279.7 million and $28.0 million at December 31, 2004, and 2003,
respectively. WPS Resources had other outstanding short-term debt of
$12.7 million and $10.0 million as of December 31, 2004, and
2003, respectively. Short-term borrowings in 2004 were used primarily to fund
capital expenditures related to Weston 4.

In 2004, 2003 and 2002 we issued new shares of common stock under our Stock
Investment Plan and under certain stock-based employee benefit and compensation
plans. As a result of these plans, equity increased $28.3 million,
$31.0 million, and $28.3 million in 2004, 2003, and 2002,
respectively.

On January 19, 2004, WPSC retired $49.9 million of its 7.125% series
first mortgage bonds. These bonds had an original maturity date of July 1, 2023.

On January 8, 2004, WPS Resources retired $50.0 million of its 7.0%
trust preferred securities. As a result of this transaction, WPSR Capital Trust
I, a Delaware business trust, was dissolved.

WPSC issued $125.0 million of 4.80% 10-year senior notes in
December 2003. The senior notes are collateralized by a pledge of first
mortgage bonds and may become non-collateralized if WPSC retires all of its
outstanding first mortgage bonds. The net proceeds from the issuance of the
senior notes were used to call $49.9 million of 7.125% first mortgage bonds
on January 19, 2004, fund construction costs and capital additions, reduce
short-term indebtedness, and for other corporate utility purposes.

In November 2003, 4,025,000 shares of WPS Resources common stock were
sold in a public offering at $43.00 per share, which resulted in a net increase
in equity of $166.8 million. Net proceeds from this offering were used to
retire the trust preferred securities in January 2004, reduce short-term debt,
fund equity contributions to subsidiary companies, and for general corporate
purposes.

In November 2003, PDI retired all of its notes payable under a revolving
credit note, in the amount of $12.5 million

WPSC called $9.1 million of 6.125% tax-exempt bonds in May 2003.

In March 2003, UPPCO retired $15.0 million of 7.94% first mortgage bonds
that had reached maturity.

WPSC used short-term debt to retire $50.0 million of 6.8% first mortgage
bonds on February 1, 2003, that had reached maturity.

WPSC issued $150.0 million of 4.875% 10-year senior notes in
December 2002. The senior notes are collateralized by a pledge of first
mortgage bonds and may become non-collateralized if WPSC retires all of its
outstanding first mortgage bonds. WPSC used approximately $72 million of
the net proceeds from

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the issuance of the senior notes to acquire the De Pere Energy Center and
$69 million to retire short-term debt. The balance of the net proceeds was
used for other corporate utility purposes.

WPS Resources issued $100.0 million of 5.375% 10-year senior
non-collateralized notes in November 2002. We used approximately
$55 million of the net proceeds from the issuance of these notes to repay
short-term debt incurred to provide equity capital to our subsidiaries and the
remainder for other corporate purposes.

In October 2002, WPSC retired $50.0 million of 7.30% first mortgage
bonds that had reached maturity.

Credit Ratings

WPS Resources and WPSC use internally generated funds and commercial
paper borrowing to satisfy most of their capital requirements.
WPS Resources also periodically issues long-term debt and common stock to
reduce short-term debt, maintain desired capitalization ratios, and fund future
growth. WPS Resources may seek nonrecourse financing for funding
nonregulated acquisitions. WPS Resources' commercial paper borrowing
program provides for working capital requirements of the nonregulated businesses
and UPPCO. WPSC has its own commercial paper borrowing program. WPSC also
periodically issues long-term debt, receives equity contributions from
WPS Resources, and makes payments for return of capital to
WPS Resources to reduce short-term debt, fund future growth, and maintain
capitalization ratios as authorized by the PSCW. The specific forms of long-term
financing, amounts, and timing depend on the availability of projects, market
conditions, and other factors.

The current credit ratings for WPS Resources and WPSC are listed in the
table below.

|                                                                                                        |                               |                                 
|------------------------------------------------------------------------------------------------------- | ----------------------------- | --------------------------------
|Credit Ratings                                                                                          | Standard & Poor's             | Moody's                         
|WPS Resources
         Senior unsecured debt
         Commercial paper
         Credit line syndication | A
      A-1
      -           | A1
      P-1
      A1           
|WPSC
         Bonds
         Preferred stock
         Commercial paper
         Credit line syndication | A+
      A-
      A-1
      - | Aa2
      A2
      P-1
      Aa3

In January 2005, Standard & Poor's downgraded its ratings for WPSC one
ratings level and established a negative outlook. At the same time, Standard
& Poor's affirmed WPS Resources ratings but changed the outlook from
stable to negative. In taking these actions, Standard & Poor's cited WPSC's
substantial capital spending program and the risk profile of WPSR's nonregulated
businesses.

In November 2003, Moody's downgraded its long-term ratings for
WPS Resources and WPSC one ratings level, leaving only commercial paper
ratings unchanged. Moody's downgrade of WPS Resources was based principally
on a gradual shift in the company's financial and business risk profile
attributable to the growth of nonregulated businesses, the impact of weaker
wholesale power markets, and a relatively high dividend payout. Moody's
downgrade of WPSC was based on the expectation that the utility's substantial
capital spending program will exceed its retained cash flow through 2007, which
is likely to lead to a meaningful increase in debt. Following the 2003
downgrade, Moody's set the ratings outlook at stable for both WPS Resources
and WPSC.

We believe these ratings continue to be among the best in the energy
industry, and allow us to access commercial paper and long-term debt markets on
favorable terms. Credit ratings are not recommendations to buy, are subject to
change, and each rating should be evaluated independently of any other rating.

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Rating agencies use a number of both quantitative and qualitative measures in
determining a company's credit rating. These measures include business risk,
liquidity risk, competitive position, capital mix, financial condition,
predictability of cash flows, management strength, and future direction. Some of
the quantitative measures can be analyzed through a few key financial ratios,
while the qualitative ones are more subjective.

WPS Resources and WPSC hold credit lines to back 100% of their
commercial paper borrowing and letters of credit. These credit facilities are
based on a credit rating of A-1/P-1 for WPS Resources and A-1/P-1 for WPSC.
A significant decrease in the commercial paper credit ratings could adversely
affect the companies by increasing the interest rates at which they can borrow
and potentially limiting the availability of funds to the companies through the
commercial paper market. A restriction in the companies' ability to use
commercial paper borrowing to meet their working capital needs would require
them to secure funds through alternate sources resulting in higher interest
expense, higher credit line fees, and a potential delay in the availability of
funds.

ESI maintains underlying agreements to support its electric and natural gas
trading operations. In the event of a deterioration of WPS Resources'
credit rating, many of these agreements allow the counterparty to demand
additional assurance of payment. This provision could pertain to existing
business, new business or both with the counterparty. The additional assurance
requirements could be met with letters of credit, surety bonds, or cash deposits
and would likely result in WPS Resources being required to maintain
increased bank lines of credit or incur additional expenses, and could restrict
the amount of business ESI can conduct.

ESI uses the NYMEX and over-the-counter financial markets to hedge its
exposure to physical customer obligations. These hedges are closely correlated
to the customer contracts, but price movements on the hedge contracts may
require financial backing. Certain movements in price for contracts through the
NYMEX exchange require posting of cash deposits equal to the market move. For
the over-the-counter market, the underlying contract may allow the counterparty
to require additional collateral to cover the net financial differential between
the original contract price and the current forward market. Increased
requirements related to market price changes usually only result in a temporary
liquidity need that will unwind as the sales contracts are fulfilled.

Future Capital Requirements and Resources

Contractual Obligations

The following table summarizes the contractual obligations of
WPS Resources, including its subsidiaries.

|                                                                      |                       |                              |             |             |         
|--------------------------------------------------------------------- | --------------------- | ---------------------------- | ----------- | ----------- | --------
|Contractual
      Obligations
      As of December 31, 2004(Millions) |                       | Payments
      Due By Period
|Total
      AmountsCommitted                                          | Less
      Than1 Year | 1 to 3Years                  | 3 to 5Years | Over 5Years
|                                                                      |                       |                              |             |             |         
|Long-term debt
      principal and interest
        payments          | $1,316.6              | $    58.9                    | $  118.8    | $269.7      | $  869.2
|Operating leases                                                      | 18.2                  | 4.2                          | 4.5         | 3.6         | 5.9     
|Commodity purchase obligations                                        | 3,600.4               | 2,243.7                      | 696.6       | 212.6       | 447.5   
|Purchase orders                                                       | 499.6                 | 305.7                        | 163.3       | 30.6        | -       
|Capital
      contributions to equity method
        investment       | 175.3                 | 56.2                         | 97.5        | 21.6        | -       
|Other                                                                 | 221.7                 | 32.6                         | 48.2        | 46.6        | 94.3    
|Total contractual cash obligations                                    | $5,831.8              | $2,701.3                     | $1,128.9    | $584.7      | $1,416.9

Long-term debt principal and interest payments represent bonds issued, notes
issued, and loans made to WPS Resources and its subsidiaries. We record all
principal obligations on the balance sheet.

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Commodity purchase obligations represent mainly commodity purchase contracts
of WPS Resources and its subsidiaries. Energy supply contracts at ESI
included as part of commodity purchase obligations are generally entered into to
meet obligations to deliver energy to customers. WPSC and UPPCO expect to
recover the costs of their contracts in future customer rates. Purchase orders
include obligations related to normal business operations and large construction
obligations, including 100% of Weston 4 obligations even though we expect 30% of
these costs to be paid by Dairyland Power Cooperative after certain conditions
are met. Capital contributions to equity method investment include our
commitment to fund a portion of the Wausau, Wisconsin, to Duluth, Minnesota,
transmission line. Other mainly represents expected pension and post-retirement
funding obligations.

Capital Requirements

WPSC makes large investments in capital assets. Net construction expenditures
are expected to be approximately $1.2 billion in the aggregate for the 2005
through 2007 period (upon the closing of the sale of Kewaunee, expenditures
would decrease approximately $73.8 million during this period). The largest
of these expenditures is for the construction of Weston 4, in which WPSC is
expected to incur costs of $432 million between 2005 through 2007, assuming
100% ownership in 2005, and 70% ownership in 2006 and 2007 after the expected
purchase of a 30% interest in Weston 4 by Dairyland Power Cooperative.

As part of its regulated utility operations, on September 26, 2003, WPSC
submitted an application for a Certificate of Public Convenience and Necessity
to the PSCW seeking approval to construct Weston 4, a 500-megawatt coal-fired
generation facility near Wausau, Wisconsin. The facility is estimated to cost
approximately $770 million (including the acquisition of coal trains). As
of December 31, 2004, WPSC has incurred a total cost of $94.9 million
related to this project. In addition, WPSC expects to incur additional
construction costs through the date the plant goes into service of approximately
$41 million to fund construction of the transmission facilities required to
support Weston 4. ATC will reimburse WPSC for the construction costs of the
interconnection and related carrying costs when Weston 4 becomes commercially
operational which is expected to occur in June 2008.

On October 7, 2004, we received the final PSCW order granting authority to
proceed with construction of Weston 4 contingent upon receipt of an air permit.
The air permit was issued by the WDNR on October 19, 2004. We believe the
air permit is one of the most stringent in the nation, which means that
Weston 4 will be one of the cleanest plants of its kind in the
United States. Construction began in October 2004, and on November 15,
2004, a petition was filed with the WDNR contesting the air permit issued. On
December 2, 2004, the WDNR granted the petition and forwarded the matter to the
Division of Hearings and Appeals. Construction continues and it is anticipated
that the contested case hearing will be held in the second half of 2005.

Other significant anticipated expenditures during this three-year period
(2005 to 2007) include:

> mercury and pollution control projects -
>       $188 million
>     
>     corporate services infrastructures -
>       $34 million
>     
>     jointly owned 500-megawatt base-load plant -
>       $65 million
>     
>     nuclear fuel - $43 million

Other capital requirements for the three-year period include a potential
  contribution of $3.3 million to the Kewaunee decommissioning trust fund
  if the sale of Kewaunee is not completed.

On April 18, 2003, the PSCW approved WPSC's request to transfer its
  interest in the Wausau, Wisconsin, to Duluth, Minnesota, transmission line to
  the ATC. WPS Resources committed to fund 50% of total project costs
  incurred up to $198 million, and receive additional equity in ATC.
  WPS Resources may terminate funding if the project extends beyond January
  1, 2010. On December 19, 2003, WPSC and

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ATC received approval to continue the project at a new cost estimate of
  $420.3 million. The updated cost estimate reflects additional costs for
  the project resulting from time delays, added regulatory requirements, changes
  and additions to the project at the request of local governments, and ATC
  overhead costs. Completion of the line is expected in 2008. WPS Resources
  has the right, but not the obligation, to provide additional funding in excess
  of $198 million up to its portion of the revised cost estimate. For the
  period 2005 through 2008, we expect to make capital contributions of
  approximately $175 million for our portion of the Wausau to Duluth
  transmission line. Our commitment to fund this transmission line could
  decrease up to 50% if Minnesota Power exercises its option to fund a portion
  of the project.

WPS Resources expects to provide additional capital contributions to
  ATC of approximately $36 million for the period 2005 through 2007 for
  other projects.

UPPCO is expected to incur construction expenditures of about $47 million
  in the aggregate for the period 2005 through 2007, primarily for electric
  distribution improvements and repairs and safety measures at hydroelectric
  facilities.

Capital expenditures identified at PDI for 2005 through 2007 are expected
  to be approximately $7.4 million, primarily for fuel improvements and
  blade replacement at WPS Empire State.

Capital expenditures identified at ESI for 2005 through 2007 are expected
  to be approximately $7.0 million, largely due to the Advantage Energy
  acquisition and computer equipment related to business expansion and normal
  technology upgrades.

All projected capital and investment expenditures are subject to periodic
  review and revision and may vary significantly from the estimates depending on
  a number of factors, including, but not limited to, industry restructuring,
  regulatory constraints, acquisition opportunities, market volatility, and
  economic trends. Other capital expenditures for WPS Resources and its
  subsidiaries for 2005 through 2007 could be significant depending on its
  success in pursuing development and acquisition opportunities. When
  appropriate, WPS Resources may seek nonrecourse financing for a portion
  of the cost of these acquisitions.

Capital Resources

As of December 31, 2004, both WPS Resources and WPSC were in
  compliance with all of the covenants under their lines of credit and other
  debt obligations.

For the period 2005 through 2007, WPS Resources plans to use
  internally generated funds net of forecasted dividend payments, cash proceeds
  from pending asset sales, and debt and equity financings to fund capital
  requirements. WPS Resources plans to maintain debt to equity ratios at
  appropriate levels to support current ratings and corporate growth. Management
  believes WPS Resources has adequate financial flexibility and resources
  to meet its future needs.

WPS Resources has the ability to issue up to an additional
  $176.9 million of debt or equity under its currently effective shelf
  registration statement. WPSC has the ability to issue up to an additional
  $375.0 million of debt under its currently effective shelf registration
  statements. The shelf registrations are subject to the ultimate terms and
  conditions to be determined prior to the actual issuance of specific
  securities.

WPS Resources and WPSC have 364-day credit line facilities for
  $400.0 million and $115.0 million, respectively. The credit lines
  are used to back 100% of WPS Resources' and WPSC's commercial paper
  borrowing programs and letters of credit for WPS Resources. As of
  December 31, 2004, there was a total of $141.7 million and $20.2
  million available under WPS Resources' and WPSC's credit lines, respectively.

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In 2003, WPS Resources announced the sale of Sunbury, and WPSC
  announced the sale of its portion of Kewaunee. We anticipate being able to
  complete the sale of Sunbury in 2005. See the Kewaunee paragraph below
  for a discussion on this potential sale. A portion of the proceeds related to
  the Sunbury sale may be used to pay the non-recourse debt related to the
  plant. A portion of the proceeds related to the Kewaunee sale will be used to
  retire debt at WPSC. The remainder of the proceeds from both the Sunbury and
  Kewaunee sales will be used by WPS Resources for investing activities and
  general corporate purposes of its subsidiaries, including reducing the amount
  of outstanding debt. For more information regarding the Sunbury and Kewaunee
  sales, see the discussion below.

Other Future Considerations

Sunbury

WPS Resources made capital contributions of $24.5 million to
  Sunbury in 2004 to compensate for the impact of lower capacity revenues, as
  well as adjustments to Sunbury's operating plan. These funds have been used to
  cover operating losses, make principal and interest payments, and purchase
  emission allowances. In 2004, WPS Resources' Board of Directors granted
  authorization to contribute up to $32.8 million of additional capital to
  Sunbury. Of that amount, $8.3 million remains available in 2005, as
  authorized by WPS Resources' Board of Directors.

On September 30, 2004, PDI received a letter of termination from Duquesne
  Power, L.P. related to the previously announced agreement to sell Sunbury to
  Duquesne for approximately $120 million. Duquesne issued its letter of
  termination following a determination by the Pennsylvania Public Utility
  Commission not to reconsider its earlier approved Provider of Last Resort
  plan, which Duquesne believed did not satisfy a closing condition in the
  agreement. PDI is continuing its efforts to sell Sunbury. The carrying value
  of Sunbury is about $117 million, and this project carries approximately $66
  million of project-financed debt. Based upon consideration of all information
  available at this time, management determined that no adjustment to the
  carrying value of Sunbury was required in 2004. Although management cannot
  predict the precise timetable or ultimate outcome, PDI is progressing with the
  sale process, and anticipates being able to complete the sale of Sunbury in
  2005.

Kewaunee

On November 7, 2003, WPSC entered into a definitive agreement to sell
  its 59% ownership interest in Kewaunee to a subsidiary of Dominion Resources,
  Inc. The other joint owner of Kewanee, Wisconsin Power and Light Company, also
  agreed to sell its 41% ownership interest in Kewaunee to Dominion. The
  transaction is subject to approvals from various regulatory agencies, of which
  all major approvals have been obtained, except for approval by the PSCW. The
  PSCW rejected the sale on November 19, 2004. However, WPSC, Wisconsin Power
  and Light Company, and Dominion Resources, Inc. offered a proposal addressing
  the PSCW's concerns in December 2004. In January 2005, the PSCW agreed to
  reconsider its decision on this transaction and we expect a decision to be
  rendered in March 2005.

WPSC estimates that its share of the cash proceeds from the sale will
  approximate $130 million, subject to various post-closing adjustments.
  The cash proceeds from the sale are expected to slightly exceed the carrying
  value of the WPSC assets being sold. In addition to the cash proceeds, WPSC
  will retain ownership of the assets contained in its non-qualified
  decommissioning trust, one of two funds that were established to cover the
  eventual decommissioning of Kewaunee. The net of tax fair value of the
  non-qualified decommissioning trust's assets at December 31, 2004, was
  $102.5 million. Dominion will assume responsibility for the eventual
  decommissioning of Kewaunee and will receive WPSC's qualified decommissioning
  trust assets that had a net of tax fair value of $242.0 million at
  December 31, 2004. WPSC has requested deferral of the gain or loss
  resulting from this transaction and related costs from the PSCW. Accordingly,
  the gain or loss on the sale of the plant assets and the related non-qualified
  decommissioning trust assets are expected to be returned to customers under
  future rate orders.

On February 20, 2005, Kewaunee was temporarily removed from service after a
  potential design weakness was identified in a backup cooling system. Plant
  engineering staff identified the concern and

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the unit was shutdown in accordance with the plant license. A modification
  is being made to resolve the issue and it is anticipated that the unit will be
  back in service at 100% power by mid April. WPSC intends to file a request with the PSCW
  for recovery of incremental costs associated with fuel, purchased power, and
  operating and maintenance costs. WPSC and Dominion remain committed to the
  sale of Kewaunee.

Asset Management Strategy

WPS Resources is finalizing its sales strategy for the balance of its
  identified excess real estate holdings. This strategy is expected to provide
  for WPS Resources to meet its average annualized earnings per share goal.

Regulatory

For a discussion of regulatory considerations, see Note 22, Regulatory
  Environment, to WPS Resources' Notes to Consolidated Financial Statements.

American Jobs Creation Act of 2004

On October 22, 2004, the President of the United States signed into law
the American Jobs Creation Act of 2004 ("2004 Jobs Act"). The 2004
Jobs Act introduces a new deduction, the "United States production
activities deduction." This domestic production provision allows as a
deduction an amount equal to a specified percent of the lesser of the qualified
production activities income of the taxpayer for the taxable year or taxable
income for the taxable year. The deduction is phased in, providing a deduction
of three percent of income through 2006, a six percent deduction through 2009,
and a nine percent deduction after 2009. On December 21, 2004, the FASB
issued final staff position ("FSP") 109-1, effective the same
day, on accounting for the effects of the domestic production deduction
provisions. The FSP  109-1 said the deduction should be accounted for as a
special deduction rather than a tax rate reduction. The FSP  109-1 also
said the special deduction should be considered by an enterprise in measuring
deferred taxes when graduated tax rates are a significant factor and also in
assessing if a valuation allowance is necessary. On December 8, 2004, the
PSCW issued an order authorizing WPSC to defer of the revenue requirements
impacts resulting from the 2004 Jobs Act. The Internal Revenue Service and
Department of Treasury issued interim guidance on January 19, 2005, covering the
implementation of the domestic production provision of the 2004 Jobs Act.
WPS Resources is currently reviewing this guidance in order to quantify the
tax impact of this deduction or identify all potential tax issues related to the
2004 Jobs Act. However, pursuant to regulatory treatment, WPS Resources
expects any tax benefits derived from utility operations to be deferred and
passed on to customers in future rates.

Section 29 Federal Tax Credits

The current rise in oil prices may result in a reduction or elimination of
the Section 29 federal tax credits expected for future years. A phase out or
elimination of the Section 29 federal tax credits would have no impact on the
value of alternative minimum tax credits WPS Resources is carrying forward as a
result of prior production of Section 29 federal tax credits. WPS Resources
is assessing the impact of this issue on future operations and evaluating
alternatives to potentially protect the ongoing economic benefits of the
synthetic fuel facility.

GUARANTEES AND OFF BALANCE SHEET ARRANGEMENTS -
WPS RESOURCES

As part of normal business, WPS Resources and its subsidiaries enter
into various guarantees providing financial or performance assurance to third
parties on behalf of certain subsidiaries. These guarantees are entered into
primarily to support or enhance the creditworthiness otherwise attributed to a
subsidiary on a stand-alone basis, thereby facilitating the extension of
sufficient credit to accomplish the subsidiaries' intended commercial purposes.

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The guarantees issued by WPS Resources include inter-company guarantees
between parents and their subsidiaries, which are eliminated in consolidation,
and guarantees of the subsidiaries' own performance. As such, these guarantees
are excluded from the recognition, measurement, and disclosure requirements of
FIN No. 45, "Guarantors' Accounting and Disclosure Requirements for
Guarantees, including Indirect Guarantees of Indebtedness of Others."

At December 31, 2004, 2003, and 2002, outstanding guarantees totaled
$977.9 million, $981.8 million, and $652.2 million, respectively,
as follows:

|WPS Resources' Outstanding Guarantees(Millions)                    | December 31, 2004 | December 31, 2003 | December 31, 2002
|------------------------------------------------------------------ | ----------------- | ----------------- | -----------------
|Guarantees of subsidiary debt                                      | $ 27.2            | $ 39.7            | $ 38.8           
|Guarantees
      supporting commodity transactions of subsidiaries | 863.9             | 874.4             | 584.3            
|Standby letters of credit                                          | 80.9              | 61.1              | 22.7             
|Surety bonds                                                       | 0.6               | 1.1               | 6.4              
|Other guarantee                                                    | 5.3               | 5.5               | -                
|Total guarantees                                                   | $977.9            | $981.8            | $652.2           



|                                                                                 |                                                                     |                       |                   |                   |                  
|-------------------------------------------------------------------------------- | ------------------------------------------------------------------- | --------------------- | ----------------- | ----------------- | -----------------
|WPS Resources'
      Outstanding Guarantees
      (Millions)Commitments Expiring | Total
      Amounts
      Committed
      At
      December 31,2004 | Less
      Than1 Year | 1
      to 3Years | 4
      to 5Years | Over
      5Years
|                                                                                 |                                                                     |                       |                   |                   |                  
|Guarantees of subsidiary debt                                                    | $ 27.2                                                              | $       -             | $     -           | $     -           | $ 27.2           
|Guarantees
      supporting commodity transactions of subsidiaries               | 863.9                                                               | 812.6                 | 22.4              | 12.9              | 16.0             
|Standby letters of credit                                                        | 80.9                                                                | 68.0                  | 12.9              | -                 | -                
|Surety bonds                                                                     | 0.6                                                                 | 0.6                   | -                 | -                 | -                
|Other guarantee                                                                  | 5.3                                                                 | -                     | -                 | -                 | 5.3              
|Total guarantees                                                                 | $977.9                                                              | $881.2                | $35.3             | $12.9             | $48.5            

At December 31, 2004, WPS Resources had outstanding
$27.2 million in corporate guarantees supporting indebtedness. Of that
total, $27.0 million supports outstanding debt at one of PDI's
subsidiaries. The underlying debt related to these guarantees is reflected on
the consolidated balance sheet.

WPS Resources' Board of Directors has authorized management to issue
corporate guarantees in the aggregate amount of up to $1.2 billion to
support the business operations of ESI. WPS Resources primarily issues the
guarantees to counterparties in the wholesale electric and natural gas
marketplace to provide counterparties the assurance that ESI will perform on its
obligations and permit ESI to operate within these markets. The amount of
guarantees actually issued by WPS Resources to support the business
operations at ESI at December 31, 2004, was $817.7 million, and this
is reflected in the table above. These guarantees reflect the amount of
outstanding business ESI could have with the counterparties holding the
guarantees at any point in time. At December 31, 2004, the actual amount of
ESI's obligations to counterparties supported by WPS Resources' parental
guarantees was $132.6 million.

At December 31, 2004, WPS Resources had issued $38.3 million
in corporate guarantees to support the business operation of PDI, which are
reflected in the above table. WPS Resources issues the guarantees for
indemnification obligations related to business purchase agreements and
counterparties in

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the wholesale electric marketplace to meet their credit requirements and
permit PDI to operate within these markets. The amount supported is dependent on
the amount of the outstanding obligations that PDI has with the parties holding
the guarantees at any point in time. At December 31, 2004, the amount of
PDI's obligations supported by WPS Resources' parental guarantees was
$4.7 million. In February 2004, WPS Resources' Board of Directors
authorized management to issue corporate guarantees in the aggregate amount of
up to $30.0 million to support business operations at PDI in addition to
guarantees that receive specific WPS Resources Board authorization.

Another $7.9 million of corporate guarantees support energy and
transmission supply at UPPCO and are not reflected on WPS Resources'
consolidated balance sheet. In February 2004, WPS Resources' Board of
Directors authorized management to issue corporate guarantees in the aggregate
amount of up to $15.0 million to support the business operations of UPPCO.
Corporate guarantees issued in the future under the Board authorized limit may
or may not be reflected on WPS Resources' consolidated balance sheet,
depending on the nature of the guarantee.

At WPS Resources' request, financial institutions have issued
$80.9 million in standby letters of credit for the benefit of third parties
that have extended credit to certain subsidiaries. If a subsidiary does not pay
amounts when due under a covered contract, the counterparty may present its
claim for payment to the financial institution, which will request payment from
WPS Resources. Any amounts owed by our subsidiaries are reflected in the
consolidated balance sheet.

At December 31, 2004, WPS Resources furnished $0.6 million of
surety bonds for various reasons including worker compensation coverage and
obtaining various licenses, permits, and rights-of-way. Liabilities incurred as
a result of activities covered by surety bonds are included in the consolidated
balance sheet.

The other guarantee of $5.3 million listed on the above table was issued
by WPSC to indemnify a third party for exposures related to the construction of
utility assets. This amount is not reflected on the consolidated balance sheet.

WPS Resources guarantees the potential retrospective premiums that could
be addressed under WPS Resources' nuclear insurance program.

See Note 23, "Variable Interest Entities," to
WPS Resources' Notes to the Consolidated Financial Statements for
information on the implementation of Interpretation No. 46R. Interpretation No.
46R requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional financial support from other parties.

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MARKET PRICE RISK MANAGEMENT ACTIVITIES - WPS RESOURCES

Market price risk management activities include the electric and natural gas
marketing and related risk management activities of ESI. ESI's marketing and
trading operations manage power and natural gas procurement as an integrated
portfolio with its retail and wholesale sales commitments. Derivative
instruments are utilized in these operations. ESI measures the fair value of
derivative instruments (including NYMEX exchange and over-the-counter contracts,
natural gas options, natural gas and electric power physical fixed price
contracts, basis contracts, and related financial instruments) on a
mark-to-market basis. The fair value of derivatives is shown as "assets or
liabilities from risk management activities" in the consolidated balance
sheets.

The offsetting entry to assets or liabilities from risk management activities
is to other comprehensive income or earnings, depending on the use of the
derivative, how it is designated, and if it qualifies for hedge accounting. The
fair values of derivative instruments are adjusted each reporting period using
various market sources and risk management systems. The primary input for
natural gas pricing is the settled forward price curve of the NYMEX exchange,
which includes contracts and options. Basis pricing is derived from published
indices and documented broker quotes. ESI bases electric prices on published
indices and documented broker quotes. The following table provides an assessment
of the factors impacting the change in the net value of ESI's assets and
liabilities from risk management activities for the 12 months ended
December 31, 2004.

|ESIMark-to-Market Roll Forward (Millions)                                          | NaturalGas | Electric | Total
|---------------------------------------------------------------------------------- | ---------- | -------- | -----
|                                                                                   |            |          |      
|Fair value of contracts at January 1, 2004                                         | $13.3      | $ 6.3    | $19.6
|Less -
      contracts realized or settled during period                           | 10.9       | (2.0)    | 8.9  
|Plus -
      changes in fair value of contracts in existence at  December 31, 2004 | 29.2       | 5.4      | 34.6 
|Fair
      value of contracts at December 31, 2004                                 | $31.6      | $13.7    | $45.3

The fair value of contracts at January 1, 2004, and December 31,
2004, reflects the values reported on the balance sheet for net mark-to-market
current and long-term risk management assets and liabilities as of those dates.
Contracts realized or settled during the period includes the value of contracts
in existence at January 1, 2004, that were no longer included in the net
mark-to-market assets as of December 31, 2004, along with the amortization
of those derivatives later designated as normal purchases and sales under SFAS
No. 133. Changes in fair value of existing contracts include unrealized gains
and losses on contracts that existed at January 1, 2004, and contracts that were
entered into subsequent to January 1, 2004, which are included in ESI's
portfolio at December 31, 2004. There were, in many cases, offsetting
positions entered into and settled during the period resulting in gains or
losses being realized during the current period. The realized gains or losses
from these offsetting positions are not reflected in the table above.

Market quotes are more readily available for short duration contracts. The
table below shows the sources of fair value and maturity of ESI's risk
management instruments.

|ESI
      Risk Management Contract Aging at Fair ValueAs of December 31, 2004 |                                |                            |                            |                                    |                      
|----------------------------------------------------------------------------- | ------------------------------ | -------------------------- | -------------------------- | ---------------------------------- | ---------------------
|Source of Fair Value (Millions)                                               | Maturity
      Less Than1 Year | Maturity
      1 to 3Years | Maturity
      4 to 5Years | Maturity
      in Excessof 5 Years | Total
      FairValue
|Prices actively quoted                                                        | $27.4                          | $1.8                       | -                          | -                                  | $29.2                
|Prices provided by external sources                                           | 8.1                            | 5.1                        | -                          | -                                  | 13.2                 
|Prices based on
      models and other valuation methods                      | 2.8                            | 0.1                        | -                          | -                                  | 2.9                  
|Total fair value                                                              | $38.3                          | $7.0                       | -                          | -                                  | $45.3                

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We derive the pricing for most contracts in the above table from active
quotes or external sources. "Prices actively quoted" includes NYMEX
contracts and basis swaps. "Prices provided by external sources"
includes electric and natural gas contract positions for which pricing
information is obtained primarily through broker quotes. "Prices based on
models and other valuation methods" includes electric contracts for which
reliable external pricing information does not exist.

ESI, as a result of PDI's ownership of generating assets in New York,
has acquired transmission congestion contracts, which are financial contracts,
that hedge price risk between zones within the New York Independent System
Operator. The contracts were marked to fair value using a combination of modeled
forward prices and market quotes. The fair market value of the contracts at
December 31, 2004, was $0.7 million.

ESI employs a variety of physical and financial instruments offered in the
marketplace to limit risk exposure associated with fluctuating commodity prices
and volumes, enhance value, and minimize cash flow volatility. However, the
application of hedge accounting rules causes ESI to experience earnings
volatility associated with electric and natural gas operations. While risks
associated with power generating capacity and power sales are economically
hedged, certain transactions do not meet the definition of a derivative or
qualify for hedge accounting under generally accepted accounting principles.
Consequently, gains and losses from the generating capacity do not always match
with the related physical and financial hedging instruments in some reporting
periods. The result can cause volatility in ESI's reported period-by-period
earnings; however, the financial impact of this timing difference will reverse
at the time of physical delivery and/or settlement of the hedge transaction. The
accounting treatment does not impact the underlying cash flows or economics of
these transactions. At December 31, 2004, the unrealized mark-to-market
gains were $5.4 million for ESI's electric operations and related hedges
that did not qualify for cash flow hedge treatment under SFAS No. 133. See Results
of Operations - Overview of Nonregulated Operations - ESI's Segment Operations
for information regarding earnings volatility associated with the natural gas
storage cycle.

CRITICAL ACCOUNTING POLICIES - WPS RESOURCES

We have identified the following accounting policies to be critical to the
understanding of our financial statements because their application requires
significant judgment and reliance on estimations of matters that are inherently
uncertain. WPS Resources' management has discussed these critical accounting
policies with the Audit Committee of the Board of Directors.

Risk Management Activities

WPS Resources has entered into contracts that are accounted for as
derivatives under the provisions of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. At
December 31, 2004, those derivatives not designated as hedges are primarily
commodity contracts to manage price risk associated with wholesale and retail
natural gas purchase and sale activities and electric energy contracts.
Management's expectations and intentions are key factors in determining the
appropriate accounting for a derivative transaction, and as a result, such
expectations and intentions are documented. Cash flow hedge accounting treatment
may be used when WPS Resources contracts to buy or sell a commodity at a
fixed price for future delivery corresponding with anticipated physical sales or
purchases. Fair value hedge accounting may be used when WPS Resources holds
firm commitments and enters into transactions that hedge the risk that the price
of a commodity may change between the contract's inception and the physical
delivery date of the commodity. To the extent that the fair value of a hedge
instrument is fully effective in offsetting the transaction being hedged, there
is no impact on income available for common shareholders prior to settlement of
the hedge. In addition, WPS Resources may apply the normal purchases and
sales exemption, provided by SFAS No. 133, as amended, to certain contracts. The
normal purchases and sales exception provides that no recognition of the
contract's fair value in the consolidated financial statements is required until
the settlement of the contract.

Derivative contracts that are determined to fall within the scope of SFAS No.
133, as amended, are recorded at fair value on the Consolidated Balance Sheet of
WPS Resources. Changes in fair value,

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except those related to derivative instruments designated as cash flow
hedges, are generally included in the determination of income available for
common shareholders at each financial reporting date until the contracts are
ultimately settled. When available, quoted market prices are used to record a
contract's fair value. If no active trading market exists for a commodity or for
a contract's duration, fair value is estimated through the use of internally
developed valuation techniques or models. Such estimates require significant
judgment as to assumptions and valuation methodologies deemed appropriate by
WPS Resources' management. As a component of the fair value determination,
WPS Resources maintains reserves to account for the estimated direct costs
of servicing and holding certain of its contracts based upon administrative
costs, credit/counterparty risk, and servicing margin with both fixed and
variable components. The effect of changing the underlying servicing and
credit/counterparty risk assumptions is as follows:



|Change in Assumption (Millions) | Effect to Operating Reserve at December 31, 2004
|------------------------------- | ------------------------------------------------
|100% increase                   | $ 11.4                                          
|50% decrease                    | $(5.7)                                          

These potential changes to the operating reserve would be shown as part of
the Nonregulated cost of fuel, gas and purchased power on the Consolidated
Statements of Income and current and long-term Assets/Liabilities from risk
management activities on the Consolidated Balance Sheets.

Asset Impairment

WPS Resources annually reviews its assets for impairment. SFAS
No. 144, "Accounting for the Impairment and Disposal of Long-Lived
Assets," and SFAS No. 142, "Goodwill and Other Intangible
Assets," form the basis for these analyses.

The review for impairment of tangible assets is more critical to PDI than to
our other segments because of its significant investment in property, plant, and
equipment and lack of access to regulatory relief that is available to our
regulated segments. At December 31, 2004, the carrying value of PDI's property,
plant, and equipment totaled $138.1 million, excluding assets held for sale,
which totaled $73.9 million. We believe that the accounting estimate related to
asset impairment of power plants is a "critical accounting estimate"
because: (1) the estimate is susceptible to change from period to period
because it requires management to make assumptions about future market sales
pricing, production costs, capital expenditures and generation volumes and
(2) the impact of recognizing an impairment could be material to our
financial position or results of operations. Management's assumptions about
future market sales prices and generation volumes require significant judgment
because actual market sales prices and generation volumes have fluctuated in the
past as a result of changing fuel costs, environmental changes, and required
plant maintenance and are expected to continue to do so in the future.

The primary estimates used at PDI in the impairment analysis are future
revenue streams and operating costs. A combination of input from both internal
and external sources is used to project revenue streams. PDI's operations group
forecasts future operating costs with input from external sources for fuel costs
and forward energy prices. These estimates are modeled over the projected
remaining life of the power plants using the methodology defined in SFAS
No. 144. PDI evaluates property, plant, and equipment for impairment
whenever indicators of impairment exist. These indicators include a significant
underperformance of the assets relative to historical or projected future
operating results, a significant change in the use of the assets or business
strategy related to such assets, and significant negative industry or economic
trends. SFAS No. 144 requires that if the sum of the undiscounted expected
future cash flows from a company's asset is less than the carrying value of the
asset, an asset impairment must be recognized in the financial statements. For
assets held for sale, impairment charges are recorded if the carrying value of
such assets exceeds the estimated fair value less costs to sell. The amount of
impairment recognized is calculated by reducing the carrying value of the asset
to its fair value.

Throughout 2004, PDI tested its power plants for impairment whenever events
or changes in circumstances indicated that their carrying amount may not be
recoverable. No impairment charges were

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recorded in 2004 as a result of these recoverability tests. Results of past
impairment tests may not necessarily be an indicator of future tests given the
criticality of the accounting estimates involved, as discussed more fully above.
Changes in actual results or assumptions could result in an impairment.

WPSC recorded goodwill of $36.4 million in its gas utility segment following
the merger of Wisconsin Fuel and Light into WPSC in 2001. The goodwill is tested
for impairment yearly based on the guidance of SFAS No. 142. The test for
impairment includes assumptions about future profitability of the gas utility
segment and the correlation between our gas utility segment and published
projections for other similar gas utility segments. A significant change in the
natural gas utility market and/or our projections of future profitability could
result in a loss being recorded on the income statement related to a decrease in
the goodwill asset as a result of the impairment test.

Receivables and Reserves

Our regulated natural gas and electric utilities and ESI accrue estimated
amounts of revenue for services rendered but not yet billed.  Estimated
unbilled sales are calculated using actual generation and throughput volumes,
recorded sales, and weather factors. The estimated unbilled sales are assigned
different rates based on historical customer class allocations. At December 31,
2004, 2003, and 2002, the amount of unbilled revenues was $113.2 million, $90.0
million, and $105.9 million, respectively. Any difference between actual sales
and the estimates or weather factors would cause a change in the estimated
revenue.

WPS Resources records reserves for potential uncollectible customer
accounts as an expense on the income statement and an uncollectible reserve on
the balance sheet. WPSC records a regulatory asset to offset its uncollectible
reserve. Because the nonregulated energy marketing business involves higher
credit risk, the reserve is more critical to ESI than to our other segments. At
ESI, the reserve is based on historical uncollectible experience and specific
customer identification where practical. If the assumption that historical
uncollectible experience matches current customer default is incorrect, or if a
specific customer with a large account receivable that has not previously been
identified as a risk defaults, there could be significant changes to the expense
and uncollectible reserve balance.

Pension and Postretirement Benefits

The costs of providing non-contributory defined benefit pension benefits and
other postretirement benefits, described in Note 18 to the Consolidated
Financial Statements, are dependent upon numerous factors resulting from actual
plan experience and assumptions regarding future experience.

Pension costs and other postretirement benefit costs are impacted by actual
employee demographics (including age, compensation levels, and employment
periods), the level of contributions we make to the plan, and earnings on plan
assets. Other postretirement benefit costs are also impacted by health care cost
trends. Pension and other postretirement benefit costs may be significantly
affected by changes in key actuarial assumptions, including anticipated rates of
return on plan assets, discount rates used in determining the projected benefit
and other postretirement benefit obligation and pension and other postretirement
benefit costs, and health care cost trends. Changes made to the plan provisions
may also impact current and future pension and other postretirement benefit
costs.

WPS Resources' pension plan assets and other postretirement benefit plan
assets are primarily made up of equity and fixed income investments.
Fluctuations in actual equity market returns as well as changes in general
interest rates may result in increased or decreased pension costs in future
periods. Management believes that such changes in costs would be recovered at
our regulated segments through the ratemaking process.

The following chart shows how a given change in certain actuarial assumptions
would impact the projected benefit obligation, the net amount recognized on the
balance sheet, and the reported annual pension cost on the income statement as
they relate to all of our defined benefit pension plans. Each factor below
reflects an evaluation of the change based on a change in that assumption only.

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|Actuarial Assumption(Millions, except percentages) | Percent 
      Change in
       Assumption | Impact on Projected Benefit Obligation | Impact on Net Amount Recognized | Impact on
       Pension
       Cost
|-------------------------------------------------- | ------------------------------------------ | -------------------------------------- | ------------------------------- | ------------------------------------
|Discount rate                                      | (0.5)                                      | $ 44.2                                 | $(3.7)                          | $ 3.7                               
|Discount rate                                      | 0.5                                        | (41.6)                                 | 3.7                             | (3.7)                               
|Rate of return on plan assets                      | (0.5)                                      | N/A                                    | (2.6)                           | 2.6                                 
|Rate of return on plan assets                      | 0.5                                        | N/A                                    | 2.6                             | (2.6)                               

The following chart shows how a given change in certain actuarial assumptions
would impact the projected other postretirement benefit obligation, the reported
other postretirement benefit liability on the balance sheet, and the reported
annual other postretirement benefit cost on the income statement. Each factor
below reflects an evaluation of the change based on a change in that assumption
only.



|Actuarial Assumption(Millions, except percentages) | Percent Change in Assumption | Impact on Postretirement Benefit Obligation | Impact on Postretirement Benefit Liability | Impact on Postretirement Benefit Cost
|-------------------------------------------------- | ---------------------------- | ------------------------------------------- | ------------------------------------------ | -------------------------------------
|Discount rate                                      | (0.5)                        | $23.8                                       | $(1.9)                                     | $ 1.9                                
|Discount rate                                      | 0.5                          | (20.5)                                      | 1.6                                        | (1.6)                                
|Health care cost trend rate                        | (1.0)                        | (34.7)                                      | 4.8                                        | (4.8)                                
|Health care cost trend rate                        | 1.0                          | 42.0                                        | (5.2)                                      | 5.2                                  
|Rate of return on plan assets                      | (0.5)                        | N/A                                         | (0.7)                                      | 0.7                                  
|Rate of return on plan assets                      | 0.5                          | N/A                                         | 0.7                                        | (0.7)                                

In selecting an assumed discount rate, we consider long-term Corporate Aa
rated bond yield rates. To select an assumed rate of return on plan assets, we
consider the historical returns and the future expectations for returns for each
asset class, as well as the target allocation of the benefit trust portfolios.
In selecting assumed health care cost trend rates, we consider past performance
and forecasts of health care costs.

Regulatory Accounting

The electric and gas utility segments of WPS Resources follow SFAS No.
71, "Accounting for the Effects of Certain Types of Regulation," and
our financial statements reflect the effects of the different ratemaking
principles followed by the various jurisdictions regulating these segments. We
defer certain items that would otherwise be immediately recognized as expenses
and revenues because our regulators have authorized deferral as regulatory
assets and regulatory liabilities for future recovery or refund to customers.
Future recovery of regulatory assets is not assured, but is generally subject to
review by regulators in rate proceedings for matters such as prudence and
reasonableness. Management regularly assesses whether these regulatory assets
and liabilities are probable of future recovery or refund by considering factors
such as regulatory environment changes and the status of any pending or
potential deregulation legislation. Once approved, we amortize the regulatory
assets and liabilities into income over the rate recovery period. If recovery of
costs is not approved or is no longer deemed probable, these regulatory assets
or liabilities are recognized in current period income.

If our electric and gas utility segments no longer meet the criteria for
application of SFAS No. 71, we would discontinue its application as defined
under SFAS No. 101, "Regulated Enterprises - Accounting for the
Discontinuation of Application of SFAS No. 71." Assets and liabilities
recognized solely due to the actions of rate regulation would no longer be
recognized on the balance sheet and would be classified as an extraordinary item
in income for the period in which the discontinuation occurred. A write-off of
all WPS Resources' regulatory assets and regulatory liabilities at
December 31, 2004, would result in a 3.6% decrease in total assets, an 8.7%
decrease in total liabilities, and a 68.4% increase in income before taxes.

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Tax Provision

As part of the process of preparing our consolidated financial statements, we
are required to estimate our income taxes for each of the jurisdictions in which
we operate. This process involves estimating our actual current tax exposure
together with assessing temporary differences resulting from differing treatment
of items, such as depreciation, for tax and accounting purposes. These
differences result in deferred tax assets and liabilities, which are included
within our consolidated balance sheet. We must also assess the likelihood that
our deferred tax assets will be recovered from future taxable income and, to the
extent we believe that recovery is not likely, we must establish a valuation
allowance, which is offset by an expense within the tax provisions in the income
statement.

Significant management judgment is required in determining our provision for
income taxes, our deferred tax assets and liabilities, and any valuation
allowance recorded against our deferred tax assets. The assumptions involved are
supported by historical data and reasonable projections. Significant changes in
these assumptions could have a material impact on WPS Resources' financial
condition and results of operations.

RELATED PARTY TRANSACTIONS - WPS RESOURCES

WPS Resources has investments in related parties that are accounted for
under the equity method of accounting. These include WPS Investments, LLC's
(a consolidated subsidiary of WPS Resources) investments in ATC and
Guardian Pipeline; WPSC's investment in Wisconsin River Power Company; and
WPS Nuclear Corporation's (a consolidated subsidiary of WPS Resources)
investment in Nuclear Management Company. WPS Resources also had an
investment in WPSR Capital Trust I, which was dissolved January 8, 2004. See
Note 10 of WPS Resources' Notes to the Consolidated Financial
Statements, "Investments in Affiliates, at Equity Method," for
information regarding related party transactions involving ATC, Guardian
Pipeline, and Nuclear Management Company. Note 24, "Company-Obligated
Mandatorily Redeemable Trust Preferred Securities of Preferred Stock
Trust," contains information regarding WPSR Capital Trust I.

TRENDS - WPS RESOURCES

Environmental

See Note 17, "Commitments and Contingencies," to the WPS
Resources' Notes to Consolidated Financial Statements for a detailed discussion
of WPS Resources' environmental commitments and contingencies.

Energy and Capacity Prices

Prices for electric energy and capacity have been extremely volatile over the
past three years. WPS Resources' nonregulated entities are impacted by this
volatility, which has been driven by the exit of many of the largest speculative
traders, equilibrium between natural gas supply and demand, changes in the
economy, and significant overbuilding of generation capacity.

Although electric energy prices are currently high due to increased natural
gas prices, we expect that electric capacity prices will continue to be
depressed for several years. Pressure on capacity prices will continue until
existing reserve margins are depleted either by load growth or capacity
retirements. PDI has been negatively impacted by the depressed capacity prices
and volatile energy prices discussed above, and as a result we have taken
certain steps to reduce our exposure to the merchant marketplace.

In 2004, PDI entered into tolling agreements with ESI to market electric
production from its facilities and to manage natural gas costs for its gas-fired
generation facilities. ESI is utilizing various financial tools, including
forwards and options, to limit exposure and extract additional value from
volatile commodity prices. PDI continues to manage costs of fuel for its
coal-fired facilities.

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Synthetic Fuel Operation

See Note 17, "Commitments and Contingencies," for a detailed
discussion of WPS Resources' synthetic fuel production facility.

Industry Restructuring

The Ohio Legislature passed a Senate Bill in May 1999 instituting
market-based rates, competitive retail electric services and establishing a
market development period that began January 1, 2001, and was to end no later
than December 31, 2005. This bill required Ohio electric distribution
companies to file electric transition plans, including the collection of
transition costs and freezing generation rates at a 5% discount during the
course of the market development period. At the end of the market development
period, rates would be set at a market-based price. However, the Public
Utilities Commission of Ohio, recognizing the competitive electric market has
not developed as envisioned and fearing rate shock at the end of the market
development period, requested the Ohio electric distribution utilities to file
rate stabilization plans covering the 2006-2008 time period. The 2006-2008 rate
stabilization plans are expected to provide rate certainty, financial stability
for the electric distribution utilities, and to further develop the competitive
market.

Since 2001, ESI has been the supplier to approximately 100,000 residential,
small commercial, and government facilities in the FirstEnergy service areas
under the State of Ohio provisions for Opt-out Electric Aggregation Programs. On
June 9, 2004, the Public Utilities Commission of Ohio ordered a competitive
bid auction be developed and conducted and approved a modified version of the
rate stabilization plan submitted by FirstEnergy. The FirstEnergy Rate
Stabilization Plan would establish electric rates consumers would pay beginning
in 2006 if the auction does not produce better benefits.

ESI participated as an intervener in the FirstEnergy Rate Stabilization Plan
and competitive bid process cases in an effort to preserve the competitive
electric business established in the FirstEnergy service areas in the 2006-2008
time period. ESI filed comments requesting modifications to the competitive bid
process to allow for fair competition. In October 2004, the Public
Utilities Commission of Ohio issued orders directing FirstEnergy to modify the
competitive bid process based on filed comments and direction from independent
consultants and scheduled the auction for December 8, 2004.

The competitive bid process was conducted on December 8, 2004,
concluding the same day. On December 9, 2004, the Public Utility Commission
of Ohio rejected the auction price citing the clearing price of 5.45 cents per
kilowatt-hour was inadequate in comparison to the FirstEnergy Rate Stabilization
Plan. While the details of the rate comparison and auction results have not been
made public; the Public Utility Commission of Ohio requested stakeholder
comments relative to what information to maintain as confidential and for what
period of time. The Public Utility Commission of Ohio intends to conduct a
similar auction next year, believing the economy of the power market will
improve, increasing the probability of an acceptable auction clearing price.

Given the auction results, the FirstEnergy Rate Stabilization Plan will be
implemented. ESI participated in recent case developments relative to the price
to be paid by customers who return from competitive supply to default service
during the Rate Stabilization Plan period. Continued service by ESI beyond
December 31, 2005, to customers of the existing aggregation programs will
be dependent on the ability of the communities to comply with the FirstEnergy
Rate Stabilization Plan requirements imposed on governmental aggregation
programs and improved market power prices.

Meanwhile, on September 23, 2004, an Ohio House Bill was introduced,
proposing change to the electric restructuring law. The bill proposes to give
the Public Utilities Commission of Ohio explicit authority to implement rate
stabilization plans, where it has been determined that there is insufficient
development of the generation market or lack of effective competition in an
electric utility's service area and ensuring against any undue competitive
disadvantage between Ohio and regional customers of an electric utility of its
affiliates. Recent news releases indicate an increased momentum in the Ohio
General Assembly for legislation that would make major changes to Senate
Bill 3 in 2005.

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On July 1, 2004, Senate Bills 1331-1336 were introduced in Michigan to amend
legislation enacted in June 2000, which initially established a competitive
supply alternative for customers in the state's electricity market. On
October 6, 2004, Senate Bill S-1 was introduced as a substitute for Senate
Bill 1331. As the Michigan legislature closed out 2004 with this package of
bills not being voted out of the Senate Energy and Technology Committee, they
must be reintroduced and sponsored again, if they are to be addressed in 2005.
It is our expectation that such a move will be initiated early in 2005.

Under current legislation, Michigan's regulated utilities were able to
securitize overrun costs associated with large generation assets and the MPSC
was provided the authority to administer the Electric Choice program to ensure
the interests of all stakeholders were met. Under the current Electric Choice
program, ESI, through its subsidiary Quest Energy, LLC, has established itself
as a significant supplier to the industrial and commercial markets, achieving
contract demand levels of approximately 900 megawatts, and annual sales
volumes of 3.6 million megawatt-hours. The initial Senate bills contained
provisions that would have substantially harmed the Electric Choice market and
returned Michigan to a model of the regulated supply monopoly. If similar
legislation is proposed and passed in 2005, it could diminish the benefits of
competitive supply for Michigan business customers. The impact on ESI could
range from maintaining Michigan business with little or no growth, to an
inability to re-contract any business, leading to a possible decision by ESI to
exit Michigan's electric market and redirect resources to more vibrant markets.
It is not unreasonable to expect changes that will have some level of negative
impact on ESI, but it would be unlikely that Michigan customers will lose all of
the benefits of competition and revert back to a fully regulated monopoly
supply. ESI is actively participating in the legislative and regulatory process
in order to protect its interests in Michigan.

WPSC, UPPCO, and ESI are members of the Midwest Independent System Operator
(ISO), which is in the process of restructuring the bulk electric power market
across its footprint. The implementation of market restructuring by the Midwest
ISO is currently expected to occur April 1, 2005. Such restructuring could have
an impact on the costs associated with serving utility customers' energy
requirements; however, given the anticipated regulatory treatment of any
potential cost differences, WPSC does not currently expect the ultimate outcome
will have a material impact on its results of operations or financial condition.
WPSC, UPPCO, and ESI are working closely with the Midwest ISO and the FERC to
ensure that there is a smooth transition to the new market in order to minimize
any impact on them and their customers. ESI currently participates in markets
that have gone through comparable transitions. We believe this past experience
has prepared ESI for the Midwest ISO transition and positions ESI to manage the
risk and pursue the opportunities that will exist.

Seams Elimination Charge Adjustment

ESI has identified an issue that could create financial exposure through
March 2006. Through a series of orders issued by FERC, Regional Through and Out
Rates for transmission service between the Midwest ISO and the PJM
Interconnection have been eliminated effective December 1, 2004. The FERC
ordered a transitional pricing mechanism called the Seams Elimination Charge
Adjustment (SECA) to be put into place on December 1, 2004, through
March 31, 2006, which would be paid by load serving entities. The purpose
of the SECA is to compensate transmission owners (during the 16-month transition
period) for the revenue they would no longer receive due to the elimination of
the Regional Through and Out Rates. Because ESI is a load serving entity, it
will be billed for SECA charges based on its power imports during 2002 and 2003.
Although actual SECA charges have only been calculated for the first 4 months of
the 16-month period, total exposure for the 16-month transitional period is
estimated to be approximately $13 million for Michigan and $2 million for
Ohio.

On February 10, 2005, FERC issued an order accepting compliance filings
implementing the SECA effective December 1, 2004, subject to refund and
surcharge, as appropriate, and setting the case in its entirety for a formal
hearing. It is anticipated that the case could take a year or more to reach a
final decision. In addition, matters related to the justness and reasonableness
and other legal challenges to the SECA itself remain pending before FERC on
rehearing. It is not known when FERC will issue an order on these requests for
rehearing. It appears that ESI will be required to pay the SECA charges

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during this process, subject to refund. ESI has actively participated in the
SECA case since its beginning and believes its position has strong merits. The
application and legality of the SECA is being challenged by many other load
serving entities and ESI will continue to pursue all avenues to appeal and/or
reduce the SECA obligations. In the interim, the exposure will be managed
through customer charges and other available avenues, where feasible. Through
existing contracts, ESI has the ability to pass SECA charges on to customers.
However, doing so may hinder ESI's competitiveness in the marketplace.

New Accounting Pronouncements

See Note 1(v), "New Accounting Pronouncements," for a detailed
discussion of new accounting pronouncements.

IMPACT OF INFLATION - WPS RESOURCES

Our financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America and report
operating results in terms of historic cost. The statements provide a
reasonable, objective, and quantifiable statement of financial results; but they
do not evaluate the impact of inflation. Under rate treatment prescribed by
utility regulatory commissions, WPSC's and UPPCO's projected operating costs are
recoverable in revenues. Because rate forecasting assumes inflation, most of the
inflationary effects on normal operating costs are recoverable in rates.
However, in these forecasts, WPSC and UPPCO are only allowed to recover the
historic cost of plant via depreciation. Our nonregulated businesses include
inflation in forecasted costs. However, any increase from inflation is offset
with projected business growth. Therefore, the estimated effect of inflation on
our nonregulated businesses is minor.

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RESULTS OF OPERATIONS - WISCONSIN PUBLIC SERVICE

WPSC is a regulated electric and natural gas utility as well as a holding
company exempt from the Public Utility Holding Company Act of 1935. Electric
operations accounted for approximately 66% of revenues in 2004, while natural
gas operations contributed 34% to 2004 revenues.

2004 Compared with 2003

Wisconsin Public Service Overview

WPSC's results of operations for the years ended December 31 are shown
in the following table:

|Wisconsin Public Service's Results(Millions) | 2004     | 2003     | Change
|-------------------------------------------- | -------- | -------- | ------
|                                             |          |          |       
|Operating revenues                           | $1,222.1 | $1,129.1 | 8.2%  
|Earnings on common stock                     | $104.8   | $78.9    | 32.8% 

Approved retail and wholesale electric rate increases drove a
$76.3 million increase in WPSC's electric revenue. The $16.7 million
increase in WPSC's natural gas revenue was driven by an increase in the per-unit
cost of natural gas and an authorized retail natural gas rate increase,
partially offset by a 6.2% decrease in natural gas throughput volumes resulting
from unfavorable weather conditions.

WPSC's earnings on common stock were $104.8 million for the year ended
December 31, 2004, compared with $78.9 million for the same period in
2003. As discussed in more detail below, the following factors impacted earnings
for the year ended December 31, 2004, compared to the same period in 2003.

- Approved rate increases (including the impact
    of timely retail electric rate relief in 2004, compared to the delay in
    receiving retail electric rate relief in 2003) favorably impacted the
    electric margin.
- An approved retail natural gas rate increase
    favorably impacted the natural gas margin at WPSC, but a decrease in natural
    gas throughput volumes partially offset the favorable impact of this rate
    increase.
- Land sales, land donations, and higher
    earnings from equity investments favorably impacted earnings.
- Higher operating and maintenance expense
    negatively impacted earnings.

Electric Utility Operations

|Electric Utility Results (Millions) | 2004     | 2003     | Change
|----------------------------------- | -------- | -------- | ------
|                                    |          |          |       
|Revenues                            | $801.2   | $724.9   | 10.5% 
|Fuel and purchased power            | 249.0    | 225.0    | 10.7% 
|Margins                             | $552.2   | $499.9   | 10.5% 
|                                    |          |          |       
|Sales in kilowatt-hours             | 13,493.4 | 13,411.4 | 0.6%  

Electric utility revenue increased $76.3 million, or 10.5%, for the year
ended December 31, 2004, compared to the same period in 2003. Electric
utility revenue increased largely due to authorized retail and wholesale
electric rate increases for WPSC's Wisconsin and Michigan customers (see
discussion within Results of Operations - WPS Resources) to recover
higher fuel and purchased power costs, increased operating expenses, and
expenditures incurred for infrastructure improvements. Electric utility

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sales volumes were also slightly higher in 2004, increasing 0.6% over 2003
sales volumes. A 1.5% increase in sales volumes to commercial and industrial
customers was partially offset by a 1.2% decrease in sales volumes to
residential customers. Higher sales volumes to our commercial and industrial
customers reflect an improving economy and growth within our service area, while
the decrease in sales volumes to residential customers reflects weather that was
6.6% cooler during the 2004 cooling season, compared to 2003.

WPSC's electric margin increased $52.3 million, or 10.5%, for the year
ended December 31, 2004, compared to 2003. The increase in WPSC's
electric margin is primarily related to the retail and wholesale electric rate
increases, partially offset by a $20.4 million increase in purchased power
costs. The quantity of power purchased in 2004 increased 9.3% over 2003
purchases and purchased power costs were 17.4% higher (on a per-unit basis) in
2004, compared to 2003. The PSCW allows WPSC to adjust prospectively the amount
billed to Wisconsin retail customers for fuel and purchased power if costs are
in excess of plus or minus 2% from approved levels. In response to a request for
additional fuel cost recovery filed early in 2004, WPSC was allowed to recover
$3.2 million of its increased fuel and purchased power costs during 2004.
The PSCW also allowed WPSC to defer $5.4 million of unanticipated fuel and
purchased power costs directly associated with the extension of the Kewaunee
refueling outage in the fourth quarter of 2004. The Kewaunee outage was extended
three weeks due primarily to difficulties encountered with lifting equipment
related to the reactor vessel and procedures to perform the lifts. It is
anticipated that these costs will be recovered in 2006, pending final approval.

WPSC's electric earnings increased $12.2 million, or 22.8%, for the year
ended December 31, 2004, compared to 2003. The increased earnings were
largely driven by the higher margin (including the effect of timely retail
electric rate relief in 2004 compared to a delay in receiving retail electric
rate relief in 2003), partially offset by higher operating and maintenance
expenses.

Gas Utility Operations

|Gas Utility Results (Millions) | 2004   | 2003   | Change
|------------------------------ | ------ | ------ | ------
|                               |        |        |       
|Revenues                       | $420.9 | $404.2 | 4.1%  
|Purchase costs                 | 301.9  | 291.0  | 3.7%  
|Margins                        | $119.0 | $113.2 | 5.1%  
|                               |        |        |       
|Throughput in therms           | 801.3  | 854.5  | (6.2%)

Gas utility revenue increased $16.7 million, or 4.1%, for the year ended
December 31, 2004, compared to 2003. Higher revenue was driven by an
authorized rate increase and an increase in the per-unit cost of natural gas,
partially offset by an overall 6.2% decrease in natural gas throughput volumes.
Natural gas prices increased 14.2% per unit in 2004. Higher natural gas prices
reflect higher marketplace natural gas costs in 2004. The PSCW and the MPSC
allow WPSC to pass changes in the total cost of natural gas on to customers. As
a result, changes in the price of the natural gas commodity do not have a direct
impact on WPSC's margin. The decrease in natural gas throughput volumes was
driven by weather that was 4.3% warmer during the heating season for the year
ended December 31, 2004, compared to 2003.

The natural gas utility margin increased $5.8 million, or 5.1%, for the
year ended December 31, 2004, compared to 2003. The higher natural gas
utility margin is largely due to the authorized rate increase mentioned above.
The ability of WPSC to realize the full benefit of an authorized rate increase
is dependent upon normal throughput volumes; therefore, the decrease in natural
gas throughput volumes negatively impacted WPSC's ability to benefit from the
full amount of the rate increase.

The higher margin drove a $1.6 million, or 10.2%, increase in gas
utility earnings for the year ended December 31, 2004.

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Operating Expenses

|Operating Expenses (Millions)            | 2004   | 2003   | Change 
|---------------------------------------- | ------ | ------ | -------
|Operating and maintenance expense        | $386.0 | $355.1 | 8.7%   
|Depreciation and decommissioning expense | 91.0   | 122.9  | (26.0%)

Operating and maintenance expense

Operating and maintenance expenses at WPSC increased $30.9 million, or
8.7%, for the year ended December 31, 2004, compared to 2003. Electric
transmission and distribution costs were up $13.5 million due primarily to
an increase in transmission rates. Pension and postretirement medical costs
incurred at WPSC increased $8.9 million. Additionally, $6.8 million of
the increase was driven by amortization of costs incurred in conjunction with
the implementation of the automated meter reading system and the purchase of the
De Pere Energy Center (previously deferred as regulatory assets).
Maintenance expenses at WPSC's coal-fired generation facilities were
$4.2 million higher in 2004, compared to 2003, driven by an extension of
the annual planned outage at the Pulliam 6 generation facility in 2004. Higher
payroll and other benefit costs also contributed to the increase in operating
and maintenance expenses. The fall refueling outage at Kewaunee did not
significantly impact the year-over-year change in operating and maintenance
expenses as there was also a refueling outage at Kewaunee in the spring of 2003,
and the PSCW approved the deferral of incremental operating and maintenance
expenses that were incurred as a direct result of the refueling outage extension
($1.8 million of operating and maintenance expenses were deferred in the
fourth quarter of 2004 and collection is anticipated in 2006, pending approval
by the PSCW).

Depreciation and decommissioning expense

Depreciation and decommissioning expense decreased $31.9 million, or
26.0%, for the year ended December 31, 2004, compared to 2003, due
primarily to a decrease of $35.9 million resulting from lower realized
gains on decommissioning trust assets and because the decommissioning trust was
not funded in 2004 in anticipation of selling Kewaunee. Realized gains on
decommissioning trust assets are substantially offset by depreciation expense
pursuant to regulatory practice. An increase in depreciation expense from plant
asset additions at WPSC partially offset the decrease in decommissioning
expense.

Other Income

Other income decreased $22.3 million, from $55.3 million in 2003 to
$33.0 million in 2004, largely due to a decrease in realized gains on
decommissioning trust assets of $33.5 million. Lower realized gains were
substantially offset by lower decommissioning expense, as discussed above.
Partially offsetting the lower gains on decommissioning trust assets were higher
earnings realized from equity investments and an increase in gains recognized
from land sales in 2004, compared to 2003.

2003 Compared with 2002

Wisconsin Public Service Overview

WPSC's 2003 and 2002 results of operations are shown in the following table:

|Wisconsin Public Service's Results(Millions) | 2003     | 2002     | Change
|-------------------------------------------- | -------- | -------- | ------
|                                             |          |          |       
|Operating revenues                           | $1,129.1 | $1,007.6 | 12%   
|Earnings on common stock                     | 78.9     | 83.1     | (5%)  

Wisconsin retail electric and wholesale electric rate increases together with
higher natural gas prices contributed to the increase in operating revenues in
2003.

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WPSC's earnings on common stock were $78.9 million in 2003 compared with
$83.1 million in 2002. As discussed in more detail below, the following
factors impacted year-over-year earnings:

- Electric rate increases and a change in sales
    mix at WPSC favorably impacted electric margins.
- Favorable weather conditions had a favorable
    impact on the natural gas margin, but the impact of favorable weather
    conditions was largely offset by a decrease in natural gas rates allowed by
    the PSCW.
- Cooler weather during the cooling season in
    2003 negatively impacted electric utility margins.
- Rising operating expenses (primarily pension
    and medical costs) together with a delay in receiving 2003 retail electric
    rate relief negatively impacted electric utility earnings. Rate relief for
    these increasing operating costs was expected on January  1, 2003;
    however, the increase in retail electric rates granted by the PSCW was not
    effective until March 21, 2003.

Electric Utility Operations

|Electric Utility Results (Millions) | 2003     | 2002     | Change
|----------------------------------- | -------- | -------- | ------
|                                    |          |          |       
|Revenues                            | $724.9   | $696.9   | 4%    
|Fuel and purchased power            | 225.0    | 217.2    | 4%    
|Margins                             | $499.9   | $479.7   | 4%    
|                                    |          |          |       
|Sales in kilowatt-hours             | 13,411.4 | 13,579.7 | (1%)  

Electric utility revenues increased $28.0 million, or 4%, in 2003
compared to 2002. The increase was largely due to the retail and wholesale
electric rate increases for the Wisconsin and Michigan customers in accordance
with new rate orders.

Due primarily to the electric rate increases, electric margins at WPSC
increased $20.2 million, or 4%, in 2003. Electric margins were also
impacted favorably by a change in sales mix in 2003. While total sales volumes
remained basically unchanged in 2003 compared to 2002, sales volumes to higher
margin residential and commercial and industrial customers increased slightly.
The increase in sales volumes to these higher margin customer classes reflects
growth within WPSC's service area and changes in the economy. These increases
were partially offset by cooler weather during the cooling season for the year
ended December 31, 2003 compared to the year ended December 31, 2002.

Gas Utility Operations

|Gas Utility Results (Millions) | 2003   | 2002   | Change
|------------------------------ | ------ | ------ | ------
|                               |        |        |       
|Revenues                       | $404.2 | $310.7 | 30%   
|Purchase costs                 | 291.0  | 198.6  | 47%   
|Margins                        | $113.2 | $112.1 | 1%    
|                               |        |        |       
|Throughput in therms           | 854.5  | 845.4  | 1%    

Gas utility revenues increased $93.5 million, or 30%, for the year ended
December 31, 2003 compared to the year ended December 31, 2002. The
increase in gas utility revenues was mostly due to a 39% increase in the average
cost of natural gas for the year ended December 31, 2003, compared to the
prior year, partially offset by the 0.3% decrease in retail natural gas rates
ordered by the PSCW, effective March 21, 2003.

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The natural gas utility margin for the year ended December 31, 2003,
increased $1.1 million, or 1%, compared to the year ended December 31,
2002. The increase in the natural gas utility margin can be attributed to a 1%
increase in natural gas throughput volumes in 2003 compared to 2002. Natural gas
throughput volumes to our higher margin residential and commercial and
industrial customers increased 6% in the aggregate, mostly as a result of colder
weather in 2003 compared to 2002. Natural gas throughput volumes to our lower
margin transport customers decreased 5% due to the rising price of natural gas
together with their ability to use alternate fuel sources.

Operating Expenses

|Operating Expenses (Millions)            | 2003   | 2002   | Change
|---------------------------------------- | ------ | ------ | ------
|Operating and maintenance expense        | $355.1 | $326.9 | 9%    
|Depreciation and decommissioning expense | 122.9  | 81.9   | 50%   

Operating and maintenance expense

Utility operating and maintenance expense increased $28.2 million, or
9%, for the year ended December 31, 2003, compared to the prior year.
Approximately $17 million of the increase reflects higher pension,
postretirement medical, and active medical costs. The remaining increase
pertains to costs incurred for plant maintenance related to Kewaunee's scheduled
refueling outage in 2003 (there was no refueling outage in 2002), additional
operating expenses at Kewaunee and wage increases.

Depreciation and decommissioning expense

Utility depreciation and decommissioning expense increased
$41.0 million, or 50%, for the year ended December 31, 2003, compared
to the prior year, mostly related to an increase of $37.4 million resulting
from higher realized gains on the decommissioning trust assets that resulted in
recording decommissioning expense approximately equal to the gains recognized in
miscellaneous income pursuant to regulatory practice. The remaining increase is
related to plant asset additions.

Other Income

Other income increased $41.3 million in 2003, largely due to an increase
in realized gains on the decommissioning trust assets of $36.4 million. The
realized gains were offset by increased decommissioning expense, as discussed
above. Gains recognized on hydroelectric land sales in 2003 compared to 2002
(primarily due to the $6.2 million pre-tax gain recognized in 2003 from
land sales to the WDNR) were also higher in 2003. Earnings from equity method
investments also increased in 2003 compared to 2002.

BALANCE SHEET - WISCONSIN PUBLIC SERVICE

2004 Compared with 2003

Net utility plant increased $186.5 million, or 9.9%, from
December 31, 2003, to December 31, 2004. The increase in net utility
plant primarily relates to capital expenditures associated with the construction
of Weston 4 and the installation of automated meter reading.

Pension assets decreased from $67.8 million at December 31, 2003,
to $0 at December 31, 2004. The decrease in the pension assets was the
result of the merger of WPS Resource's two non-contributory qualified
retirement plans effective December 31, 2004. For the combined plan, WPSC's
cumulative contributions were less than cumulative accrued net benefit costs;
therefore, no assets were recorded at December 31, 2004. Prior to the
merger, an asset was recognized for one of the plans. (See Note 18 to
WPS Resources' Consolidated Financial Statements - Employee Benefit Plans,
for more information.)

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The current portion of long-term debt decreased from $49.9 million at
December 31, 2003, to $0 at December 31, 2004. On January 19, 2004,
WPSC retired early $49.9 million of its 7.125% series first mortgage bonds.
These bonds had an original maturity date of July 1, 2023. None of WPSC's
long-term debt is scheduled to mature in 2005.

Short-term debt increased $91 million, from $10.0 million at
December 31, 2003, to $101.0 million at December 31, 2004.
Short-term debt was used to finance a portion of WPSC's capital expenditures in
2004.

Accounts payable increased $40.2 million, or 38.3%, from
December 31, 2003, to December 31, 2004. The increase in accounts
payable was driven by expenditures for Weston 4.

The environmental remediation liability increased $30.5 million from
December 31, 2003, to December 31, 2004. This liability relates to
clean-up costs associated with several manufactured gas plant sites (see Note 17
to WPS Resources' Consolidated Financial Statements - Commitments and
Contingencies, for more information). WPSC's estimate of future clean-up costs
required to remediate these sites increased to reflect the WDNR's application of
sediment guidance that was recently issued.

Pension and postretirement benefit obligations decreased $43.0 million,
or 31.6%, from December 31, 2003, to December 31, 2004, primarily due
to a reduction in the minimum pension liability that was recorded. The decrease
in the minimum pension liability was driven by WPS Resources' merger of its
two non-contributory qualified retirement plans. On a combined basis, the
minimum pension liability and related pension asset were reduced pursuant to
generally accepted accounting principles.

LIQUIDITY AND CAPITAL RESOURCES - WISCONSIN PUBLIC SERVICE

WPSC believes that its cash, operating cash flows, and borrowing ability
because of strong credit ratings, when taken together, provide adequate
resources to fund ongoing operating requirements and future capital expenditures
related to expansion of existing businesses and development of new projects.
However, WPSC's operating cash flow and access to capital markets can be
impacted by macroeconomic factors outside its control. In addition, WPSC's
borrowing costs can be impacted by its short- and long-term debt ratings
assigned by independent rating agencies, which in part are based on certain
credit measures such as interest coverage and leverage ratios. Currently, WPSC
believes these ratings continue to be among the best in the energy industry (see
the Financing Cash Flows and Credit Ratings sections below).

Operating Cash Flows

During 2004, net cash provided by operating activities was
$213.9 million, compared with $152.6 million in 2003. The increase was
driven by improved operating results.

During 2003, net cash provided by operating activities was
$152.6 million, compared with $185.4 million in 2002. The decrease was
primarily due to increased working capital requirements. Gas inventories
increased $19.9 million due to high natural gas prices. Receivables and
accrued revenues also increased due to higher natural gas prices.

Investing Cash Flows

Net cash used for investing activities was $252.0 million in 2004
compared to $182.2 million in 2003. The increase was largely related to a
$111.2 million increase in utility capital expenditures (see Capital
Expenditures below), partially offset by a $48.4 million decrease in
cash used for the purchase of equity investments and other acquisitions. The
final payment in the amount of $48.4 million related to the De Pere
Energy Center was made in December 2003.

Net cash used for investing activities was $182.2 million in 2003
compared to $184.0 million in 2002. The small decrease is attributed to a
$29.4 million decrease in capital expenditures and an increase in the

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sale of property, plant, and equipment of $26.2 million. The majority of
the increase in the sale of property, plant, and equipment was the result of
WPSC's sale of $20.1 million of assets at book value related to the Wausau,
Wisconsin, to Duluth, Minnesota, transmission line to ATC in June 2003. These
factors were partially offset by an increase in the purchase of equity
investments and other acquisitions of $48.4 million from the remaining
purchase price for the 180-megawatt De Pere Energy Center paid in
December 2003. See "Note 6 - Acquisitions and Sales of
Assets" in WPS Resources' Notes to Consolidated Financial Statements
for more information.

Capital Expenditures

Capital expenditures by business segment for the years ended
December 31, 2004, 2003, and 2002 are as follows:



|(Millions)                            |  | Years Ended December 31,
|------------------------------------- |  | ------------------------
|                                      |  | 2004                    
|Electric Utility                      |  | $210.1                  
|Gas Utility                           |  | 62.7                    
|Other                                 |  | -                       
|Wisconsin Public Service Consolidated |  | $272.8                  

The increase in capital expenditures at the electric utility in 2004 as
compared to 2003 is mainly due to higher capital expenditures associated with
the construction of the 500-megawatt coal-fired Weston 4 generation facility
located near Wausau, Wisconsin. Gas utility capital expenditures increased
primarily due to the installation of automated meter reading. See Liquidity
and Capital Resources - WPS Resources for more information regarding
construction of Weston 4.

Capital expenditures in the electric utility were higher in 2002 compared to
2003 mainly due to construction of portions of the Pulliam combustion turbine at
WPSC in 2002. Gas utility capital expenditures increased due to the installation
of automated meter reading in 2003.

Financing Cash Flows

Net cash provided by financing activities was $36.9 million in 2004
compared to $30.9 million in 2003. Although cash provided by operating
activities increased significantly in 2004, additional borrowings were required
to fund WPSC's capital expenditures, primarily related to the construction of
Weston 4.

Net cash provided by financing activities was $30.9 million in 2003
compared to cash used for financing activities of $7.9 million in 2002.
WPSC required cash from financing activities in 2003 as cash provided by
operating activities was not adequate to fund investing activities.

Significant Financing Activities

See Liquidity and Capital Resources - WPS Resources for detailed
information on significant financing activities for WPSC.

Credit Ratings

See Liquidity and Capital Resources - WPS Resources for detailed
information on WPSC's credit ratings.

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Future Capital Requirements and Resources

Contractual Obligations

The following table summarizes the contractual obligations of WPSC, including
its subsidiary.

|                                                                      |                              |                        |                   |        |         
|--------------------------------------------------------------------- | ---------------------------- | ---------------------- | ----------------- | ------ | --------
|Contractual
      Obligations
      As of December 31, 2004(Millions) | Total
      AmountsCommitted | Payments Due By Period
|Less
      Than1 Year                                                 | 1
      to 3Years            | 3
      to 5Years      | Over
      5Years
|Long-term debt
      principal and interest
        payments          | $  759.8                     | $ 27.1                 | $ 54.1            | $ 54.1 | $  624.5
|Operating lease obligations                                           | 14.5                         | 3.2                    | 3.4               | 3.0    | 4.9     
|Commodity purchase obligations                                        | 1,198.1                      | 187.1                  | 294.9             | 202.9  | 513.2   
|Purchase orders                                                       | 493.8                        | 299.9                  | 163.3             | 30.6   | -       
|Other                                                                 | 215.8                        | 30.1                   | 47.0              | 46.1   | 92.6    
|Total contractual cash obligations                                    | $2,682.0                     | $547.4                 | $562.7            | $336.7 | $1,235.2

Long-term debt principal and interest payments represent bonds issued, notes
issued, and loans made to WPSC. We record all principal obligations on the
balance sheet. Commodity purchase obligations represent mainly commodity
purchase contracts of WPSC. WPSC expects to recover the costs of its contracts
in future customer rates. Purchase orders include obligations related to normal
business operations and large construction obligations, including Weston 4.
Other mainly represents expected pension and post-retirement funding
obligations.

Capital Requirements

See Liquidity and Capital Resources - WPS Resources for detailed
information on capital requirements for WPSC.

Capital Resources

See Liquidity and Capital Resources - WPS Resourcesfor detailed
information on capital resources for WPSC.

Other Future Considerations

Kewaunee

See Liquidity and Capital Resources - WPS Resources for detailed
information on the proposed sale of WPSC's interest in Kewaunee.

Regulatory

See Note 22, Regulatory Environment, to WPS Resources' Consolidated Financial
Statements for detailed information on WPSC's regulatory issues.

American Jobs Creation Act of 2004

See Liquidity and Capital Resources - WPS Resourcesfor detailed
information on the American Jobs Creation Act of 2004.

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OFF BALANCE SHEET ARRANGEMENTS - WISCONSIN PUBLIC SERVICE

See Guarantees and Off Balance Sheet Arrangements - WPS Resources
for information regarding WPSC's off balance sheet arrangements.

CRITICAL ACCOUNTING POLICIES - WISCONSIN PUBLIC SERVICE

See Critical Accounting Policies - WPS Resourcesfor information
regarding WPSC's critical accounting policies.

RELATED PARTY TRANSACTIONS - WISCONSIN PUBLIC SERVICE

See Related Party Transactions - WPS Resourcesfor information
regarding WPSC's related party transactions.

TRENDS - WISCONSIN PUBLIC SERVICE

See Trends - WPS Resourcesfor information regarding WPSC's
trends.

IMPACT OF INFLATION - WISCONSIN PUBLIC SERVICE

See Impact of Inflation - WPS Resourcesfor information regarding
the impact of inflation on WPSC.

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ITEM 7A.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Market Risks and Other Significant Risks

WPS Resources has potential market risk exposure related to commodity
price risk, interest rate risk, equity return, and principal preservation risk.
WPS Resources is also exposed to other significant risks due to the nature
of our subsidiaries' business and the environment from which we operate.
WPS Resources has risk management policies in place to monitor and assist
in controlling these risks and may use derivative and other instruments to
manage some of these exposures as further described below.

Interest Rate Risk

WPS Resources and WPSC are exposed to interest rate risk resulting from
their variable rate long-term debt and short-term commercial paper borrowing.
Exposure to interest rate risk is managed by limiting the amount of variable
rate obligations and continually monitoring the effects of market changes in
interest rates. WPS Resources and WPSC enter into long-term fixed rate debt
when it is advantageous to do so. WPS Resources and WPSC may also enter
into derivative financial instruments, such as swaps, to mitigate interest rate
exposure. At December 31, 2004, and 2003, WPS Resources utilized one
interest rate swap to fix the interest rate on a variable rate loan at one of
its nonregulated subsidiaries.

Based on the variable rate debt of WPS Resources and WPSC outstanding at
December 31, 2004, a hypothetical increase in market interest rates of 100
basis points in 2005 would increase annual interest expense by approximately
$3.2 million at WPS Resources and $1.0 million at WPSC.
Comparatively, based on the variable rate debt outstanding at December 31,
2003, an increase in interest rates of 100 basis points would have
increased interest expense in 2004 by approximately $0.7 million at
WPS Resources and $0.1 million at WPSC. These amounts were determined
by performing a sensitivity analysis on the impact of a hypothetical 100 basis
points increase in interest rates on the variable rate debt of
WPS Resources and WPSC outstanding as of December 31, 2004, and 2003.
This sensitivity analysis was performed assuming a constant level of variable
rate debt during the period and an immediate increase in the levels of interest
rates with no other subsequent changes for the remainder of the period. In the
event of a significant change in interest rates, management would take action to
mitigate WPS Resources' and WPSC's exposure to the change.

Commodity Price Risk

WPS Resources is exposed to commodity price risk resulting from the
impact of market fluctuations in the price of certain commodities, including but
not limited to electricity, natural gas, coal, fuel oil, and uranium, which are
used and/or sold by our subsidiaries in the normal course of their business. We
employ established policies and procedures and utilize contracts of various
duration to manage our fuel and gas supply costs and to reduce the market risk
associated with changing commodity prices, including using various types of
commodity and derivative instruments.

WPS Resources' exposure to commodity price risk in its regulated
utilities is significantly mitigated by the current ratemaking process for the
recovery of its electric fuel and purchased energy costs as well as its cost of
natural gas purchased for resale. Recovery of electric fuel and purchased energy
costs through the PSCW ratemaking process can be sought if they exceed more than
2% of the estimated costs used to establish the rates. The risk associated with
exposure to costs less than 2% above the estimated costs that are not
recoverable are not material. Recovery of utility natural gas commodity costs
are allowed to be passed through to retail customers in both Wisconsin and
Michigan via gas cost recovery plans authorized by the PSCW and MPSC,
respectively. An additional risk within the ratemaking process, regulatory lag
risk, occurs between the time we submit rate proceedings and the time we receive
the final approval or denial from the PSCW, MPSC, or FERC. The regulatory lag
risk may increase or decrease with any change in commodity prices, unplanned
outages, or unscheduled maintenance during the approval period. The regulatory
lag risk is deemed to be insignificant; therefore, the Value-at-Risk amounts
discussed below do not include measures for WPS Resources' regulated
utilities. To further

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manage commodity price risk and the associated regulatory lag risk, our
regulated utilities enter into contracts of various durations for the purchase
and/or sale of natural gas, fuel for electric generation, and electricity.

For the nonregulated utilities, PDI utilizes purchase and/or sale contracts
for electric fuel and electricity to help manage its commodity price risk and
ESI uses derivative financial and commodity instruments to reduce market risk
associated with the changing prices of natural gas and electricity sold at firm
prices to customers. ESI also utilizes these instruments to manage market risk
associated with anticipated energy purchases.

For purposes of risk management disclosure, PDI and ESI's activities are
classified as non-trading. Certain PDI merchant plants are under contract to ESI
and ESI has the ability to reduce market price risk and extract additional value
from these plants through the use of various financial and physical tools
(including forward contracts and options). Due to the fact that a majority of
PDI's risk is now essentially managed and reported through ESI, a separate
Value-at-Risk amount has not been presented for PDI.

Value-at-Risk

To measure commodity price risk exposure, WPS Resources performs a
Value-at-Risk analysis of its exposures.

Value-at-Risk is used to describe a probabilistic approach to quantifying the
exposure to market risk. The Value-at-Risk amount represents an estimate of the
potential change in fair value that could occur from changes in market factors,
within a given confidence level, if an instrument or portfolio is held for a
specified time period. Value-at-Risk models are relatively sophisticated.
However, the quantitative risk information is limited by the parameters
established in creating the model. The instruments being used may have features
that could trigger a potential loss in excess of the calculated amount if the
changes in the underlying commodity price exceed the confidence level of the
model used. Value-at-Risk is not necessarily indicative of actual results that
may occur.

Value-at-Risk is estimated using a delta-normal approximation based on a
one-day holding period and a 95% confidence level. The delta-normal
approximation is based on the assumption that changes in the value of the
portfolio over short time periods, such as one day, are normally distributed. It
does not take into account higher order risk exposures, so it may not provide a
good approximation of the risk in a portfolio with substantial option positions.
We utilized a delta-normal approximation because our portfolio has limited
exposure to optionality. Our Value-at-Risk calculation includes derivative
financial and commodity instruments, such as forwards, futures, swaps, and
options as well as commodities held in inventory, such as natural gas held in
storage to the extent such positions are significant.

The Value-at-Risk amount for ESI was calculated to be $0.5 million at
December 31, 2004, compared to $0.8 million at December 31, 2003.
The decrease is due to less volatility in the market and fewer unusual
fluctuations in the various portfolios. Due to the fact that a majority of PDI's
risk is essentially managed and reported through ESI, a separate Value-at-Risk
amount has not been presented for PDI in 2004. The Value-at-Risk amount for PDI
at December 31, 2003 was calculated to be $1.2 million.

For the year ended December 31, 2004, the average, high, and low
Value-at-Risk amounts for ESI were $0.6 million, $0.8 million, and
$0.5 million, respectively. The same amounts for the year ended
December 31, 2003, were $0.5 million, $0.8 million, and
$0.4 million. The average, high, and low amounts were computed using the
Value-at-Risk amounts at the beginning of the reporting period and the four
quarter-end amounts.

Equity Return and Principal Preservation Risk

WPS Resources and WPSC currently fund liabilities (accumulated benefit
obligations) related to employee benefits and nuclear decommissioning through
various external trust funds. These funds are managed by various investment
managers and hold investments in debt and equity securities. Changes

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in the market value of these investments can have an impact on the
future expenses related to these liabilities. WPS Resources maintains
a qualified pension plan for employees' retirement.

Foreign Currency Exchange Rate Risk

WPS Resources is exposed to foreign currency risk as a result of foreign
operations owned and operated in Canada and transactions denominated in Canadian
dollars for the purchase and sale of natural gas and electricity by our
nonregulated subsidiaries. Forward foreign exchange contracts designated as fair
value hedges are utilized to manage the risk associated with currency
fluctuations on certain firm sales and sales commitments denominated in Canadian
dollars and certain Canadian dollar denominated asset and liability positions.
WPS Resources' exposure to foreign currency risk was not significant at
December 31, 2004, or 2003.

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|                                                                                                                                        |          |          |        
|--------------------------------------------------------------------------------------------------------------------------------------- | -------- | -------- | -------
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                     |         
|                                                                                                                                        |          |          |        
|WPS RESOURCES CORPORATION                                                                                                              
|                                                                                                                                        |          |          |        
|A. CONSOLIDATED STATEMENTS OF INCOME                                                                                                   
|                                                                                                                                        |          |          |        
|                                                                                                                                        |          |          |        
|Year Ended December 31                                                                                                                  |          |          |        
|(Millions, except per share data)                                                                                                       | 2004     | 2003     | 2002   
|                                                                                                                                        |          |          |        
|Nonregulated revenue                                                                                                                    | $3,598.6 | $3,137.6 | $410.8 
|Utility revenue                                                                                                                         | 1,292.0  | 1,183.7  | 1,050.3
|Total revenues                                                                                                                          | 4,890.6  | 4,321.3  | 1,461.1
|                                                                                                                                        |          |          |        
|Nonregulated cost of fuel, gas, and purchased power                                                                                     | 3,458.8  | 3,016.6  | 339.7  
|Utility cost of fuel, gas, and purchased power                                                                                          | 576.2    | 532.3    | 419.0  
|Operating and maintenance expense                                                                                                       | 513.2    | 459.5    | 412.5  
|Depreciation and decommissioning expense                                                                                                | 107.0    | 138.4    | 94.8   
|Taxes other than income                                                                                                                 | 46.1     | 43.8     | 39.9   
|Operating income                                                                                                                        | 189.3    | 130.7    | 155.2  
|                                                                                                                                        |          |          |        
|Miscellaneous income                                                                                                                    | 47.7     | 63.6     | 47.8   
|Interest expense and distributions on trust preferred securities                                                                        | (54.2)   | (55.6)   | (55.8) 
|Minority interest                                                                                                                       | 3.4      | 5.6      | -      
|Other income (expense)                                                                                                                  | (3.1)    | 13.6     | (8.0)  
|                                                                                                                                        |          |          |        
|Income before taxes                                                                                                                     | 186.2    | 144.3    | 147.2  
|Provision for income taxes                                                                                                              | 30.0     | 33.7     | 28.7   
|Income from continuing operations                                                                                                       | 156.2    | 110.6    | 118.5  
|                                                                                                                                        |          |          |        
|Discontinued operations, net of tax                                                                                                     | (13.4)   | (16.0)   | (6.0)  
|Net income before cumulative effect of change in                                                                                        |          |          |        
|accounting principles                                                                                                                   | 142.8    | 94.6     | 112.5  
|                                                                                                                                        |          |          |        
|Cumulative effect of change in accounting principles, net of tax                                                                        | -        | 3.2      | -      
|Net income before preferred stock dividends of subsidiary                                                                               | 142.8    | 97.8     | 112.5  
|                                                                                                                                        |          |          |        
|Preferred stock dividends of subsidiary                                                                                                 | 3.1      | 3.1      | 3.1    
|Income available for common shareholders                                                                                                | $139.7   | $94.7    | $109.4 
|                                                                                                                                        |          |          |        
|Average shares of common stock                                                                                                          |          |          |        
|Basic                                                                                                                                   | 37.4     | 33.0     | 31.7   
|Diluted                                                                                                                                 | 37.6     | 33.2     | 32.0   
|                                                                                                                                        |          |          |        
|Earnings (loss) per common share (basic)                                                                                                |          |          |        
|Income from continuing operations                                                                                                       | $4.09    | $3.26    | $3.64  
|Discontinued operations                                                                                                                 | (0.35)   | (0.49)   | (0.19) 
|Cumulative effect of change in accounting principles                                                                                    | -        | 0.10     | -      
|Earnings per common share (basic)                                                                                                       | $3.74    | $2.87    | $3.45  
|                                                                                                                                        |          |          |        
|Earnings (loss) per common share (diluted)                                                                                              |          |          |        
|Income from continuing operations                                                                                                       | $4.07    | $3.24    | $3.61  
|Discontinued operations                                                                                                                 | (0.35)   | (0.49)   | (0.19) 
|Cumulative effect of change in accounting principles                                                                                    | -        | 0.10     | -      
|Earnings per common share (diluted)                                                                                                     | $3.72    | $2.85    | $3.42  
|                                                                                                                                        |          |          |        
|Dividends per common share                                                                                                              | $2.20    | $2.16    | $2.12  
|                                                                                                                                        |          |          |        
|                                                                                                                                        |          |          |        
|The accompanying notes to WPS Resources Corporation's consolidated
      financial statements are an integral part of these statements.
|                                                                                                                                        |          |          |        

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|                                                                                                                                              |          |         
|--------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                           |          |         
|                                                                                                                                              |          |         
|WPS RESOURCES CORPORATION                                                                                                                    
|                                                                                                                                              |          |         
|B. CONSOLIDATED BALANCE SHEETS                                                                                                               
|                                                                                                                                              |          |         
|At December 31                                                                                                                                |          |         
|(Millions)                                                                                                                                    | 2004     | 2003    
|                                                                                                                                              |          |         
|Assets                                                                                                                                        |          |         
|Cash and cash equivalents                                                                                                                     | $40.0    | $50.7   
|Restricted funds                                                                                                                              | -        | 3.2     
|Accounts receivable - net of reserves of $8.0 and $6.6, respectively                                                                          | 531.3    | 502.4   
|Accrued unbilled revenues                                                                                                                     | 113.2    | 90.0    
|Inventories                                                                                                                                   | 188.8    | 178.3   
|Current assets from risk management activities                                                                                                | 439.5    | 518.1   
|Assets held for sale                                                                                                                          | 119.6    | 116.4   
|Other current assets                                                                                                                          | 86.1     | 86.4    
|Current assets                                                                                                                                | 1,518.5  | 1,545.5 
|                                                                                                                                              |          |         
|Property, plant, and equipment, net                                                                                                           | 2,002.6  | 1,828.7 
|Nuclear decommissioning trusts                                                                                                                | 344.5    | 332.3   
|Regulatory assets                                                                                                                             | 160.9    | 127.7   
|Long-term assets from risk management activities                                                                                              | 80.4     | 104.3   
|Other                                                                                                                                         | 338.7    | 353.8   
|Total assets                                                                                                                                  | $4,445.6 | $4,292.3
|                                                                                                                                              |          |         
|Liabilities and Shareholders' Equity                                                                                                          |          |         
|Short-term debt                                                                                                                               | $292.4   | $38.0   
|Current portion of long-term debt                                                                                                             | 6.7      | 56.6    
|Note payable to preferred stock trust                                                                                                         | -        | 51.5    
|Accounts payable                                                                                                                              | 589.4    | 510.7   
|Current liabilities from risk management activities                                                                                           | 401.6    | 517.3   
|Liabilities held for sale                                                                                                                     | 2.8      | 2.7     
|Deferred income taxes                                                                                                                         | 14.6     | 1.7     
|Other current liabilities                                                                                                                     | 72.6     | 86.9    
|Current liabilities                                                                                                                           | 1,380.1  | 1,265.4 
|                                                                                                                                              |          |         
|Long-term debt                                                                                                                                | 865.7    | 871.9   
|Deferred income taxes                                                                                                                         | 65.5     | 78.8    
|Deferred investment tax credits                                                                                                               | 16.2     | 17.7    
|Regulatory liabilities                                                                                                                        | 288.3    | 304.4   
|Environmental remediation liabilities                                                                                                         | 68.4     | 37.9    
|Pension and postretirement benefit obligations                                                                                                | 94.6     | 137.7   
|Long-term liabilities from risk management activities                                                                                         | 68.3     | 92.2    
|Asset retirement obligations                                                                                                                  | 364.4    | 344.0   
|Other                                                                                                                                         | 91.2     | 88.0    
|Long-term liabilities                                                                                                                         | 1,922.6  | 1,972.6 
|                                                                                                                                              |          |         
|Commitments and contingencies                                                                                                                 |          |         
|                                                                                                                                              |          |         
|Preferred stock of subsidiary with no mandatory redemption                                                                                    | 51.1     | 51.1    
|Common stock equity                                                                                                                           | 1,091.8  | 1,003.2 
|Total liabilities and shareholders' equity                                                                                                    | $4,445.6 | $4,292.3
|                                                                                                                                              |          |         
|                                                                                                                                              |          |         
|The accompanying notes to WPS Resources Corporation's consolidated
      financial statements are an integral
      part of these statements.
|                                                                                                                                              |          |         

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|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|--------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | -------- | ------------------------------------------------------------------------------------- | ----------- | ----------------------------------------- | ---------------- | ------------- | --------------------------------------------------------
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                     |                     |          |                                                                                       |             |                                           |                  |              
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|WPS RESOURCES CORPORATION                                                                                                              
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|C. CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS'
      EQUITY                                                                        
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|                                                                                                                                        |                     |          | Employee
      Stock Plan
      Guarantees and
      Deferred
      CompensationTrust | CommonStock | Capital
      in
      Excess ofPar Value | RetainedEarnings | TreasuryStock | Accumulated
      Other
      ComprehensiveIncome (Loss)
|                                                                                                                                        |                     |         
|                                                                                                                                        | ComprehensiveIncome |         
|(Millions)                                                                                                                              | Total              
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|Balance at December 31, 2001                                                                                                            | -                   | $715.9   | ($4.2)                                                                                | $31.5       | $325.4                                    | $373.6           | ($7.7)        | ($2.7)                                                  
|Income available for common shareholders                                                                                                | $109.4              | 109.4    | -                                                                                     | -           | -                                         | 109.4            | -             | -                                                       
|Other comprehensive income - cash flow hedges (net of tax of $3.1)                                                                      | (4.6)               | (4.6)    | -                                                                                     | -           | -                                         | -                | -             | (4.6)                                                   
|Other comprehensive income - minimum pension liability (net of tax of
      $1.8)                                                       | (2.7)               | (2.7)    | -                                                                                     | -           | -                                         | -                | -             | (2.7)                                                   
|Comprehensive income                                                                                                                    | $102.1              | -        | -                                                                                     | -           | -                                         | -                | -             | -                                                       
|Issuance of common stock                                                                                                                | -                   | 28.3     | -                                                                                     | 0.5         | 21.7                                      | -                | 6.1           | -                                                       
|Purchase of common stock                                                                                                                | -                   | (1.3)    | (1.3)                                                                                 | -           | -                                         | -                | -             | -                                                       
|Dividends on common stock                                                                                                               | -                   | (67.1)   | -                                                                                     | -           | -                                         | (67.1)           | -             | -                                                       
|Other                                                                                                                                   | -                   | 4.9      | 0.1                                                                                   | -           | 4.7                                       | -                | 0.1           | -                                                       
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|Balance at December 31, 2002                                                                                                            | -                   | $782.8   | ($5.4)                                                                                | $32.0       | $351.8                                    | $415.9           | ($1.5)        | ($10.0)                                                 
|Income available for common shareholders                                                                                                | $94.7               | 94.7     | -                                                                                     | -           | -                                         | 94.7             | -             | -                                                       
|Other comprehensive income - cash flow hedges (net of tax of $4.8)                                                                      | 7.2                 | 7.2      | -                                                                                     | -           | -                                         | -                | -             | 7.2                                                     
|Other comprehensive income - minimum pension liability (net of tax of
      $8.2)                                                       | (12.3)              | (12.3)   | -                                                                                     | -           | -                                         | -                | -             | (12.3)                                                  
|Other comprehensive income - currency translation                                                                                       | 0.1                 | 0.1      | -                                                                                     | -           | -                                         | -                | -             | 0.1                                                     
|Comprehensive income                                                                                                                    | $89.7               | -        | -                                                                                     | -           | -                                         | -                | -             | -                                                       
|Issuance of common stock                                                                                                                | -                   | 197.7    | -                                                                                     | 4.8         | 191.8                                     | -                | 1.1           | -                                                       
|Purchase of common stock                                                                                                                | -                   | (1.0)    | (1.0)                                                                                 | -           | -                                         | -                | -             | -                                                       
|Dividends on common stock                                                                                                               | -                   | (71.8)   | -                                                                                     | -           | -                                         | (71.8)           | -             | -                                                       
|Other                                                                                                                                   | -                   | 5.8      | (0.1)                                                                                 | -           | 5.9                                       | -                | -             | -                                                       
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|Balance at December 31, 2003                                                                                                            | -                   | $1,003.2 | ($6.5)                                                                                | $36.8       | $549.5                                    | $438.8           | ($0.4)        | ($15.0)                                                 
|Income available for common shareholders                                                                                                | $139.7              | 139.7    | -                                                                                     | -           | -                                         | 139.7            | -             | -                                                       
|Other comprehensive income - cash flow hedges (net of tax of $3.1)                                                                      | 4.6                 | 4.6      | -                                                                                     | -           | -                                         | -                | -             | 4.6                                                     
|Other comprehensive income - minimum pension liability (net of tax of
      $4.0)                                                       | (6.0)               | (6.0)    | -                                                                                     | -           | -                                         | -                | -             | (6.0)                                                   
|Other comprehensive income - currency translation                                                                                       | 0.3                 | 0.3      | -                                                                                     | -           | -                                         | -                | -             | 0.3                                                     
|Comprehensive income                                                                                                                    | $138.6              | -        | -                                                                                     | -           | -                                         | -                | -             | -                                                       
|Issuance of common stock                                                                                                                | -                   | 26.3     | -                                                                                     | 0.6         | 25.6                                      | -                | 0.1           | -                                                       
|Dividends on common stock                                                                                                               | -                   | (81.3)   | -                                                                                     | -           | -                                         | (81.3)           | -             | -                                                       
|Other                                                                                                                                   | -                   | 5.0      | (1.9)                                                                                 | 0.1         | 7.0                                       | (0.2)            | -             | -                                                       
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|Balance at December 31, 2004                                                                                                            | -                   | $1,091.8 | ($8.4)                                                                                | $37.5       | $582.1                                    | $497.0           | ($0.3)        | ($16.1)                                                 
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         
|The accompanying notes to WPS Resources Corporation's consolidated
      financial statements are an integral part of these statements.
|                                                                                                                                        |                     |          |                                                                                       |             |                                           |                  |               |                                                         

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|                                                                                                                                        |                                                                  |                           |         |         |       
|--------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------- | ------------------------- | ------- | ------- | ------
|ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                                                     |                                                                  |                           |        
|                                                                                                                                        |                                                                  |                           |         |         |       
|WPS RESOURCES CORPORATION                                                                                                              
|                                                                                                                                        |                                                                  |                           |         |         |       
|D. CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                               
|                                                                                                                                        |                                                                  |                           |         |         |       
|Year Ended December 31                                                                                                                  |                                                                  |                           |        
|(Millions)                                                                                                                              |                                                                  | 2004                      | 2003    | 2002   
|Operating Activities                                                                                                                    |                                                                  |                           |        
|Net income before preferred stock dividends of subsidiary                                                                               | $142.8                                                           | $97.8                     | $112.5 
|Adjustments to reconcile net income to net cash provided by operating
      activities                                                  |                                                                  |                          
|                                                                                                                                        | Discontinued operations, net of tax                              | 13.4                      | 16.0    | 6.0    
|                                                                                                                                        | Depreciation and decommissioning                                 | 107.0                     | 138.4   | 94.8   
|                                                                                                                                        | Amortization of nuclear fuel and other                           | 44.7                      | 42.4    | 46.5   
|                                                                                                                                        | Unrealized gain on investments                                   | (5.5)                     | (38.7)  | (1.7)  
|                                                                                                                                        | Pension and postretirement expense                               | 39.8                      | 26.4    | 5.2    
|                                                                                                                                        | Pension and postretirement funding                               | (17.8)                    | (15.6)  | (7.3)  
|                                                                                                                                        | Deferred income taxes and investment tax credit                  | (2.1)                     | (0.4)   | 0.7    
|                                                                                                                                        | Unrealized (gains) losses on nonregulated energy contracts       | (10.7)                    | 10.4    | 5.8    
|                                                                                                                                        | Gain on sales of partial interest in synthetic fuel operation    | (7.5)                     | (7.6)   | (38.0) 
|                                                                                                                                        | Gain on sale of property, plant, and equipment                   | (12.0)                    | (7.1)   | (0.8)  
|                                                                                                                                        | Cumulative effect of change in accounting principles, net of tax | -                         | (3.2)   | -      
|                                                                                                                                        | Other                                                            | (11.1)                    | (33.7)  | (8.0)  
|                                                                                                                                        | Changes in working capital, net of businesses acquired           |                           |         |        
|                                                                                                                                        |                                                                  | Receivables, net          | (67.6)  | (183.3) | (83.2)
|                                                                                                                                        |                                                                  | Inventories               | (11.6)  | (79.9)  | 17.8  
|                                                                                                                                        |                                                                  | Other current assets      | (0.9)   | (19.4)  | (6.2) 
|                                                                                                                                        |                                                                  | Accounts payable          | 45.2    | 102.8   | 59.1  
|                                                                                                                                        |                                                                  | Other current liabilities | (3.1)   | 17.1    | (14.7)
|Net cash operating activities                                                                                                           | 243.0                                                            | 62.4                      | 188.5  
|                                                                                                                                        |                                                                  |                           |         |         |       
|Investing Activities                                                                                                                    |                                                                  |                           |        
|Capital expenditures                                                                                                                    | (290.0)                                                          | (176.2)                   | (210.3)
|Sale of property, plant, and equipment                                                                                                  | 26.9                                                             | 31.4                      | 7.1    
|Purchase of equity investments and other acquisitions                                                                                   | (52.3)                                                           | (102.7)                   | (72.3) 
|Decommissioning funding                                                                                                                 | (0.3)                                                            | (3.0)                     | (2.6)  
|Other                                                                                                                                   |                                                                  |                           | 3.1     | 6.5     | 12.7  
|Net cash investing activities                                                                                                           | (312.6)                                                          | (244.0)                   | (265.4)
|                                                                                                                                        |                                                                  |                           |         |         |       
|Financing Activities                                                                                                                    |                                                                  |                           |        
|Short-term debt - net                                                                                                                   | 251.2                                                            | 14.7                      | 3.9    
|Issuance of long-term debt                                                                                                              | -                                                                | 125.0                     | 250.3  
|Repayment of long-term debt, note to preferred stock trust and capital
      lease                                                      | (105.1)                                                          | (87.7)                    | (129.6)
|Payment of dividends                                                                                                                    |                                                                  |                           |        
|                                                                                                                                        | Preferred stock                                                  | (3.1)                     | (3.1)   | (3.1)  
|                                                                                                                                        | Common stock                                                     | (81.3)                    | (71.8)  | (67.1) 
|Issuance of common stock                                                                                                                | 26.3                                                             | 197.7                     | 28.3   
|Purchase of common stock                                                                                                                | -                                                                | (1.0)                     | (1.3)  
|Other                                                                                                                                   |                                                                  |                           | (11.2)  | 24.8    | 11.7  
|Net cash financing activities                                                                                                           | 76.8                                                             | 198.6                     | 93.1   
|Change in cash and cash equivalents - continuing operations                                                                             | 7.2                                                              | 17.0                      | 16.2   
|                                                                                                                                        |                                                                  |                           |         |         |       
|Change in cash and cash equivalents - discontinued operations                                                                           | (17.9)                                                           | (9.6)                     | (16.8) 
|Change in cash and cash equivalents                                                                                                     | (10.7)                                                           | 7.4                       | (0.6)  
|                                                                                                                                        |                                                                  |                           |         |         |       
|Cash and cash equivalents at beginning of year                                                                                          | 50.7                                                             | 43.3                      | 43.9   
|Cash and cash equivalents at end of year                                                                                                | $40.0                                                            | $50.7                     | $43.3  
|                                                                                                                                        |                                                                  |                           |         |         |       
|                                                                                                                                        |                                                                  |                           |         |         |       
|The accompanying notes to WPS Resources Corporation's consolidated
      financial statements are an integral part of these statements.
|                                                                                                                                        |                                                                  |                           |         |         |       



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ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WPS RESOURCES

E. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The notes to the consolidated financial statements that follow include
consolidated WPS Resources footnotes and certain combined footnotes for
both WPS Resources and its wholly owned subsidiary registrant, WPSC. WPSC's
financial statements also include supplemental footnotes related to WPSC. Refer
to Item 8, Section L for a listing of the combined footnotes included in the
WPS Resources notes and the supplemental footnotes that are applicable to
the WPSC registrant.

NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Nature of Operations--WPS Resources is a holding company. Our
wholly owned subsidiary, WPSC, is an electric and natural gas utility. WPSC
supplies and distributes electric power and natural gas in its franchised
service territory in northeastern Wisconsin and an adjacent portion of the
Upper Peninsula of Michigan. Our other wholly owned utility subsidiary,
UPPCO, is an electric utility. UPPCO supplies and distributes electric energy to
a portion of the Upper Peninsula of Michigan. Another wholly owned
subsidiary, WPS Resources Capital Corporation, is a holding company for our
nonregulated businesses, ESI and PDI. ESI is a diversified energy supply and
services company. PDI is an electric generation company.

The term "utility" refers to the regulated activities of WPSC and
UPPCO, while the term "nonutility" refers to the activities of WPSC
and UPPCO that are not regulated. The term "nonregulated" refers to
activities other than those of WPSC and UPPCO.

(b) Consolidation Basis of Presentation--The Consolidated Financial
Statements include the accounts of WPS Resources and all majority owned
subsidiaries, after eliminating significant intercompany transactions and
balances. If a minority owner's equity is reduced to zero, our policy is to
record 100% of the subsidiary's losses until the minority owner makes capital
contributions or commitments to fund its share of the operating costs. The cost
method of accounting is used for investments when WPS Resources owns less
than 20% of the voting stock of the company, unless other evidence indicates we
have significant influence over the operating and financial policies of the
investee. Investments in businesses not controlled by WPS Resources, but
over which we have significant influence regarding the operating and financial
policies of the investee, are accounted for using the equity method. For
additional information on our equity method investments see Note 10,
"Investments in Affiliates, at Equity Method."

For all periods presented, certain assets and liabilities of Sunbury are
classified as held for sale and Sunbury's operating results have been separately
classified and reported as discontinued operations. Refer to Note 4,
"Assets Held for Sale," for more information.

(c) Use of Estimates--We prepare our financial statements in
conformity with accounting principles generally accepted in the
United States of America. We make estimates and assumptions that affect
reported amounts. These estimates and assumptions include assets, liabilities,
the disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimates.

(d) Cash and Cash Equivalents--We consider short-term investments with
an original maturity of three months or less to be cash equivalents.

Cash paid for taxes during 2004, 2003, and 2002 was $37.0 million,
$21.9 million, and $34.6 million, respectively. During 2004, 2003, and
2002, cash paid for interest totaled $54.4 million, $57.9 million, and
$52.3 million, respectively.

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Non-cash transactions were as follows:

|(Millions)                                                  | 2004  | 2003 | 2002
|----------------------------------------------------------- | ----- | ---- | ----
|                                                            |       |      |     
|Weston 4 construction costs funded through accounts payable | $22.6 | $ -  | $ - 
|Minimum pension liability equity adjustment                 | 6.0   | 12.3 | 2.7 
|Restricted cash                                             | 3.2   | 1.0  | 17.8
|Debt assumed in Advantage acquisition                       | 3.2   | -    | -   
|Exchange of transmission assets for equity interest in ATC  | -     | 5.9  | -   
|Conversion of indebtedness to equity in Quest Energy LLC    | -     | -    | 2.4 
|Debt assumed in WPS Empire State acquisition                | -     | -    | 0.9 

(e) Revenue and Customer Receivables--Revenues are recognized on the
accrual basis and include estimated amounts for electric and natural gas
services rendered but not billed. Approximately 6.6% of WPS Resources'
total revenue and approximately 10.1% of WPSC's total revenue in 2004 was from
companies in the paper products industry.

WPSC and UPPCO use automatic fuel and purchased power adjustment clauses
for the MPSC retail electric portions of their business. WPSC also uses
automatic fuel and purchased power adjustment clauses for its FERC wholesale
electric business; however, at UPPCO, most wholesale electric contracts are
special contracts and have no automatic fuel and purchased power adjustment
clauses. The Wisconsin retail electric portion of WPSC's business uses a
"cost variance range" approach, based on a specific estimated fuel and
purchased power cost for the forecast year. If WPSC's actual fuel and purchased
power costs fall outside this range, the PSCW can authorize an adjustment to
future rates. Decreases to rates can be implemented without a hearing, unless
requested by WPSC, Commission Staff, or interveners, while increases to rates
are generally subject to a hearing. For more information on current regulatory
actions related to the fuel and purchased power adjustment clauses, see
Note 22, "Regulatory Environment."

The PSCW approved a modified one-for-one gas cost recovery plan for WPSC
commencing in January 1999. This plan allows WPSC to pass changes in the
cost of natural gas on to system natural gas customers, subject to regulatory
review by the Commission for reasonableness.

The MPSC has approved one-for-one recovery of prudently incurred natural gas
costs for WPSC, subject to regulatory review. The MPSC also approved a natural
gas cost recovery factor adjustment mechanism for WPSC for the period November
2004 through October 2005. This adjustment mechanism allows WPSC to upwardly
adjust the natural gas rates charged to customers in Michigan based on upward
changes to the New York Mercantile Exchange natural gas futures price
without further MPSC action.

Billings to UPPCO's customers under the MPSC's jurisdiction include base rate
charges and a power supply cost recovery factor. UPPCO receives MPSC approval
each year to recover projected power supply costs by establishment of power
supply cost recovery factors. The MPSC reconciles these factors to actual costs
annually and permits 100% recovery of allowed power supply costs. UPPCO
recognizes any over or under recovery currently in its revenues, and the payable
or receivable is recognized on the balance sheet until settlement. The deferrals
are relieved with additional billings or refunds.

WPSC and UPPCO are required to provide service and grant credit to customers
within their service territories. The two companies continually review their
customers' credit-worthiness and obtain or refund deposits accordingly. Both
utilities are precluded from discontinuing service to residential customers
during winter moratorium months. The regulated segments calculate a reserve for
potential uncollectible customer receivables using a four-year average of bad
debts net of recoveries as a percentage of total accounts receivable. The
historical percentage is applied to the current year-end accounts receivable
balance to determine the required reserve balance.

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At PDI, electric power revenues related to fixed-price contracts are
recognized at the lower of amounts billable under the contract or an amount
equal to the volume of the capacity made available or the energy delivered
during the period multiplied by the estimated average revenue per kilowatt-hour
per the terms of the contract. Under floating-price contracts, electric power
revenues are recognized when capacity is provided or energy is delivered.

ESI accrues revenues in the month that energy is delivered and/or services
are rendered. With the January 1, 2003, adoption of Emerging Issues Task Force
Issue No. 02-03, "Issues Involved in Accounting for Derivative
Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and
Risk Management Activities," revenues related to derivative instruments
classified as trading are reported net of related cost of sales for all periods
presented. Therefore, previously reported revenues for derivatives classified as
trading in 2002 have been reclassified to be shown net of cost of fuel, natural
gas, and purchased power, while most 2004 and 2003 revenues continue to be
reported on a gross basis. See Note 1(t), "Cumulative Effect of Change
in Accounting Principle," for more information. Neither margins nor income
available for common shareholders were impacted by the reclassification of
revenue upon adoption of Issue No. 02-03.

ESI calculates the reserve for potential uncollectible customer receivable
balances by applying an estimated bad debt experience rate to each past due
aging category and reserving for 100% of specific customer receivable balances
deemed to be uncollectible. The basis for calculating the reserve for
receivables from wholesale counterparties considers netting agreements,
collateral, and guarantees.

(f) Inventories--Inventories consist of natural gas in storage and fossil
fuels, including coal. We value all fossil fuels using average cost. Average
cost is also used to value natural gas in storage for our regulated segments.
Natural gas in storage for our nonregulated segments is valued at the lower of
cost or market unless hedged pursuant to a fair value hedge. Through
December 2002, natural gas in storage for our nonregulated segments was
marked to the current spot price under fair value accounting rules. To comply
with accounting requirements resulting from the rescission of Issue
No. 98-10, "Accounting for Contracts Involved in Energy Trading and
Risk Management Activities," we adopted the inventory valuation method
described above for our nonregulated natural gas inventories effective January
1, 2003.

(g) Risk Management Activities--As part of our regular operations,
WPS Resources enters into contracts, including options, swaps, futures,
forwards, and other contractual commitments, to manage market risks such as
changes in commodity prices and interest rates.

WPS Resources evaluates its derivative contracts in accordance with SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended and interpreted. SFAS No. 133 establishes
accounting and financial reporting standards for derivative instruments and
requires, in part, that we recognize certain derivative instruments on the
balance sheet as assets or liabilities at their fair value. Subsequent changes
in fair value of the derivatives are recorded currently in earnings unless
certain hedge accounting criteria are met. If the derivatives qualify for
regulatory deferral subject to the provisions of SFAS No. 71,
"Accounting for the Effects of Certain Types of Regulation," the
derivatives are marked to fair value pursuant to SFAS No. 133 and are
offset with a corresponding regulatory asset or liability.

Prior to the adoption of Issue No. 02-03, effective January 1, 2003, ESI
accounted for contracts in accordance with Issue No. 98-10,
"Accounting for Contracts Involved in Energy Trading and Risk Management
Activities." See Note 1(t), "Cumulative Effect of Change in Accounting
Principle," for more information concerning the transition from Issue No.
98-10 to Issue No. 02-03.

In the fourth quarter of 2003, WPS Resources adopted Issue No. 03-11,
"Reporting Realized Gains and Losses on Derivative Instruments that are
Subject to SFAS No. 133 and Not 'Held for Trading Purposes' as Defined in
Issue No. 02-03," which resulted in recording nonregulated revenues
net of cost of fuel, natural gas, and purchased power for energy-related
transactions entered into after October 1, 2003, that settle financially and for
which the commodity does not physically transfer. Had the provisions of Issue
No. 03-11 been applied to arrangements entered into prior to October 1, 2003,
previously reported nonregulated revenue would have decreased $62.9 million
for the nine months ended September 30,

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2003, with a corresponding $62.9 million decrease to nonregulated cost
of fuel, natural gas, and purchased power. Previously reported wholesale natural
gas sales volumes for the nine months ended September 30, 2003 would have
decreased 10.8 billion cubic feet. Neither margins, income, nor cash flows were
impacted by the adoption of Issue No. 03-11.

WPS Resources classifies mark-to-market gains and losses on derivative
instruments not qualifying for hedge accounting as a component of revenues.

(h) Property, Plant, and Equipment--Utility plant is stated at the
original cost of construction including an allowance for funds used during
construction. The cost of renewals and betterments of units of property (as
distinguished from minor items of property) is capitalized as an addition to the
utility plant accounts. Except for land, no gain or loss is recognized in
connection with ordinary retirements of utility property units. Maintenance,
repair, replacement, and renewal costs associated with items not qualifying as
units of property are considered operating expenses. The utility charges the
cost of units of property retired, sold, or otherwise disposed of, less salvage,
to the accumulated provision for depreciation. The cost of removal associated
with the retirement is charged to a regulatory liability.

We record straight-line depreciation expense over the estimated useful life
of utility property and include amounts for estimated removal and salvage. The
PSCW approved depreciation rates for WPSC effective January 1, 1999.
On December 21, 2004, WPSC received approval for new depreciation rates
effective January 1, 2005, which are not expected to have a material impact on
annual depreciation expense.

The depreciation of Kewaunee production plant for the Wisconsin retail
jurisdiction is being accrued based on a PSCW order. The cost of the steam
generators that went into service in December 2001 will be recovered over
an 8 1/2 year period using the sum-of-years-digits method of depreciation. Also
under this order, the unrecovered plant investment at January 1, 2001, and
future additions will be recovered over a period ending 8 1/2 years after
the installation of the steam generators using a straight-line remaining life
depreciation methodology. For the Michigan retail and wholesale jurisdictions,
depreciation for Kewaunee is calculated on a straight-line basis using
depreciation rates approved by the PSCW effective January 1, 1994.

Depreciation expense also includes accruals for nuclear decommissioning.
These accruals are not included in the annual composite rates shown below. An
explanation of this item is included in Note 8, "Nuclear Plant
Operation."



|Annual Utility Composite Depreciation Rates | 2004  | 2003  | 2002 
|------------------------------------------- | ----- | ----- | -----
|                                            |       |       |      
|Electric                                    | 3.59% | 3.63% | 3.66%
|Gas                                         | 3.65% | 3.63% | 3.59%

Nonutility property interest capitalization takes place during construction,
and gain and loss recognition occurs in connection with retirements. Nonutility
property is depreciated using straight-line depreciation. Asset lives range from
3 to 20 years.

Nonregulated plant is stated at the original construction cost, which
includes capitalized interest, or estimated fair value at the time of
acquisition pursuant to a business combination. The costs of renewals,
betterments, and major overhauls are capitalized as an addition to plant. The
gains or losses associated with ordinary retirements are recorded in the period
of retirement. Maintenance, repair, and minor replacement costs are expensed as
incurred.

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Most of the nonregulated subsidiaries compute depreciation using the
straight-line method over the following estimated useful lives:



|Structures and improvements   | 15 to 40 years                                    
|----------------------------- | --------------------------------------------------
|Office and plant equipment    | 5 to 35 years                                     
|Office furniture and fixtures | 3 to 10 years                                     
|Vehicles                      | 5 years                                           
|Computer equipment            | 3 years                                           
|Leasehold improvements        | Shorter of: life of the lease or life of the asset

The Combined Locks Energy Center, however, is using the units of production
depreciation method for selected pieces of equipment having defined lives stated
in terms of hours of production.

WPS Resources capitalizes certain costs related to software developed or
obtained for internal use and amortizes those costs to operating expense over
the estimated useful life of the related software, which is usually three to
seven years.

(i) Capitalized Interest and Allowance for Funds Used During Construction--Our
nonregulated subsidiaries capitalize interest for construction projects, while
our utilities use an allowance for funds used during construction
("AFUDC") calculation, which includes both a debt and an equity
component as required by regulatory accounting.

Approximately 50% of WPSC's retail jurisdictional construction
work-in-progress expenditures are subject to AFUDC, except on specific projects
approved by the PSCW. For 2004, WPSC's AFUDC retail rate was 9.21%.

WPSC's construction work-in-progress AFUDC debt and equity percentage formula
for the wholesale jurisdiction is specified in the FERC's Uniform System of
Accounts. The 2004 average AFUDC wholesale rate was 6.99%.

WPSC's allowance for equity funds used during construction for 2004, 2003,
and 2002 was $2.0 million, $2.4 million, and $3.0 million,
respectively. WPSC's allowance for borrowed funds used during construction for
2004, 2003, and 2002 was $0.7 million, $1.0 million, and
$1.2 million, respectively. UPPCO did not record AFUDC for 2004, 2003, or
2002, as UPPCO did not have significant construction projects during these
years.

Our nonregulated subsidiaries calculate capitalized interest on long-term
construction projects for periods during which financing is provided by
WPS Resources through interim debt. The interest rate capitalized is based
upon the monthly short-term borrowing rate WPS Resources incurs for such
funds. The amount of interest capitalized during 2004, 2003, and 2002 was
insignificant.

(j) Asset Impairment--We review the recoverability of long-lived tangible
and intangible assets, excluding goodwill, other indefinite lived intangible
assets, and regulatory assets, in accordance with SFAS No. 144,
"Accounting for the Impairment and Disposal of Long-Lived Assets."
SFAS No. 144 requires review of assets when circumstances indicate that the
carrying amount may not be recoverable. The carrying amount of assets held and
used is not recoverable if it exceeds the undiscounted sum of cash flows
expected to result from the use and eventual disposition of the asset. If the
carrying value is not recoverable, the impairment loss is measured as the excess
of the asset's carrying value over its fair value. The carrying value of assets
held for sale is not recoverable if it exceeds the fair value less cost to sell
the asset. An impairment charge is recorded for any excess of the carrying value
over the fair value less cost to sell. If events or circumstances indicate the
carrying value of investments accounted for under the equity method of
accounting may not be recoverable, potential impairment is assessed by comparing
the future anticipated cash flows from these investments to their carrying
values. Impairment charges are recorded if the carrying value of such assets
exceeds the future anticipated cash flows.

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(k) Regulatory Assets and Liabilities--WPSC and UPPCO are subject to the
provisions of SFAS No. 71. Regulatory assets represent probable future
revenue associated with certain incurred costs which will be recovered from
customers through the ratemaking process. Regulatory liabilities represent
amounts that are refundable in future customer rates. Based on a current
evaluation of the various factors and conditions that are expected to impact
future cost recovery, we believe that future recovery of our regulatory assets
is probable.

(l) Goodwill and Other Intangible Assets--In accordance with SFAS
No. 142, "Goodwill and Other Intangible Assets," goodwill and
other assets with indefinite lives are not amortized, but are subject to annual
impairment tests. WPSC performs its impairment test during the second quarter of
each year, while PDI performs its impairment test annually during the third
quarter. The impairment tests are updated whenever events or changes in
circumstances indicate that the assets might be impaired. Based upon the results
of testing, no impairments were noted in 2004, 2003, or 2002.

Other intangible assets with definite lives, consisting primarily of emission
credits and customer related intangible assets, are amortized over periods from
1 to 30 years. For more information on WPS Resources' intangible assets,
see Note 11, "Goodwill and Other Intangible Assets."

(m) Retirement of Debt--Premiums, discounts, and expenses incurred with
the issuance of outstanding long-term debt are amortized over the terms of the
debt issues. Any call premiums or unamortized expenses associated with
refinancing higher-cost debt obligations used to finance regulated assets and
operations are amortized consistent with regulatory treatment of those items,
where appropriate.

(n) Research and Development-- Electric research and development
expenditures for WPSC totaled $0.7 million, $0.6 million, and $0.3 million,
in 2004, 2003, and 2002, respectively. No other research and development
expenditures were significant.

(o) Asset Retirement Obligations--Effective January 1, 2003,
WPS Resources adopted SFAS No. 143, "Accounting for Asset
Retirement Obligations." Under this accounting standard, WPS Resources
recognizes, at fair value, legal obligations associated with the retirement of
tangible long-lived assets that result from the acquisition, construction or
development, and/or normal operation of the asset. The associated retirement
costs are capitalized as part of the related long-lived asset and
depreciated over the useful life of the asset. For the utility segments of
WPS Resources, we believe it is probable that any differences between
expenses under SFAS No. 143 and expenses currently recovered through
customer rates will be recoverable or refundable in future customer rates.
Accordingly, the adoption of this statement had no impact on the utility
segment's income as its effect is offset by the establishment of regulatory
assets or liabilities pursuant to SFAS No. 71. Refer to Note 15,
"Asset Retirement Obligations," for additional information on SFAS No.
143.

(p) Income Taxes--We account for income taxes using the liability method
as prescribed by SFAS No. 109, "Accounting for Income Taxes."
Under this method, deferred income taxes have been recorded using currently
enacted tax rates for the differences between the tax basis of assets and
liabilities and the basis reported in the financial statements. Due to the
effects of regulation on WPSC and UPPCO, certain adjustments made to deferred
income taxes are, in turn, recorded as regulatory assets or liabilities.

Investment tax credits, which have been used to reduce our federal income
taxes payable, have been deferred for financial reporting purposes. These
deferred investment tax credits are being amortized over the useful lives of the
property to which they relate.

WPS Resources is an indirect part owner in a facility that produces
synthetic fuel that qualifies for tax credits under Section 29 if certain
requirements are satisfied. Section 29 tax credits are currently scheduled to
expire at the end of 2007. Tax credits that are not used to reduce tax expense
as a result of alternative minimum tax rules relating to United States
federal income taxes are carried forward as alternative minimum tax credits to
reduce current tax expense in future years. Under current federal law,
alternative minimum tax credits do not expire.

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WPS Resources files a consolidated United States income tax return
that includes domestic subsidiaries in which its ownership is 80% or more.
WPS Resources and its consolidated subsidiaries are parties to a tax
allocation arrangement under which each entity determines its income tax
provision on a stand-alone basis, after which the effects of federal
consolidation are accounted for.

WPS Resources records a reserve for tax contingencies based upon management's
assessment of the probabilities that certain deductions or income tax positions
may not be sustained when income tax returns are audited by taxing
jurisdictions. Our identified tax exposures are discussed below.

WPS Resources and its subsidiaries have routinely been subject to examination
by various taxing jurisdictions. The periods currently open for examination
include: Internal Revenue Service - 2002 and subsequent tax years, Wisconsin
Department of Revenue - 1996 and subsequent tax years, and other state and local
taxing jurisdictions - various time periods. At any given time there might be
several of these audits open covering multiple tax years. Management has not
been informed by any taxing jurisdictions of any material adjustment to any
filed or proposed tax position as a result of the on-going examinations.

WPS Resources has submitted a request to have the Internal Revenue Service
conduct a pre-filing review of two tax positions related to the 2004 tax return.
The first position relates to the value of the Peshtigo River land donated to
the WDNR in 2004. The second position relates to the current deductibility of a
planned repair that was made to the reactor vessel at Kewaunee in 2004. The IRS
has not yet responded to these requests. If the IRS decides not to undertake a
pre-filing review, WPS Resources will have to wait for resolution of these
positions when they come up for examination post-filing. WPS Resources has
recorded a tax benefit with respect to these positions based upon management's
assessment of the probability of sustaining the position WPS Resources intends
to take in filing its 2004 tax return.

The combined current benefit of Section 29 tax credits and the deferred
benefit of alternative minimum tax credits (arising from Section 29 tax credits)
is limited to an amount equal to the WPS Resources regular consolidated federal
tax liability. In 2004, and in some previous years, this limitation has impacted
the amount of the tax benefit recorded as compared to actual Section 29 tax
credits produced. WPS Resources has recorded a tax benefit with respect to
Section 29 tax credits based upon management's assessment of the probability of
sustaining the filing position for federal tax returns.

(q) Excise Taxes--WPS Resources presents revenue net of pass-through
taxes on the Consolidated Statements of Income.

(r) Guarantees--Effective January 1, 2003, WPS Resources adopted the
provisions of FASB Interpretation No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees Including Indirect Guarantees of
Indebtedness of Others." Interpretation No. 45 requires that the
guarantor recognize, at the inception of the guarantee, a liability for the fair
value of the obligation undertaken in issuing the guarantee.

At December 31, 2004, WPSC had an outstanding guarantee to indemnify a
third party for certain unrecovered costs related to a utility construction
project in the event the project is not completed. At December 31, 2004,
the guarantee carries a maximum exposure of

(s) Stock-Based Employee Compensation--WPS Resources has stock-based
employee compensation plans, which are described more fully in Note 21,
"Stock-Based Compensation." WPS Resources accounts for these
plans under the recognition and measurement provisions of Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," and
related interpretations. Upon grant of stock options, no stock-based employee
compensation cost is reflected in net income, as all options granted under these
plans had an exercise price equal to the market value of

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the underlying common stock on the date of grant. The following table
illustrates the effect on income available for common shareholders and earnings
per share if the company had applied the fair value recognition provisions of
SFAS No. 123, "Accounting for Stock-Based Compensation," to
stock-based employee compensation:



|(Millions, except per share amounts)                                                        | 2004   | 2003  | 2002  
|------------------------------------------------------------------------------------------- | ------ | ----- | ------
|Income available for common shareholders                                                    |        |       |       
|As reported                                                                                 | $139.7 | $94.7 | $109.4
|Add: Stock-based compensation expense using
        the intrinsic value method - net of tax | 1.4    | 2.1   | 1.3   
|Deduct: Stock-based compensation expense  using the fair value method -
      net of tax    | (2.1)  | (2.6) | (1.8) 
|Pro forma                                                                                   | $139.0 | $94.2 | $108.9
|                                                                                            |        |       |       
|Basic earnings per common share                                                             |        |       |       
|As reported                                                                                 | $3.74  | $2.87 | $3.45 
|Pro forma                                                                                   | 3.72   | 2.85  | 3.44  
|                                                                                            |        |       |       
|Diluted earnings per common share                                                           |        |       |       
|As reported                                                                                 | $3.72  | $2.85 | $3.42 
|Pro forma                                                                                   | 3.70   | 2.84  | 3.40  

The fair value of each stock option grant is estimated on the date of grant
using the Black-Scholes stock option pricing model assuming:

|                        | 2004     | 2003             | 2002            
|----------------------- | -------- | ---------------- | ----------------
|Expected life           | 10 years | 10 years         | 10 years        
|Risk-free interest rate | 4.40%    | 4.40% to 4.65%   | 4.43% to 5.57%  
|Expected dividend yield | 5.19%    | 5.68 % to 6.23%  | 6.23% to 6.60%  
|Expected volatility     | 15.44%   | 18.25% to 19.97% | 19.53% to 20.53%
|                        |          |                  |                 

(t) Cumulative Effect of Change in Accounting Principles

The adoption of SFAS No. 143 at PDI on January 1, 2003, resulted in a
$0.3 million negative after-tax cumulative effect of change in accounting
principle related to recording a liability for the closure of an ash basin at
Sunbury.

(u) Reclassifications--We reclassified certain prior year financial
statement amounts to conform to the current year presentation.

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(v) New Accounting Pronouncements--In December 2004, the FASB issued
SFAS No. 123R, "Share-Based Payment," which addresses the accounting
for share-based payment transactions. SFAS No. 123R eliminates the ability to
account for share-based compensation transactions using APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and requires a company to
measure the cost of employee services received in exchange for an award of
equity instruments based on the grant-date fair value of the award (with limited
exceptions). That cost is recognized over the period during which an employee is
required to provide service in exchange for the award. SFAS No. 123R will be
effective for WPS Resources on July 1, 2005. SFAS No. 123R offers companies
alternative methods of adopting this standard. At the present time,
WPS Resources has not determined which alternative method it will use, or
the resulting impact on its financial position or results of operations.
However, we do not expect a significant impact when we adopt the standard.

In March 2004, the FASB issued EITF No. 03-01, "The Meaning of
Other-Than-Temporary Impairment and its Application to Certain
Investments," which provides new guidance for assessing impairment losses
on debt and equity investments. The new impairment model applies to investments
accounted for under the cost method and investments accounted for under SFAS
115, "Accounting for Certain Investments in Debt and Equity
Securities." EITF No. 03-01 also includes new disclosure requirements for
cost method investments and for all investments that are in an unrealized loss
position. In September 2004, the FASB delayed the accounting provisions of EITF
No. 03-01; however, the disclosure requirements were effective for
WPS Resources for the year ended December 31, 2004. WPS Resources
does not expect the adoption of the accounting provisions of EITF No. 03-01 to
have a significant impact on financial position or results of operations.

WPS Resources' investments accounted for under SFAS No. 115 that have
unrealized losses at December 31, 2004, were not significant. At
December 31, 2004, the aggregate carrying amount of WPS Resources'
cost method investments totaled $1.5 million. These investments were not
evaluated for impairment because the fair value of the investments was not
estimated in accordance with paragraphs 14 and 15 of SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments," and no events
or changes in circumstances were identified that would have had a significant
adverse effect on the fair value of those investments.

NOTE 2--FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate such
value:

Cash, Short-Term Investments, Energy Conservation Loans, Notes Payable, and
Outstanding Commercial Paper: The carrying amount approximates fair value due to
the short maturity of these investments and obligations.

Nuclear Decommissioning Trusts: Nuclear decommissioning trust investments are
recorded at fair value, net of taxes payable on unrealized gains and losses.
This represents the amount of assets available to accomplish decommissioning.
The nonqualified trust investments designated to pay income taxes when
unrealized gains become realized are classified as nuclear decommissioning
trusts - other assets.

Long-Term Debt and Preferred Stock: The fair values of long-term debt and
preferred stock are estimated based on the quoted market price for the same or
similar issues or on the current rates offered to WPS Resources for debt of
the same remaining maturity.

Risk Management Activities: Assets and liabilities from risk management
activities are recorded at fair value pursuant to SFAS No. 133.

The estimated fair values of our financial instruments as of December 31
were:

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|(Millions)                                    | 2004            | 2003      
|--------------------------------------------- | --------------- | ----------
|                                              | Carrying Amount | Fair Value
|                                              |                 |           
|Cash and cash equivalents                     | $ 40.0          | $ 40.0    
|Restricted cash                               | -               | -         
|Energy conservation loans                     | 1.6             | 1.6       
|Nuclear decommissioning trusts                | 344.5           | 344.5     
|Nuclear decommissioning trusts - other assets | 26.8            | 26.8      
|Notes payable                                 | 12.7            | 12.7      
|Commercial paper                              | 279.7           | 279.7     
|Note payable to preferred stock trust         | -               | -         
|Long-term debt                                | 874.4           | 925.2     
|Preferred stock                               | 51.1            | 50.0      
|Risk management activities - net              | 50.0            | 50.0      

NOTE 3--RISK MANAGEMENT ACTIVITIES

The following table shows WPS Resources' assets and liabilities from
risk management activities as of December 31, 2004 and 2003:

|                                         | Assets | Liabilities
|---------------------------------------- | ------ | -----------
|(Millions)                               | 2004   | 2003       
|Utility Segment                          |        |            
|Gas and electric purchase contracts      | $ 11.0 | $ 8.4      
|Other                                    | -      | -          
|Nonregulated Segments                    |        |            
|Commodity and foreign currency contracts | 465.3  | 588.7      
|Fair value hedges                        | 3.8    | 0.3        
|Cash flow hedges                         |        |            
|Commodity contracts                      | 39.8   | 25.0       
|Interest rate swap                       | -      | -          
|Total                                    | $519.9 | $622.4     
|Balance Sheet Presentation               |        |            
|Current                                  | $439.5 | $518.1     
|Long-Term                                | 80.4   | 104.3      
|Total                                    | $519.9 | $622.4     

Assets and liabilities from risk management activities are classified as
current or long-term based upon the maturities of the underlying financial
instruments.

Utility Segment

WPSC has entered into a limited number of natural gas and electric purchase
contracts that are accounted for as derivatives. The PSCW approved the
recognition of a regulatory asset or liability for the fair value of derivative
amounts as a result of these contracts. Thus, management believes any gains or
losses resulting from the eventual settlement of these contracts will be
collected from or refunded to customers.

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Nonregulated Segments

The derivatives in the nonregulated segments not designated as hedges are
primarily commodity contracts used to manage price risk associated with
wholesale and retail natural gas purchase and sale activities, electric energy
contracts, and foreign currency contracts used to manage foreign currency
exposure related to our nonregulated Canadian businesses. Changes in the fair
value of derivatives that have not qualified for hedge accounting are recognized
currently in earnings.

Our nonregulated segments also enter into derivative contracts that are
designated as either fair value or cash flow hedges. Fair value hedges are used
to mitigate the risk of changes in the price of natural gas held in storage. The
changes in the fair value of these hedges are recognized currently in earnings,
as are the changes in fair value of the hedged items. Fair value hedge
ineffectiveness recorded in nonregulated revenue on the Consolidated Statements
of Income was not significant in 2004, 2003, or 2002. At December 31, 2004, a
mark-to-market gain of $3.0 million related to the changes in the difference
between the spot and forward prices of natural gas was excluded from the
assessment of hedge effectiveness. This loss was reported directly in earnings.

Cash flow hedges consist of commodity contracts associated with our energy
marketing activities and an interest rate swap. The commodity contracts extend
through December 2006 and are used to mitigate the risk of cash flow
variability associated with the future purchases and sales of natural gas and
electricity. To the extent they are effective, the changes in the values of
these contracts are included in other comprehensive income, net of deferred
taxes. Cash flow hedge ineffectiveness recorded in nonregulated revenue on the
Consolidated Statements of Income was not significant in 2004, 2003, or 2002.
When testing for effectiveness, no portion of the derivative instruments was
excluded. Amounts recorded in other comprehensive income related to these cash
flow hedges will be recognized in earnings as the related contracts are settled
or if the hedged transaction is discontinued. In 2004, we reclassified a
$1.9 million gain from other comprehensive income into earnings as a result
of the discontinuance of cash flow hedge accounting for certain hedge
transactions where it was probable that the original forecasted transaction
would no longer occur. The amounts reclassified during 2003 and 2002 were not
significant. In the next 12 months, subject to changes in market prices of
natural gas and electricity, it is expected that $11.5 million will be
recognized in earnings due to contracts being settled.

The interest rate swap designated as a cash flow hedge is used to fix the
interest rate for the full term of a variable rate loan due in March 2018
used to finance the purchase of Sunbury. Because the swap was determined to be
effective, the changes in the value of this contract are included in other
comprehensive income, net of deferred taxes. Amounts recorded in other
comprehensive income related to this swap will be recognized as a component of
interest expense as the interest becomes due. In the next 12 months, we expect
to expense $1.8 million, assuming interest rates comparable to those at
December 31, 2004, and assuming the hedged transaction continues after
Sunbury is sold. (See Note 4, "Assets Held for Sale," for more
information). We did not exclude any components of the derivative instrument's
change in fair value from the assessment of hedge effectiveness.

NOTE 4--ASSETS HELD FOR SALE

On September 30, 2004, PDI received a letter of termination from
Duquesne Power, L.P. related to the previously announced agreement to sell
Sunbury to Duquesne for approximately $120 million. Duquesne issued its
letter of termination following a determination by the Pennsylvania Public
Utility Commission not to reconsider its earlier approved Provider of Last
Resort plan, which Duquesne believed did not satisfy a closing condition in the
agreement. PDI is progressing with a sale process using an investment banking
advisor, and anticipates being able to complete the sale of Sunbury in 2005.
This facility currently sells power on a wholesale basis, and previously
provided energy for a 200-megawatt around-the-clock outtake contract that
expired on December 31, 2004. The sale of Sunbury will enable
WPS Resources to reduce uncontracted merchant exposure and redeploy capital
into markets with different risk profiles.

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In December 2004, PDI completed the sale of certain silt reserves that
were utilized in the operation of Sunbury. Consideration consisted of an
up-front payment of $1.4 million and possible future payments based upon
future silt extraction. The sale of the silt reserves resulted in a loss of
$0.1 million.

At December 31, 2004, and 2003, the assets and liabilities associated
with Sunbury have been classified as held for sale in accordance with SFAS
No. 144, which requires that a long-lived asset classified as held for sale
be measured at the lower of its carrying amount or fair value, less costs to
sell, and cease being depreciated. Based upon consideration of all information
available, no adjustments to write down assets held for sale were required
during the years ended December 31, 2004, and 2003.

The major classes of assets and liabilities held for sale are as follows at
December 31:

|(Millions)                               | 2004   | 2003  
|---------------------------------------- | ------ | ------
|Inventories                              | $ 7.3  | $ 4.2 
|Other current assets                     | 5.4    | 5.1   
|Property, plant, and equipment, net      | 74.7   | 71.5  
|Other assets (includes emission credits) | 32.2   | 35.6  
|Assets held for sale                     | $119.6 | $116.4
|                                         |        |       
|Other current liabilities                | $ 0.6  | $ 0.6 
|Asset retirement obligations             | 2.2    | 2.1   
|Liabilities held for sale                | $ 2.8  | $ 2.7 

PDI financed Sunbury with equity from WPS Resources and debt financing,
including non-recourse debt and a related interest rate swap. The interest rate
swap is designated as a cash flow hedge and, as a result, the mark-to-market
loss has been recorded as a component of other comprehensive income. If
management determines that the hedged transactions (i.e., future interest
payments on the debt) will not continue after the sale, WPS Resources will
be required to recognize the amount accumulated within other comprehensive
income ($5.2 million net of tax at December 31, 2004) currently in
earnings. No such determination has been made at December 31, 2004.

A summary of the components of discontinued operations recorded in the
Consolidated Statements of Income for the years ended December 31 was as
follows:

|(Millions)                          | 2004    | 2003    | 2002   
|----------------------------------- | ------- | ------- | -------
|Nonregulated revenue                | $ 60.2  | $ 81.2  | $ 87.2 
|Operating expenses                  | (80.7)  | (97.7)  | (91.3) 
|Other income                        | 4.3     | -       | -      
|Interest expense                    | (5.5)   | (6.2)   | (5.8)  
|Loss before taxes                   | (21.7)  | (22.7)  | (9.9)  
|Income tax benefit                  | (8.3)   | (6.7)   | (3.9)  
|Discontinued operations, net of tax | $(13.4) | $(16.0) | $ (6.0)

Interest expense represents the non-recourse term loans directly related to
Sunbury.

A summary of the components of the change in cash and cash equivalents
related to discontinued operations recorded in the Consolidated Statements of
Cash Flows for the years ended December 31 are as follows:

|(Millions)                          | 2004    | 2003   | 2002   
|----------------------------------- | ------- | ------ | -------
|Net cash operating activities       | $(12.2) | $(3.2) | $ 5.5  
|Net cash investing activities       | (2.4)   | (3.4)  | (19.4) 
|Net cash financing activities       | (3.3)   | (3.0)  | (2.9)  
|Change in cash and cash equivalents | $(17.9) | $(9.6) | $(16.8)

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During 2004, 2003, and 2002 cash paid for interest associated with the
non-recourse debt of discontinued operations was $5.4 million,
$5.5 million, and $5.8 million, respectively.

NOTE 5--PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consists of the following utility, nonutility,
and nonregulated assets.

|(Millions)                                        | 2004     | 2003    
|------------------------------------------------- | -------- | --------
|Electric utility                                  | $2,409.4 | $2,288.9
|Gas utility                                       | 510.0    | 457.2   
|Total utility plant                               | 2,919.4  | 2,746.1 
|Less: Accumulated depreciation                    | 1,260.9  | 1,200.8 
|Net                                               | 1,658.5  | 1,545.3 
|Construction in progress                          | 154.5    | 89.3    
|Nuclear fuel, less accumulated amortization       | 24.6     | 20.3    
|Net utility plant                                 | 1,837.6  | 1,654.9 
|                                                  |          |         
|Nonutility plant                                  | 19.5     | 20.3    
|Less: Accumulated depreciation                    | 5.3      | 4.9     
|Net nonutility plant                              | 14.2     | 15.4    
|                                                  |          |         
|Electric nonregulated                             | 163.0    | 161.2   
|Gas nonregulated                                  | 6.6      | 7.0     
|Other nonregulated                                | 20.1     | 20.8    
|Total nonregulated property, plant, and equipment | 189.7    | 189.0   
|Less: Accumulated depreciation                    | 38.9     | 30.6    
|Net nonregulated property, plant, and equipment   | 150.8    | 158.4   
|Total property, plant, and equipment              | $2,002.6 | $1,828.7

NOTE 6--ACQUISITIONS AND SALES OF ASSETS

Sale of Peshtigo River Lands

On October 5, 2004, WPSC sold at auction 279 acres of Peshtigo River
development lands for $12.2 million. Under terms of a multi-phase agreement
reached with the WDNR in 2001 related to lands near the Peshtigo River, the WDNR
bought more than 5,000 acres of land for $13.5 million in 2001. In
December 2003, WPSC sold an additional 542 acres of land to the WDNR for
$6.5 million. WPSC completed the multi-phase agreement with the sale of 179
acres for $5.0 million to the WDNR on December 9, 2004. Following the
close of this final phase of the WDNR agreement, WPSC donated an additional
5,176 acres to the state. The sales are a part of our asset management
strategy.

Wausau, Wisconsin, to Duluth, Minnesota, Transmission Line

On April 18, 2003, the PSCW approved WPSC's request to transfer its
interest in the Wausau, Wisconsin, to Duluth, Minnesota, transmission line to
ATC in exchange for an ownership interest in the company. ATC is a for-profit
transmission-only company created by the transfer of transmission assets
previously owned by multiple electric utilities serving the upper Midwest. WPSC
sold, at book value, approximately $20.1 million of assets related to the
Wausau to Duluth transmission line to ATC in June 2003. No gain or loss was
recognized on the transaction. In December 2003, WPSC also transferred
other transmission assets to ATC, increasing its investment an additional
$5.9 million. In 2004 and 2003, WPS Resources invested
$15.7 million and $14.0 million, respectively, in ATC, related to its
agreement to fund approximately half of the Wausau, Wisconsin, to Duluth,
Minnesota, transmission line. At December 31,

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2004, WPS Resources' ownership interest in ATC was 22.64%. Our
investment in ATC is described more fully in Note 10, "Investments in
Affiliates, at Equity Method."

Advantage Energy Inc.

On July 1, 2004, ESI acquired all of the outstanding stock of Advantage
Energy Inc., a New York based energy-marketing company founded in 1997. On the
date of acquisition, Advantage served approximately 8,200 residential and
commercial customers with a peak load of approximately 275 megawatts.
Consideration for the purchase consisted of an initial cash payment for the
tangible and intangible net worth of the company and an earn-out with a maximum
cap and a declining percentage to the seller. Payments under the earn-out will
be made on July 1, 2005, 2006 and 2007.

Kewaunee

On November 7, 2003, WPSC and Wisconsin Power and Light Company entered
into an agreement to sell Kewaunee to a subsidiary of Dominion Resources, Inc.
The transaction is subject to approvals from various regulatory agencies, of
which all major approvals have been obtained, except for approval by the PSCW.
The Commission rejected the sale on November 19, 2004; however, WPSC, Wisconsin
Power and Light Company, and Dominion offered a proposal addressing the
Commission's concerns in December 2004. In January 2005, the Commission
agreed to reconsider its decision on this transaction, and we anticipate a
decision by the Commission in March 2005.

If the Commission approves the proposed transaction, WPSC estimates that its
share of the cash proceeds from the sale will approximate $130 million,
subject to various post-closing adjustments. The cash proceeds from the sale are
expected to slightly exceed the carrying value of the WPSC assets being sold. In
addition to the cash proceeds, WPSC will retain ownership of the assets
contained in its non-qualified decommissioning trust, one of two funds that were
established to cover the eventual decommissioning of Kewaunee. The pretax fair
value of the non-qualified decommissioning trust's assets at December 31,
2004, was $129.4 million. Dominion will assume responsibility for the
eventual decommissioning of Kewaunee and will receive WPSC's qualified
decommissioning trust assets that had a pretax fair value of $241.9 million
at December 31, 2004. WPSC has requested deferral of the gain expected to
result from this transaction and related costs from the PSCW. Accordingly, WPSC
anticipates most of the gain on the sale of the plant assets and the related
non-qualified decommissioning trust assets will be deferred and returned to
customers under future rate orders.

As of December 31, 2004, WPSC's share of the carrying value of the
assets and liabilities included within the sale agreement was as follows:



|(Millions)                           | 2004    
|------------------------------------ | --------
|                                     |         
|Property, plant, and equipment, net  | $177.9  
|Qualified decommissioning trust fund | 241.9   
|Other current assets                 | 5.3     
|Total assets                         | $425.1  
|                                     |         
|Regulatory liabilities               | $ (55.9)
|Asset retirement obligations         | 363.9   
|Total liabilities                    | $308.0  

The assets and liabilities disclosed above do not meet the criteria to be
classified as held for sale on the Consolidated Balance Sheets under the
provisions of SFAS No. 144 due to uncertainties inherent in the regulatory
approval process.

Assuming the closing of the sale, WPSC will enter into a long-term power
purchase agreement with Dominion to purchase energy and capacity virtually
equivalent to the amounts that would have been

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received had current ownership in Kewaunee continued. The power purchase
agreement, which also will require regulatory approval, will extend through 2013
when the plant's current operating license will expire. Fixed monthly payments
under the power purchase agreement will approximate the expected costs of
production had WPSC continued to own the plant. Therefore, management believes
that the sale of Kewaunee and the related power purchase agreement will provide
more price certainty for WPSC's customers and reduce our risk profile. In April
2004, WPSC entered into an exclusivity agreement with Dominion. Under this
agreement, if Dominion decides to extend the operating license of Kewaunee,
Dominion agreed to negotiate only with WPSC for its share of the plant output
for a new power purchase agreement that would extend beyond Kewaunee's current
operating license termination date. This agreement allows for the same
exclusivity rights for Wisconsin Power and Light and its share of output of the
plant. The exclusivity period will start on the closing date of the sale and
extend through December 21, 2011.

Guardian Pipeline

On May 30, 2003, WPS Resources purchased a one-third interest in
Guardian Pipeline, LLC from CMS Gas Transmission Company for approximately
$26 million. Guardian Pipeline owns a natural gas pipeline, which began
operating in 2002, that stretches about 140 miles from near Joliet, Illinois,
into southern Wisconsin. The pipeline can transport up to 750 million cubic
feet of natural gas daily. Our interest in Guardian Pipeline is accounted for as
an equity method investment and is described more fully in Note 10,
"Investments in Affiliates, at Equity Method."

Quest Energy, LLC

Through 2002, WPS Resources provided financial support and energy supply
services to a third party, Quest Energy, LLC, a Michigan limited liability
company that markets electric power to retail customers in Michigan. Financial
support was in the form of wholesale electric sales extended without generally
required credit assurances, an interest-bearing note including an equity
conversion option with an initial maturity date of May 2005, and trade credit
indebtedness, all secured by the assets of Quest. ESI reported revenues related
to wholesale electric sales to Quest of $1.4 million in 2002. In November
2002, Quest Energy Holdings, LLC, an independent Michigan limited liability
company and owner of Quest Energy, LLC, appointed ESI as manager of Quest Energy
LLC. The appointment as manager, as well as other factors, including the
provision of substantial financial support, resulted in the consolidation of
Quest's financial statements with those of WPS Resources as of
December 31, 2002. WPS Resources assigned the equity conversion option
to ESI on January 29, 2003, and ESI acquired a 100% ownership interest in
Quest. ESI used the purchase accounting method to account for this acquisition.
There was no cash consideration paid; therefore, the purchase price of
$0.7 million was equivalent to the carrying value of the
note receivable from Quest on December 31, 2002.

De Pere Energy Center

On December 16, 2002, WPSC completed the purchase of the 180-megawatt De
Pere Energy Center from Calpine Corporation, a California-based independent
power producer. Prior to this purchase, the power from the De Pere Energy Center
was under long-term contract to WPSC and was accounted for as a capital lease.
This power purchase agreement required Calpine to expand the facility in the
future. The agreement became uneconomical in the current market, and the
contract was terminated concurrent with the purchase of the De Pere Energy
Center. The $120.4 million purchase included a $72.0 million payment
upon closing and a $48.4 million payment in December 2003. As a result
of the purchase, the capital lease obligation was reversed and the difference
between the capital lease asset and the $120.4 million purchase price was
recorded as a regulatory asset. Of the $47.8 million regulatory asset
initially recorded, $45.6 million is under the jurisdiction of the PSCW and
is being amortized over a 20-year period beginning on January 1, 2004.
Amortization of the remaining regulatory asset, which is under the jurisdiction
of FERC and the MPSC, began in 2003 and will also occur over 20 years.

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The transaction also includes a power purchase agreement with Calpine
Corporation for capacity and energy from the Fox Energy Center, which is
currently under construction near Kaukauna, Wisconsin. The agreement calls for
WPSC to purchase 150 megawatts of capacity beginning on June 1, 2005,
escalating to 470 megawatts of capacity on June 1, 2006, until May 31,
2015, when it decreases to 235 megawatts. On May 31, 2016, the agreement
terminates.  Under the agreement, WPSC will also be responsible for fuel
supply to the facility over the life of the agreement. The new power purchase
agreement is contingent on timely plant construction and does not meet the
requirements of a capital lease. At this time, WPSC believes Calpine will
fulfill its contractual commitments, including a June 1, 2005 project in-service
date.

ECO Coal Pelletization #12

As a result of several transactions in 2001, PDI became the sole member of
ECO Coal Pelletization #12 LLC, which contributed 100% of its synthetic fuel
producing machinery to a newly formed entity in exchange for cash and a
one-third ownership interest in the newly formed entity that produces synthetic
fuel from coal qualifying for tax credits under Section 29 of the Internal
Revenue Code.

These transactions generated a pre-tax gain of $40.2 million, of which
$38.0 million had been deferred as of December 31, 2001, as a result
of certain rights of rescission and put options that were granted to the buyer.
The rights of rescission and the put options expired in 2002 and, as a result,
PDI recognized all of the $38.0 million deferred gain in miscellaneous
income on the Consolidated Statement of Income in 2002.

The actual payments for the purchase of the former partner's interest in ECO
#12 were contingent upon the same provisions referred to above. As a result,
$21.3 million was originally held in escrow and was released
proportionately as the respective rescission rights and put options expired. At
December 31, 2002, this escrow had a balance of $3.5 million,
$2.7 million of which was released in 2003 as the remaining contingencies,
not related to the recognition of the deferred gain, expired. As a result of
negotiations with our former partner, the remaining $0.8 million was
released to PDI and recorded as a gain, within miscellaneous income, in 2003.

On December 19, 2002, PDI sold an approximate 30% interest in ECO #12 to
a third party. The buyer purchased the Class A interest in ECO #12, which gives
the buyer a preferential allocation of tons of synthetic fuel produced and sold
annually. The buyer may be allocated additional tons of synthetic fuel if PDI
makes them available, but neither party is obligated beyond the required annual
allocation of tons. The buyer's share of losses generated from the synthetic
fuel operation, $3.4 million in 2004, is recorded as minority interest in
the Consolidated Statements of Income.

PDI received consideration of $3.0 million cash, as well as a fixed
note and a variable note for the second sale transaction. Payments
under the variable note are contingent upon the achievement of specified
levels of synthetic fuel production by the facility. In conjunction with the
sale, PDI agreed to make certain payments to a third-party broker, consisting of
an up-front payment of $1.5 million (which was paid at the time of
closing), $1.4 million in 2003, and $1.9 million in 2004. A deferred
gain of $6.9 million and $9.2 million was reflected on PDI's balance
sheet at December 31, 2004, and 2003, respectively. This deferred gain
represents the present value of future payments under the fixed note and
the up-front cash payments net of transaction costs. It does not include an
amount for the variable note, which is contingent upon the synthetic fuel
production. Payments on the variable note are a function of fuel production
and are recognized as a component of the gain when received. Pre-tax gains of
$7.5 million and $7.6 million were recognized as a component of
miscellaneous income in 2004 and 2003, respectively, related to this
transaction. Similar gains are expected to result from this transaction through
2007. There was no gain recognized in 2002 from the 2002 sale.

Canadian Retail Gas Business

On November 1, 2002, ESI entered into an agreement to purchase a book of
retail natural gas business in the Canadian provinces of Quebec and Ontario.
Consideration for the purchase consisted of an earn-out

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to the seller based on a percentage of gross margins on the volume of natural
gas delivered to certain customers during a two-year period ending October 31,
2004. The earn-out was equivalent to fixed percentages of gross margin realized
over this two-year period for customers already under contract and for customers
appearing on the acquired customer list who entered into a contract with ESI
subsequent to the date of purchase. Total consideration paid amounted to $0.9
million. This transaction was accounted for using the purchase method of
accounting; therefore, the results of operations are included in the financial
statements presented for WPS Resources only since the acquisition date.
There was no goodwill recorded in the acquisition as the purchase price
approximated the fair value of the acquired assets and liabilities. The business
is part of the operations of WPS Energy Services of Canada Corp., a
subsidiary of ESI, which was created in October 2002.

WPS Empire State, Inc.

Effective June 1, 2002, PDI acquired a business, now called WPS Empire
State, which owns three power plants and associated assets in upstate New York
with a combined nameplate capacity of 259 megawatts. PDI used the purchase
method of accounting to account for the acquisition. The operations of
WPS Empire State are included in the financial statements presented for
WPS Resources for all periods beginning June 1, 2002, but do not have a
material impact. The purchase price, including acquisition costs, was
$61.1 million. There was no goodwill recorded in this acquisition, as the
purchase price approximated the fair value of the acquired assets and
liabilities.

NOTE 7--JOINTLY OWNED UTILITY FACILITIES

Information regarding WPSC's share of major jointly owned electric-generating
facilities in service at December 31, 2004, is set forth below:

|(Millions, except for percentages)                   | West MarinetteUnit No. 33 | Columbia Energy Center | Edgewater Unit No. 4 | Kewaunee 
|---------------------------------------------------- | ------------------------- | ---------------------- | -------------------- | ---------
|Ownership                                            | 68.0%                     | 31.8%                  | 31.8%                | 59.0%    
|WPSC's share of plant nameplate capacity (megawatts) | 56.8                      | 335.2                  | 105.0                | 358.7    
|Utility plant in service                             | $18.0                     | $132.2                 | $30.4                | $270.1(1)
|Accumulated depreciation                             | $ 7.9                     | $ 85.0                 | $17.7                | $189.5(1)
|In-service date                                      | 1993                      | 1975 and 1978          | 1969                 | 1974     

(1)

WPSC's share of direct expenses for these plants is included in the
corresponding operating expenses in the Consolidated Statements of Income. WPSC
has supplied its own financing for all jointly-owned projects.

NOTE 8--NUCLEAR PLANT OPERATION

On November 7, 2003, WPSC and Wisconsin Power and Light Company entered
into an agreement to sell Kewaunee to a subsidiary of Dominion Resources, Inc.
The transaction is subject to approvals from various regulatory agencies, of
which all major approvals have been obtained, except for approval by the PSCW.
The PSCW rejected the sale on November 19, 2004. However, WPSC, Wisconsin
Power and Light Company, and Dominion Resources, Inc. offered a proposal
addressing the PSCW's concerns in December 2004. In January 2005, the PSCW
agreed to reconsider its decision on this transaction, and we expect a decision
to be rendered in March 2005. See Note 6, "Acquisitions and Sales of
Assets," for more information on the transaction.

The quantity of heat produced for the generation of electric energy by
Kewaunee is the basis for the amortization of the costs of nuclear fuel,
including an amount for ultimate disposal. These costs are recovered currently
from customers in rates. The ultimate storage of fuel is the responsibility of
the United States Department of Energy pursuant to a contract required by
the Nuclear Waste Act of 1982. The Department of Energy receives quarterly
payments for the storage of fuel based on generation.

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Payments from WPSC to the Department of Energy totaled $2.6 million,
$2.3 million, and $2.0 million, during 2004, 2003, and 2002
respectively.

On an interim basis, spent nuclear fuel storage space is provided at
Kewaunee. Expenses associated with interim spent fuel storage at Kewaunee are
recognized as current operating costs. At current production levels, the plant
has sufficient storage for all fuel assemblies until 2009 with full core
offload. Additional capacity will be needed by 2010 to maintain full core
offload capability for fuel assemblies in use at the end of its current license
in 2013.

The accumulated provision for nuclear fuel, which represents nuclear fuel
purchases and amortization, totaled $273.0 million at
December 31, 2004, and $265.1 million at December 31,
2003.

For information on the depreciation policy for Kewaunee, see Note 1(h),
"Property, Plant, and Equipment."

WPSC's share of nuclear decommissioning costs to date has been accrued over
the estimated service life of Kewaunee, recovered currently from customers in
rates, and deposited in external trusts. Such costs totaled $0.3 million in
2004, $3.0 million in 2003, and $2.6 million in 2002. In developing
our decommissioning funding plan, we assumed a long-term after-tax earnings rate
of approximately 5%.

As of December 31, 2004, the market value of the external nuclear
decommissioning trusts totaled $344.5 million, net of tax.

As part of the anticipated sale of Kewaunee, WPSC will transfer its qualified
nuclear decommissioning trust assets to Dominion. WPSC will retain the
nonqualified trust assets, which totaled $129.4 million pretax
($102.5 million net of tax) at December 31, 2004. The funds collected
from customers for the decommissioning obligation related to the nonqualified
trust are expected to be refunded to customers in accordance with
yet-to-be-determined regulatory guidelines. Also in conjunction with the
anticipated sale, the PSCW suspended funding into the retail jurisdiction of
WPSC's decommissioning trusts for 2004. For the wholesale jurisdiction, funding
during 2004 was $0.3 million.

In the fourth quarter of 2003, WPSC changed its investment strategy for its
qualified trust and placed the assets in short-term investments. This was done
to reduce volatility in the value of the trust for the anticipated transfer to
Dominion at the time of closing of the Kewaunee sale. A condition of the sale
specifies a minimum amount of qualified trust assets to be transferred. This
liquidation and reinvestment resulted in a sizable increase in realized earnings
for 2003 and a corresponding increase in depreciation expense. It also resulted
in a sizable decrease in the percent of investments held in equity securities
compared to prior years.

Investments in the nuclear decommissioning trusts are recorded at fair value.
Investments at December 31, 2004, consisted of 71% cash and cash
equivalents and 29% equity securities. The investments are presented net of
related income tax effects on unrealized gains, and represent the amount of
assets available to accomplish decommissioning. The nonqualified trust
investments designated to pay income taxes when unrealized gains become realized
are classified as other assets. At December 31, 2004, the amount classified
as other assets was $26.8 million. An offsetting regulatory liability
reflects the expected reduction in future rates as unrealized gains in the
nonqualified trust are realized. Information regarding the cost and fair value
of the external nuclear decommissioning trusts, net of tax is set forth below:

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|2004 Security Type (Millions) | Fair Value | Cost   | Unrealized Gain
|----------------------------- | ---------- | ------ | ---------------
|                              |            |        |                
|Cash and cash equivalents     | $243.9     | $243.9 | $    -         
|Equity                        | 100.6      | 60.6   | 40.0           
|Balance at December 31        | $344.5     | $304.5 | $40.0          
|                              |            |        |                
|2003 Security Type (Millions) | Fair Value | Cost   | Unrealized Gain
|                              |            |        |                
|Fixed income                  | $239.7     | $239.6 | $  0.1         
|Equity                        | 92.6       | 59.1   | 33.5           
|Balance at December 31        | $332.3     | $298.7 | $33.6          

Future decommissioning costs collected in customer rates and a charge for
realized earnings from external trusts are included in depreciation expense.
Realized trust earnings totaled $5.5 million in 2004, $38.7 million in
2003, and $1.7 million in 2002. In 2002, unrealized gains and losses, net
of taxes, in the external trusts were reflected as changes to the
decommissioning reserve, since decommissioning expense is recognized as the
gains and losses are realized, in accordance with regulatory requirements.

If the sale is not consummated, WPSC's share of Kewaunee decommissioning,
based on its 59% ownership interest, is estimated to be $350 million in
current (2004) dollars based on a site-specific study. The study was performed
in 2002 by an external consultant and is used as the basis for calculating
regulatory funding requirements. The study uses several assumptions, including
immediate dismantlement as the method of decommissioning and plant shutdown in
2013. Based on the standard cost escalation assumptions reflected in our current
funding plan, which were determined based on the requirements of a
July 1994 PSCW order, the undiscounted amount of WPSC's share of
decommissioning costs forecasted to be expended between the years 2013 and 2037
is $929 million if the sale is not consummated. See Note 6,
"Acquisitions and Sales of Assets," for further discussion of the
pending sale of Kewaunee.

Beginning January 1, 2003, we adopted SFAS No. 143. This statement
applies to all entities with legal obligations associated with the retirement of
a tangible long-lived asset that results from the acquisition, construction, or
development and/or normal operation of that asset. We have identified the final
decommissioning of Kewaunee as an asset retirement obligation and have recorded
an asset retirement obligation of $363.9 million at December 31, 2004.
This amount is based on several significant assumptions, including the scope of
decommissioning work performed, the timing of future cash flows, and inflation
and discount rates. Some of these assumptions differ significantly from the
assumptions authorized by the PSCW to calculate the nuclear decommissioning
liability for funding purposes. For more information on SFAS No. 143 and
its impact on Kewaunee refer to Note 15, "Asset Retirement
Obligations."

NOTE 9--REGULATORY ASSETS AND LIABILITIES

The following regulatory assets and liabilities are reflected in our
consolidated balance sheets as of December 31:

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|WPS Resources' Regulatory Assets/Liabilities (Millions)       | 2004   | 2003  
|------------------------------------------------------------- | ------ | ------
|                                                              |        |       
|Regulatory assets                                             |        |       
|Environmental remediation costs (net of insurance recoveries) | $ 72.7 | $ 41.0
|De Pere Energy Center                                         | 45.3   | 47.7  
|Deferred nuclear costs                                        | 10.9   | 4.9   
|Plant related costs                                           | 6.5    | 2.6   
|Minimum pension liability                                     | 6.4    | 15.2  
|Reserve for uncollectible accounts                            | 5.5    | 4.4   
|Unamortized loss on debt                                      | 2.4    | 1.4   
|Automated meter reading costs                                 | 1.8    | 4.5   
|Funding for enrichment facilities                             | 1.8    | 2.4   
|Other                                                         | 7.6    | 3.6   
|Total                                                         | $160.9 | $127.7
|                                                              |        |       
|Regulatory liabilities                                        |        |       
|Cost of removal reserve                                       | $186.2 | $180.0
|Asset retirement obligations                                  | 46.6   | 66.9  
|Unrealized gain on decommissioning trust                      | 26.8   | 22.5  
|Income tax related items                                      | 11.2   | 11.8  
|Derivatives                                                   | 11.0   | 8.4   
|Deferred gain on emission allowance sales                     | 3.7    | 5.1   
|Deferred ATC costs                                            | 1.6    | 3.4   
|Demand-side management expenditures                           | 1.1    | 5.3   
|Interest from tax refunds                                     | -      | 0.7   
|Other                                                         | 0.1    | 0.3   
|Total                                                         | $288.3 | $304.4

Our utility subsidiaries expect to recover their regulatory assets and return
their regulatory liabilities through rates charged to customers based on
specific ratemaking decisions or precedent for each item over periods specified
by the regulators or over the normal operating period of the assets and
liabilities to which they relate. Except for amounts expended for manufactured
gas plant remediation, WPSC is recovering carrying costs for all regulatory
assets. UPPCO may recover carrying costs on environmental regulatory assets.
Based on prior and current rate treatment for such costs, we believe it is
probable that WPSC and UPPCO will continue to recover from customers the
regulatory assets described above.

See Note 6, "Acquisitions and Sales of Assets;" Note 15,
"Asset Retirement Obligations;" Note 16, "Income
Taxes;" and Note 18, "Employee Benefit Plans," for specific
information on regulatory deferrals related to the De Pere Energy Center, asset
retirement obligations and cost of removal, income taxes, and pensions. See
Note 17, "Commitments and Contingencies," for information on
environmental remediation deferred costs.

NOTE 10--INVESTMENTS IN AFFILIATES, AT EQUITY METHOD

Investments in corporate joint ventures and other companies accounted for
under the equity method at December 31, 2004, and 2003 follow.

|(Millions)                                  | 2004   | 2003  
|------------------------------------------- | ------ | ------
|ATC, LLC                                    | $113.4 | $ 79.9
|Guardian Pipeline, LLC                      | 29.0   | 27.4  
|Wisconsin River Power Company               | 12.8   | 12.8  
|Other                                       | 6.8    | 4.9   
|Investments in affiliates, at equity method | $162.0 | $125.0

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Investments in affiliates under the equity method are a component of other
assets on the Consolidated Balance Sheets, and the equity income is recorded in
miscellaneous income on the Consolidated Statements of Income. Most of the
equity income is taxable to the investor, rather than the investees, due to the
nontaxable nature of several of the investees' business structures. Accordingly,
the provision for income taxes includes our taxes on this equity income.

WPS Investments, LLC, a consolidated subsidiary of WPS Resources,
had a 22.64% ownership interest in ATC at December 31, 2004. ATC is a
for-profit, transmission-only company. It owns, maintains, monitors, and
operates, electric transmission assets in portions of Wisconsin, Michigan, and
Illinois. Its assets previously were owned and operated by multiple electric
utilities serving the upper Midwest, all of which transferred their transmission
assets to ATC in exchange for an ownership interest. A Wisconsin law encouraged
utilities in the state to transfer ownership and control of their transmission
assets to a state-wide transmission company. The Midwest Independent System
Operator directs ATC's operation of the transmission system.

During 2003, WPSC made additional contributions and sold the Wausau,
Wisconsin, to Duluth, Minnesota, transmission line to ATC. See Note 6,
"Acquisitions and Sales of Assets," for more information on these
transactions.

WPSC and UPPCO record related-party transactions for services provided to and
network transmission services received from ATC. Charges to ATC for services
provided by WPSC were $9.3 million, $14.4 million, and
$12.9 million in 2004, 2003, and 2002, respectively. UPPCO charged
$6.7 million, $4.8 million, and $4.5 million in 2004, 2003, and
2002, respectively for services provided. Network transmission service costs
paid to ATC by WPSC were $42.6 million, $33.6 million, and
$31.0 million in 2004, 2003, and 2002, respectively. UPPCO recorded network
transmission service costs of $4.0 million, $4.2 million, and
$4.9 million in 2004, 2003, and 2002, respectively.

WPS Resources recorded dividends received of $11.7 million and $7.5
million from ATC in 2004 and 2003, respectively.

Condensed financial data of ATC follows.

|(Millions)                                 | 2004       | 2003    | 2002   
|------------------------------------------ | ---------- | ------- | -------
|Income statement data                      |            |         |        
|Revenues                                   | $   262.8  | $225.6  | $205.3 
|Operating expenses                         | (157.7)    | (139.5) | (131.1)
|Other income (expense)                     | (26.9)     | (23.4)  | (20.1) 
|Net income                                 | $     78.2 | $ 62.7  | $ 54.1 
|                                           |            |         |        
|WPS Investment's equity in net income      | $     16.0 | $ 10.1  | $   7.9
|                                           |            |         |        
|Balance sheet data                         |            |         |        
|Current assets                             | $    30.1  | $  33.1 | $  40.7
|Non-current assets                         | 1,156.5    | 927.3   | 754.3  
|Total assets                               | $1,186.6   | $960.4  | $795.0 
|                                           |            |         |        
|Current liabilities                        | $   194.4  | $ 66.6  | $ 46.9 
|Long-term debt                             | 448.5      | 448.2   | 348.0  
|Other non-current liabilities              | 6.7        | 12.9    | 6.6    
|Shareholders' equity                       | 537.0      | 432.7   | 393.5  
|Total liabilities and shareholders' equity | $1,186.6   | $960.4  | $795.0 

WPSC owns 50% of the voting stock of Wisconsin River Power Company, which
operates two hydroelectric plants on the Wisconsin River and
an oil-fired combustion turbine. Two-thirds of the energy output of
the hydroelectric plants is sold to WPSC, and the remaining one-third is sold to
Wisconsin Power

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and Light. The electric power from the combustion turbine is sold in equal
parts to WPSC and Wisconsin Power and Light.

WPSC records related party transactions for sales to and purchases from
Wisconsin River Power. Revenues from services provided to Wisconsin River Power
were $1.1 million, $1.4 million, and $1.5 million for 2004, 2003,
and 2002, respectively. Purchases from Wisconsin River Power by WPSC were
$3.2 million, $2.3 million, and $2.1 million for 2004, 2003, and
2002, respectively.

WPSC recorded dividends received of $6.0 million and $1.5 million from
Wisconsin River Power in 2004 and 2003, respectively.

Condensed financial data of Wisconsin River Power follows.



|(Millions)                                 | 2004  | 2003  | 2002 
|------------------------------------------ | ----- | ----- | -----
|Income statement data                      |       |       |      
|Revenues                                   | $ 7.5 | $ 6.7 | $ 6.4
|Operating expenses                         | (5.5) | (5.0) | (4.9)
|Other income (expense)                     | 10.4  | 7.7   | 4.2  
|Net income                                 | $12.4 | $ 9.4 | $ 5.7
|                                           |       |       |      
|WPSC's equity in net income                | $ 6.2 | $ 4.7 | $ 2.7
|                                           |       |       |      
|Balance sheet data                         |       |       |      
|Current assets                             | $ 9.0 | $ 8.3 | $ 3.6
|Non-current assets                         | 20.1  | 19.9  | 20.1 
|Total assets                               | $29.1 | $28.2 | $23.7
|                                           |       |       |      
|Current liabilities                        | $ 1.0 | $ 1.1 | $ 3.5
|Other non-current liabilities              | 2.5   | 1.7   | 1.0  
|Shareholders' equity                       | 25.6  | 25.4  | 19.2 
|Total liabilities and shareholders' equity | $29.1 | $28.2 | $23.7

WPS Investments, LLC, a consolidated subsidiary of WPS Resources,
purchased a 33% ownership interest in Guardian Pipeline, LLC on May 30,
2003. Guardian Pipeline owns a natural gas pipeline, which began operating in
2002, that stretches about 140 miles from near Joliet, Illinois, into southern
Wisconsin. It can transport up to 750 million cubic feet of natural gas
daily.

ESI records related party transactions for purchases from Guardian Pipeline.
These purchases amounted to $0.4 million and $0.1 million for 2004 and
2003, respectively.

Condensed financial data of Guardian Pipeline, LLC as of December 31 and
for the year ended December 31, 2004, and the period from May 30, 2003, to
December 31, 2003, follows.

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|(Millions)                                 | 2004    | 2003   
|------------------------------------------ | ------- | -------
|Income statement data                      |         |        
|Revenues                                   | $  35.2 | $  20.6
|Operating expenses                         | (16.8)  | (3.1)  
|Other income (expense)                     | (13.4)  | (13.8) 
|Net income                                 | $ 5.0   | $ 3.7  
|                                           |         |        
|WPS Investment's equity in net income      | $   1.7 | $   1.2
|                                           |         |        
|Balance sheet data                         |         |        
|Current assets                             | $   5.0 | $   7.4
|Non-current assets                         | 268.4   | 272.3  
|Total assets                               | $273.4  | $279.7 
|                                           |         |        
|Current liabilities                        | $ 18.1  | $ 21.6 
|Long-term debt                             | 157.8   | 165.6  
|Shareholder's equity                       | 97.5    | 92.5   
|Total liabilities and shareholders' equity | $273.4  | $279.7 

Other investments accounted for under the equity method include
WPS Nuclear Corporation's (a consolidated subsidiary of
WPS Resources) investment in Nuclear Management Company and other minor
investments. The Nuclear Management Company is owned by affiliates of five
utilities in the upper Midwest and operates the six nuclear power plants of
these utilities. At December 31, 2004, WPS Nuclear Corporation's
ownership in Nuclear Management Company was 20%. WPSC recorded related party
transactions for services provided by Nuclear Management Company for the
management and operation of Kewaunee. Management service fees paid to Nuclear
Management Company by WPSC were $26.7 million, $25.6 million, and
$24.7 million in 2004, 2003, and 2002, respectively.

NOTE 11--GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill recorded by WPS Resources was $36.8 million at
December 31, 2004, and 2003. Of this amount, $36.4 million is recorded in
WPSC's natural gas segment relating to its merger with Wisconsin Fuel and Light.
In 2003, WPSC transferred $0.9 million from a regulatory acquisition
premium (previously classified as property, plant, and equipment) to goodwill.
The increase in goodwill reflected an adjustment to the amount of recoverable
goodwill from the Wisconsin Fuel and Light merger allowed by the PSCW in its
March 2003 rate order. The remaining $0.4 million of goodwill relates to PDI.

Goodwill and purchased intangible assets are included in other assets on the
Consolidated Balance Sheets. Emission credits are recorded at the lower of cost
or market. Information in the tables below relates to total purchased
identifiable intangible assets for the years indicated (excluding assets held
for sale).

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|(Millions)       | December 31, 2004   
|---------------- | --------------------
|Asset Class      | Average Life (Years)
|Emission credits | 1 to 30             
|Customer related | 1 to 8              
|Other            | 1 to 30             
|Total            |                     
|                 |                     
|(Millions)       | December 31, 2003   
|Asset Class      | Average Life (Years)
|Emission credits | 1 to 30             
|Customer related | 1 to 5              
|Other            | 1 to 30             
|Total            |                     

A customer related intangible asset in the amount of $7.3 million was
recorded in conjunction with the July 1, 2004 acquisition of Advantage
Energy. This intangible asset will be amortized over a period of eight years.

Intangible asset amortization expense, in the aggregate, for the years ended
December 31, 2004, and 2003 was $2.4 million and
$1.7 million, respectively

|Estimated Amortization Expense:   |             
|--------------------------------- | ------------
|                                  |             
|For year ending December 31, 2005 | $2.7 million
|For year ending December 31, 2006 | 2.2 million 
|For year ending December 31, 2007 | 2.1 million 
|For year ending December 31, 2008 | 1.9 million 
|For year ending December 31, 2009 | 1.6 million 

NOTE 12--LEASES

WPS Resources leases various property, plant, and equipment. Terms of the
leases vary, but generally require WPS Resources to pay property taxes,
insurance premiums, and maintenance costs associated with the leased property.
Rental expense attributable to operating leases was $5.7 million,
$5.2 million, and $5.1 million in 2004, 2003, and 2002 respectively.
Future minimum rental obligations under non-cancelable operating leases, are
payable as follows:



|Year ending December 31(Millions) |      
|--------------------------------- | -----
|                                  |      
|2005                              | $ 4.2
|2006                              | 2.3  
|2007                              | 2.2  
|2008                              | 2.0  
|2009                              | 1.6  
|Later years                       | 5.9  
|Total payments                    | $18.2

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NOTE 13--SHORT-TERM DEBT AND LINES OF CREDIT

WPS Resources has a syndicated $225 million 364-day revolving
credit facility and a $175 million 364-day bi-lateral loan agreement. WPSC
has syndicated a $115 million 364-day revolving credit facility, to provide
short-term borrowing flexibility and security for commercial paper outstanding.

The information in the table below relates to short-term debt and lines of
credit for the years indicated.

|(Millions, except for percentages)                    | 2004   | 2003   | 2002  
|----------------------------------------------------- | ------ | ------ | ------
|As of end of year                                     |        |        |       
|Commercial paper outstanding                          | $279.7 | $28.0  | $16.0 
|Average discount rate on outstanding commercial paper | 2.46%  | 1.15%  | 1.35% 
|Short-term notes payable outstanding                  | $12.7  | $10.0  | $13.8 
|Average interest rate on short-term notes payable     | 2.52%  | 1.12%  | 1.22% 
|Available (unused) lines of credit                    | $161.9 | $288.9 | $264.5
|For the year                                          |        |        |       
|Maximum amount of short-term debt                     | $312.5 | $194.2 | $133.4
|Average amount of short-term debt                     | $75.3  | $104.3 | $59.7 
|Average interest rate on short-term debt              | 1.82%  | 1.38%  | 1.73% 

The commercial paper has varying maturity dates ranging from January 4, 2005,
through January 25, 2005.

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NOTE 14--LONG-TERM DEBT

|At December 31 (Millions)                                       | 2004   | 2003    
|--------------------------------------------------------------- | ------ | --------
|First mortgage bonds - WPSC                                     |        |         
|                                                                | Series | Year Due
|                                                                | 6.90%  | 2013    
|                                                                | 7.125% | 2023    
|                                                                |        |         
|Senior notes - WPSC                                             |        |         
|                                                                | Series | Year Due
|                                                                | 6.125% | 2011    
|                                                                | 4.875% | 2012    
|                                                                | 4.80%  | 2013    
|                                                                | 6.08%  | 2028    
|                                                                |        |         
|First mortgage bonds - UPPCO                                    |        |         
|                                                                | Series | Year Due
|                                                                | 10.0%  | 2008    
|                                                                | 9.32%  | 2021    
|                                                                |        |         
|Unsecured senior notes - WPS Resources                          |        |         
|                                                                | Series | Year Due
|                                                                | 7.00%  | 2009    
|                                                                | 5.375% | 2012    
|                                                                |        |         
|Term loans - nonrecourse, collateralized by nonregulated assets | 82.3   | 87.2    
|Tax exempt bonds                                                | 27.0   | 27.0    
|Senior secured note                                             | 2.7    | 2.9     
|Total                                                           | 874.4  | 931.2   
|Unamortized discount and premium on bonds and debt              | (2.0)  | (2.7)   
|Total long-term debt                                            | 872.4  | 928.5   
|Less current portion                                            | (6.7)  | (56.6)  
|Total long-term debt                                            | $865.7 | $871.9  

On January 19, 2004, WPSC retired $49.9 million of its 7.125% series
first mortgage bonds. These bonds had an original maturity date of July 1, 2023.

All of WPSC's debt securities are subject to the terms and conditions of the
First Mortgage of WPSC. Under the terms of the mortgage, substantially all
property owned by WPSC is pledged as collateral for these outstanding debt
securities. All these debt securities require semiannual payments of interest.
All principal payments are due on the maturity date of each series. All WPSC
senior notes become non-collateralized if WPSC retires all of its outstanding
first mortgage bonds.

Under the terms of the First Mortgage of UPPCO, substantially all property
owned by UPPCO is pledged as collateral for this outstanding debt series.
Interest payments are due semiannually on May 1 and November 1 with a sinking
fund payment of $900,000 due each November 1. The final sinking fund payment due
November 1, 2021, will completely retire the series.

Borrowings by PDI under term loans and collateralized by nonregulated assets
totaled $82.3 million at December 31, 2004. The assets of
WPS New England Generation, Inc. and WPS Canada Generation, Inc.,
subsidiaries of PDI, collateralize $5.4 million and $13.2 million,
respectively, of the total outstanding amount. Both have semiannual installment
payments, an interest rate of 8.75%, and mature in May 2010. Sunbury Generation,
LLC, an indirect subsidiary of PDI, is the borrower of the remaining
$63.7 million that is collateralized by its plant. Quarterly payments are
made in relation to this financing, which, as the result of an interest rate
swap, carries an effective interest rate of 8.1% for the year ended
December 31, 2004,

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and matures in March 2018. This loan also has renewals in 2006 and 2012.
However, if certain debt covenants are not met, the lender is not required to
renew the loans.

In April 2001, the Schuylkill County Industrial Development Authority issued
$27.0 million of refunding tax-exempt bonds. At the time of issuance of the
refunding bonds, WPS Westwood Generation, LLC, a subsidiary of PDI, owned
the original bonds, the proceeds of which were used in substantial part to
provide facilities. Upon issuance of the refunding bonds, the original bonds
were paid off. WPS Westwood Generation was paid $27.0 million from the
proceeds of the refunding bonds for the retirement of the original bonds plus
accrued interest. WPS Westwood Generation is now obligated to pay the
refunding bonds with monthly payments that have a floating interest rate that is
reset weekly. At December 31, 2004, the interest rate was 1.8%. The bonds
mature in April 2021. WPS Resources agreed to guarantee WPS Westwood
Generation's obligation to provide sufficient funds to pay the refunding bonds
and the related obligations and indemnities.

Upper Peninsula Building Development Corporation has a senior secured
note of $2.7 million as of December 31, 2004, which requires
semiannual payments at an interest rate of 9.25%, and matures in 2011. The note
is secured by a first mortgage lien on the building they own, which is also
leased to UPPCO for use as their corporate headquarters.

At December 31, 2004, WPS Resources and its subsidiaries were in
compliance with all covenants relating to outstanding debt. A schedule of all
principal debt payment amounts, including bond maturities and early retirements,
for WPS Resources is as follows:



|Year ending December 31(Millions) |        
|--------------------------------- | -------
|                                  |        
|2005                              | $   6.7
|2006                              | 7.7    
|2007                              | 8.3    
|2008                              | 9.4    
|2009                              | 159.9  
|Later years                       | 682.4  
|Total payments                    | $874.4 

NOTE 15--ASSET RETIREMENT OBLIGATIONS

Legal retirement obligations, as defined by the provisions of SFAS No. 143,
"Accounting for Asset Retirement Obligations," identified at WPSC
relate primarily to the final decommissioning of Kewaunee. WPSC has a legal
obligation to decommission the irradiated portions of Kewaunee in accordance
with the Nuclear Regulatory Commission's minimum decommissioning requirements.
The liability, calculated under the provisions of SFAS No. 143, is based on
several assumptions, including the scope of decommissioning work to be
performed, the timing of the future cash flows, and inflation and discount
rates. Some of these assumptions differ significantly from the assumptions
authorized by the PSCW to calculate the nuclear decommissioning liability for
funding purposes. In accordance with SFAS No. 71, "Accounting for the
Effects of Certain Types of Regulation," WPSC established a regulatory
liability to record the differences between ongoing expense regulation under
SFAS No. 143 and the ratemaking practices for retirement costs authorized by the
PSCW. As of December 31, 2004, the net of tax market value of external
nuclear decommissioning trusts established for future retirement costs,
authorized by the PSCW, was approximately $344.5 million. See Note 6,
"Acquisitions and Sales of Assets," for information on the pending
sale of Kewaunee.

We also identified other legal retirement obligations related to utility
plant assets that are not significant to the financial statements. Upon
implementation of SFAS No. 143 on January 1, 2003, we recorded a net asset
retirement cost of $90.8 million and an asset retirement obligation of
$324.8 million. The difference between previously recorded liabilities of
$290.5 million and the cumulative effect of adopting SFAS No. 143 was
deferred to a regulatory liability pursuant to SFAS No 71.

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PDI has identified a legal retirement obligation related to the closure of an
ash basin located at Sunbury. The adoption of SFAS No. 143 at PDI resulted in a
$0.3 million negative after-tax cumulative effect of change in accounting
principle in the first quarter of 2003 related to recording a liability for the
closure of this ash basin. The asset retirement obligation associated with
Sunbury is recorded as a liability held for sale on the consolidated balance
sheets. See Note 4, "Assets Held for Sale."

The following table describes all changes to the asset retirement obligation
liabilities of WPS Resources.



|(Millions)                                        | WPSC      | PDI   | Total    
|------------------------------------------------- | --------- | ----- | ---------
|Asset retirement obligations at December 31, 2002 | $       - | $   - | $       -
|Liability recognized in transition                | 324.8     | 2.0   | 326.8    
|Accretion expense                                 | 19.2      | 0.1   | 19.3     
|Asset retirement obligations at December 31, 2003 | 344.0     | 2.1   | 346.1    
|Accretion expense                                 | 20.4      | 0.1   | 20.5     
|Asset retirement obligation at December 31, 2004  | $364.4    | $2.2  | $366.6   

Pro forma income available for common shareholders and earnings per
share have not been presented for the periods ended December 31, 2004,
2003, and 2002 because the pro forma application of SFAS No. 143 to
prior periods does not materially differ from the actual amounts reported for
those periods in the Consolidated Statements of Income.

NOTE 16--INCOME TAXES

The principal components of our deferred tax assets and liabilities
recognized in the balance sheet as of December 31 are as follows:

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|(Millions)                                      | 2004   | 2003  
|----------------------------------------------- | ------ | ------
|                                                |        |       
|Deferred tax assets:                            |        |       
|Deferred tax credit carry forwards              | $ 74.0 | $ 52.0
|Plant related                                   | 59.0   | 55.8  
|Employee benefits                               | 31.5   | 28.7  
|Deferred income and deductions                  | 17.5   | 21.1  
|Other comprehensive income                      | 16.4   | 13.4  
|State capital and operating loss carry forwards | 11.3   | 10.9  
|Risk management activities                      | 10.3   | 6.9   
|Regulatory deferrals                            | 1.8    | 3.4   
|Other                                           | 7.5    | (1.2) 
|Total deferred tax assets                       | 229.3  | 191.0 
|                                                |        |       
|Valuation allowance                             | (1.5)  | (3.0) 
|Net deferred tax assets                         | $227.8 | $188.0
|                                                |        |       
|Deferred tax liabilities:                       |        |       
|Plant related                                   | $243.3 | $233.3
|Risk management activities                      | 18.3   | -     
|Regulatory deferrals                            | 13.2   | 8.7   
|Employee benefits                               | 11.0   | 16.1  
|Other comprehensive income                      | 5.8    | 3.4   
|Deferred income and deductions                  | 3.5    | 3.3   
|Other                                           | 12.8   | 3.7   
|Total deferred tax liabilities                  | $307.9 | $268.5
|                                                |        |       
|Consolidated Balance Sheet Presentation:        |        |       
|Current deferred tax liabilities                | $ 14.6 | $ 1.7 
|Long-term deferred tax liabilities              | 65.5   | 78.8  
|Net deferred tax liabilities                    | $ 80.1 | $ 80.5

Deferred tax credit carryforwards include $71.1 million of alternative
minimum tax credits related to tax credits available under Section 29 of the
Internal Revenue Code. These alternative minimum tax credit carryforwards can be
carried forward indefinitely. Carry forward periods for state capital and
operating loss carryforwards vary, but in the majority of states in which we do
business, the period is 15 years or more. The balance of the carryforward of
state net operating losses is $220.0 million for all states. Valuation
allowances have been established for certain state operating and capital loss
carryforwards due to the uncertainty of the ability to realize the benefit of
these losses in the future. The implementation of new tax strategies allowed WPS
Resources to reduce its valuation allowance in 2004.

The following table presents a reconciliation of federal income taxes (which
are calculated by multiplying the statutory federal income tax rate by book
income before federal income tax) to the provision for income taxes reported in
the Consolidated Statements of Income.

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|(Millions, except for percentages)                     | 2004   | 2003   | 2002  
|------------------------------------------------------ | ------ | ------ | ------
|                                                       | Rate   | Amount | Rate  
|                                                       |        |        |       
|Statutory federal income tax                           | 35.0%  | $65.2  | 35.0% 
|State income taxes, net                                | 3.4    | 6.4    | 5.9   
|Plant related                                          | 0.1    | 0.1    | (0.8) 
|Benefits and compensation                              | (2.0)  | (3.7)  | (1.6) 
|Investment tax credit                                  | (0.8)  | (1.5)  | (1.2) 
|Federal tax credits                                    | (17.6) | (32.8) | (13.1)
|Other differences, net                                 | (2.0)  | (3.7)  | (0.8) 
|Effective income tax                                   | 16.1%  | $30.0  | 23.4% 
|                                                       |        |        |       
|Current provision                                      |        |        |       
|Federal                                                |        | $20.1  |       
|State                                                  |        | 11.6   |       
|Foreign                                                |        | 0.4    |       
|Total current provision                                |        | 32.1   |       
|Deferred provision (benefit)                           |        | 1.1    |       
|Recognition of net operating loss
        carryforward |        | (1.7)  |       
|Recognition of deferred investment tax credit          |        | (1.5)  |       
|Total income tax expense                               |        | $30.0  |       

Foreign income (loss) before taxes was $8.3 million in 2004,
$4.3 million in 2003, and $(1.2) million in 2002.

As the related temporary differences reverse, WPSC and UPPCO are
prospectively refunding taxes to customers for which deferred taxes were
recorded in prior years at rates different than current rates. The regulatory
liability for these refunds and other regulatory tax effects totaled
$11.2 million as of December 31, 2004, and $11.8 million as of
December 31, 2003.

NOTE 17--COMMITMENTS AND CONTINGENCIES

Commodity and Purchase Order Commitments

WPS Resources routinely enters into long-term purchase and sale
commitments that have various quantity requirements and durations. The
commitments described below are as of December 31, 2004.

ESI has unconditional purchase obligations related to energy supply contracts
that total $2.4billion. Substantially all of these obligations end
by 2009, with obligations totaling $2.6 million extending from 2010 through
2012. The majority of the energy supply contracts are to meet ESI's offsetting
obligations to deliver energy to its customers.

WPSC has obligations related to nuclear fuel, coal, purchased power, and
natural gas. Nuclear fuel contracts total $38.2 million and extend through
2014. Assuming Kewaunee is sold as discussed in Note 6, "Acquisitions
and Sales of Assets," these nuclear fuel contracts would be assigned to
Dominion. Obligations related to coal supply and transportation extend through
2016 and total $386.2 million. Through 2016, WPSC has obligations totaling
$600.6 million for either capacity or energy related to purchased power.
Also, there are natural gas supply and transportation contracts with total
estimated demand payments of $129.7 million through 2010. WPSC expects to
recover these costs in future customer rates. Additionally, WPSC has contracts
to sell electricity and natural gas to customers.

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PDI has entered into purchase contracts totaling $12.6 million. The
majority of these contracts relate to coal purchases for Sunbury and expire in
2005. See Note 4, "Assets Held for Sale," for more information on
Sunbury.

UPPCO has made commitments for the purchase of commodities, mainly capacity
or energy related to purchased power, which total $5.2 million and extend
through 2006.

WPS Resources also has commitments in the form of purchase orders issued
to various vendors. At December 31, 2004, these purchase orders totaled
$499.6 million and $493.8 million for WPS Resources and WPSC,
respectively. The majority of these commitments relate to large construction
projects, including construction of the 500-megawatt Weston 4 coal-fired
generation facility near Wausau, Wisconsin.

Nuclear Plant Operation

The Price Anderson Act ensures that funds will be available to pay for public
liability claims arising out of a nuclear incident. This Act may require WPSC to
pay up to a maximum of $59.4 million per incident. The payments will not
exceed $5.9 million per incident in a given calendar year. These amounts
relate to WPSC's 59% ownership in Kewaunee.

Clean Air Regulations

The generation facilities of PDI are located in an ozone transport region. As
a result, these generation facilities are subject to additional restrictions on
emissions of nitrogen oxide. During 2004, no additional nitrogen oxide emission
allowances were purchased and no additional allowance purchases are anticipated
for 2005. PDI began 2004 with some sulfur dioxide emission allowances for its
generation facilities that are required to participate in the sulfur dioxide
emission program. During 2004, additional sulfur dioxide allowances of 15,000
were purchased at market rates. PDI estimates purchasing approximately
10,000 sulfur dioxide allowances in total, at market rates, to meet its
2005 requirements for its generation facilities.

United States Environmental Protection Agency Section 114 Request

In November 1999, the EPA announced the commencement of a Clean Air Act
enforcement initiative targeting the utility industry. This initiative resulted
in the issuance of several notices of violation/findings of violation and the
filing of lawsuits against utilities. In these enforcement proceedings, the EPA

In December 2000, WPSC received from the EPA a request for information
under Section 114 of the Clean Air Act. The EPA sought information and documents
relating to work performed on the coal-fired boilers located at WPSC's Pulliam
and Weston electric generating stations. WPSC filed a response with the EPA in
early 2001.

On May 22, 2002, WPSC received a follow-up request from the EPA seeking
additional information regarding specific boiler-related work performed on
Pulliam Units 3, 5, and 7, as well as information on WPSC's life extension
program for Pulliam Units 3-8 and Weston Units 1 and 2. WPSC made an initial
response to the EPA's follow-up information request on June 12, 2002, and
filed a final response on June 27, 2002.

In 2000 and 2002, Wisconsin Power and Light Company received a similar series
of EPA information requests relating to work performed on certain coal-fired
boilers and related equipment at the Columbia

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generating station (a facility located in Portage, Wisconsin, jointly owned
by Wisconsin Power and Light Company, Madison Gas and Electric Company, and
WPSC). Wisconsin Power and Light Company is the operator of the plant and is
responsible for responding to governmental inquiries relating to the operation
of the facility. Wisconsin Power and Light Company filed its most recent
response for the Columbia facility on July 12, 2002.

Depending upon the results of the EPA's review of the information, the EPA
may issue "notices of violation" or "findings of violation"
asserting that a violation of the Clean Air Act occurred and/or seek additional
information from WPSC and/or third parties who have information relating to the
boilers or close out the investigation. To date, the EPA has not responded to
the filings made by WPSC and Wisconsin Power and Light. In addition, under the
federal Clean Air Act, citizen groups may pursue a claim. WPSC has received no
notice of a claim from a citizen suit.

In response to the EPA Clean Air Act enforcement initiative, several
utilities have elected to settle with the EPA, while others are in litigation.
In general, those utilities that have settled have entered into consent decrees
which require the companies to pay fines and penalties, undertake supplemental
environmental projects, and either upgrade or replace pollution controls at
existing generating units or shut down existing units and replace these units
with new electric generating facilities. Several of the settlements involve
multiple facilities. The fines and penalties (including the capital costs of
supplemental environmental projects) associated with these settlements range
between $7 million and $30 million. Factors typically considered in
settlements include, but are not necessarily limited to, the size and number of
facilities as well as the duration of alleged violations and the presence or
absence of aggravating circumstances. The regulatory interpretations upon which
the lawsuits or settlements are based may change based on future court decisions
that may be rendered in pending litigations.

If the federal government decided to bring a claim against WPSC and if it
were determined by a court that historic projects at WPSC's Pulliam and Weston
plants required either a state or federal Clean Air Act permit, WPSC may, under
the applicable statutes, be required to:

> 

- shut down any unit found to be operating in
    non-compliance,
- install additional pollution control
    equipment,
- pay a fine, and/or
- pay a fine and conduct a supplemental
    environmental project in order to resolve any such claim.

At the end of December 2002 and October 2003, the EPA issued new rules
governing the federal new source review program. These rules are currently being
challenged in the District of Columbia Circuit Court of Appeals, and a final
decision is not anticipated before April of 2005. The rules are not yet
effective in Wisconsin. They are also not retroactive. Wisconsin has proposed
amending its new source review program to substantially conform to the federal
regulations. The Wisconsin rules are not anticipated to be finalized before
2006, after the District of Columbia Circuit Court of Appeals' decision is
rendered.

Mercury and Interstate Quality Rules

On October 1, 2004, the mercury emission control rule became effective in
Wisconsin. The rule requires WPSC to control annual system mercury emissions in
phases. The first phase will occur in 2008 and 2009. In this phase, the annual
mercury emissions are capped at the average annual system mercury emissions for
the period 2002 through 2004. The next phase will run from 2010 through 2014 and
requires a 40% reduction from average annual 2002 through 2004 mercury input
amounts. After 2015, a 75% reduction is required with a goal of an 80% reduction
by 2018. If federal regulations are promulgated, we believe the State of
Wisconsin will revise the Wisconsin rule to be consistent with the federal rule.
WPSC estimates capital costs of approximately $101 million to achieve the
proposed 75% reductions. The capital costs are expected to be recovered in a
future rate case.

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In December 2003, the EPA proposed mercury "maximum achievable
control technology" standards and an alternative mercury "cap and
trade" program substantially modeled on the Clear Skies legislation
initiative. The EPA also proposed the Clean Air Interstate Rule (formerly known
as the Interstate Air Quality Rule), which would reduce sulfur dioxide and
nitrogen oxide emissions from utility boilers located in 29 states, including
Wisconsin, Michigan, Pennsylvania, and New York. As to the mercury "maximum
achievable control technology" proposal, it requires existing units burning
sub-bituminous coal to achieve an annual average mercury emission rate limit of
5.8 pounds per trillion Btu, existing units burning bituminous coal to achieve
an annual average mercury emission rate limit of 2.0 pounds per trillion Btu,
and existing units burning coal-refuse to achieve an annual average mercury
emission rate limit of 0.38 pounds per trillion Btu on a unit-by-unit or
plant-wide basis. New sub-bituminous coal-fired units must achieve an emission
rate limit of 0.020 pounds per gigawatt-hour.

If the EPA proposed mercury "maximum achievable control technology"
rule is promulgated, WPSC's current analysis indicates that the emission control
equipment on the existing units may be sufficient to achieve the proposed
limitation. New units will require additional mercury control techniques to
reduce mercury emissions by 65% to 85%. Weston 4 will install and operate
mercury control technology with the aim of achieving a mercury emission rate
less than that proposed in the EPA proposed mercury "maximum achievable
control technology" rule. As to the mercury cap and trade program, WPSC is
studying its long-term compliance strategy to meet the targets set forth in the
proposed rule. Based on the current rule proposal and current projections, WPSC
anticipates meeting the proposed targets. Mercury control technology is still in
development. WPSC is assessing potential mercury control technologies for
application to future new coal-fired units. The proposed alternative mercury cap
and trade program would require a 30% reduction in national mercury emissions in
2010 and a 70% reduction in national mercury emissions beginning in 2018. WPSC
estimates the cost to comply with the proposed alternative mercury cap and trade
program is similar to the cost to comply with the Wisconsin rule.

Whichever form of the proposed federal mercury rule is promulgated, PDI's
current analysis indicates that additional emission control equipment on the
existing units may be required. Excluding Sunbury, PDI estimates the capital
cost for the remaining units to be approximately $1 million to achieve a
70% reduction. If Sunbury is not sold, the mercury control costs would be
approximately $33 million in total. See Note 4, "Assets Held for
Sale," for more information on Sunbury.

As to the Clean Air Interstate Rule proposal, the proposal allows the
affected states (including Wisconsin, Michigan, Pennsylvania, and New York) to
either require utilities located in the state to participate in an interstate
cap and trade program or meet the state's emission budget for sulfur dioxide and
nitrogen oxide through measures to be determined by the state. The states have
not adopted a preference as to which option they would select in the event the
rules become final, but the states are investigating a possible cap and trade
program. The effect of the rule, if adopted, on WPSC's and PDI's facilities is
uncertain.

Currently, WPSC is evaluating a number of options that include using the cap
and trade program and/or installing controls. For planning purposes, it is
assumed that additional sulfur dioxide and nitrogen oxide controls will be
needed on existing units or the existing units will need to be converted to
natural gas by 2010. The installation of any controls and/or any conversion to
natural gas will need to be scheduled as part of WPSC's long-term maintenance
plan for its existing units. As such, controls or conversions may need to take
place before 2010. On a preliminary basis and assuming controls or conversion
are required, WPSC estimates capital costs of $246 million in order to meet
an assumed 2010 compliance date. This estimate is based on costs of current
control technology and current information regarding the proposed rule. The
costs may change based on the requirements of the final rule.

PDI is evaluating the compliance options for the Clean Air Interstate Rule
proposal. Additional nitrogen oxide controls on some of PDI's facilities may be
necessary. The estimated capital costs for additional nitrogen oxide controls
are $2.9 million, excluding Sunbury. Additional sulfur dioxide reductions
are unlikely. If the Sunbury sale does not occur, the additional nitrogen oxide
control costs are about $41 million in total. Also, PDI will evaluate a
number of options using the cap and trade program, fuel switching, and/or
installing controls. See Note 4, "Assets Held for Sale," for more
information on Sunbury.

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Other Environmental Issues

Groundwater testing at a former ash disposal site of UPPCO indicated elevated
levels of boron and lithium. Supplemental remedial investigations were
performed, and a revised remedial action plan was developed. The Michigan
Department of Environmental Quality approved the plan in January 2003. A
liability of $1.4 million and an associated regulatory asset of
$1.4 million were recorded for estimated future expenditures associated
with remediation of the site. UPPCO received an order from the MPSC permitting
deferral and future recovery of these costs. UPPCO has an informal agreement,
with the owner of another landfill, under which it has agreed to pay 17% of the
investigation and remedial costs. It is estimated that the cost of addressing
the site over the next 3 years is $1.6 million. UPPCO has recorded
$0.3 million of this amount as its share of the liability as of
December 31, 2004.

Manufactured Gas Plant Remediation

WPSC continues to investigate the environmental cleanup of ten manufactured
gas plant sites. As of the fall of 2003, cleanup of the land portion of the
Oshkosh, Stevens Point, Green Bay, Manitowoc, and two Sheboygan sites was
substantially complete. Groundwater treatment and monitoring at these sites will
continue into the future. Cleanup of the land portion of four sites will be
addressed in the future. River sediment remains to be addressed at six sites
with sediment contamination. Remedial investigation work is expected to begin on
the sediment portion of the Sheboygan site in 2005. Sediment removal work at the
Marinette site is scheduled for 2005. Work at the other sites remains to be
scheduled.

The WDNR recently issued interim guidance for sediment remediation. Based on
WDNR's application of this guidance, WPSC estimated future undiscounted
investigation and cleanup costs as of December 31, 2004 to be
$66.7 million. WPSC may adjust these estimates in the future contingent
upon remedial technology, regulatory requirements, and the assessment of natural
resource damages.

WPSC's liability was reviewed in December 2004 against projected cleanup
costs. Accordingly, the liability was increased to $66.7 million. WPSC has
received $12.7 million to date in insurance recoveries. WPSC expects to
recover actual cleanup costs, net of insurance recoveries, in future customer
rates. Under current PSCW policies, WPSC will not recover carrying costs
associated with the cleanup expenditures.

Stray Voltage Claims

From time to time, WPSC has been sued by dairy farmers who allege that they
have suffered loss of milk production and other damages supposedly due to
"stray voltage" from the operation of WPSC's electrical system. Past
cases have been resolved without any material adverse effect on the financial
statements of WPSC. Currently, there are three such cases pending in state court
in Wisconsin, one of which is on appeal.

The PSCW has established certain requirements regarding stray voltage for all
utilities subject to its jurisdiction. The PSCW has defined what constitutes
"stray voltage," established a level of concern at which some utility
corrective action is required, and set forth test protocols to be employed in
evaluating whether a stray voltage problem exists. Based upon the information
available to it to date, WPSC believes that it was in compliance with the PSCW's
orders, and that none of the plaintiffs had a stray voltage problem as defined
by the PSCW for which WPSC is responsible. Nonetheless, in 2003, the Supreme
Court of Wisconsin ruled in the case Hoffmann v. WEPCO that a utility
could be liable in tort to a farmer for damage from stray voltage even though
the utility had complied with the PSCW's established level of concern.

One of the three remaining cases was appealed to the Wisconsin Court of
Appeals. On February 15, 2005, the Court of Appeals affirmed the jury verdict
that awarded the plaintiff approximately $0.8 million for economic damages and
$1 million for nuisance. The Court of Appeals also remanded the issue of
future damages relative to an injunction. WPSC is considering further appeal.
The other two pending cases

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have trial dates in April 2005 and September 2005. Discovery has been
completed in both cases. One of the two pending cases was tried to a jury in the
fall of 2004. The jury deadlocked 10 - 4 in favor of WPSC, and then, in response
to an instruction from the trial judge to try to reach a verdict, crafted a
compromise that was invalid under the law, resulting in a mistrial. The expert
witnesses retained by WPSC do not believe that there is a scientific basis for
concluding that electricity has harmed or damaged the plaintiffs or their cows
in either of the two remaining cases. Accordingly, WPSC is vigorously defending
and contesting these actions.

WPSC has insurance coverage for these claims, but the policies have customary
self-insured retentions per occurrence. Based upon the information known at this
time and the availability of insurance, WPSC believes that the total cost to it
of resolving the remaining three actions will not be material.

One of the cases awaiting trial includes a claim for common law punitive
damages as well as a claim for treble damages under a Wisconsin statute, sec.
196.94. In light of the information it now has, WPSC does not believe there is
any basis for the award of punitive or treble damages in this case. However, if
a jury awarded such damages, and if the total of defense costs and all damages
exceeded the self-insured retention, WPSC believes its insurance policies would
cover such a verdict, including any punitive or treble damages.

Flood Damage

On May 14, 2003, a fuse plug at the Silver Lake reservoir owned by UPPCO was
breached. This breach resulted in subsequent flooding downstream on the Dead
River, which is located in Michigan's Upper Peninsula near Marquette, Michigan.

A dam owned by Marquette Board of Light and Power, which is located
downstream from the Silver Lake reservoir near the mouth of the Dead River, also
failed during this event. In addition, high water conditions and siltation
resulted in damage at the Presque Isle Power Plant owned by Wisconsin Electric
Power Company. Presque Isle, which is located downstream from the Marquette
Board of Light and Power dam, was ultimately forced into a temporary shutdown.

The FERC's Independent Board of Review issued its report in December of
2003 and concluded that the root cause of the incident was the failure of the
design to take into account the highly erodible nature of the fuse plug's
foundation materials and spillway channel, resulting in the complete loss of the
fuse plug, foundation, and spillway channel, which caused the release of Silver
Lake far beyond the intended design of the fuse plug. The fuse plug for the
Silver Lake reservoir was designed by an outside engineering firm.

WPS Resources maintains a comprehensive insurance program that includes
UPPCO and which provides both property insurance for its facilities and
liability insurance for liability to third parties. WPS Resources is
insured in amounts that it believes are sufficient to cover its responsibilities
in connection with this event. Deductibles and self-insured retentions on these
policies are not material to WPS Resources. To date no lawsuits have been
commenced.

In November 2003, UPPCO received approval from the MPSC and the FERC for
deferral of costs that are not reimbursable through insurance or recoverable
through the power supply cost recovery mechanism. Recovery of costs deferred
will be addressed in future rate proceedings. On October 14, 2004, the MPSC
approved final recovery of the $5.2 million of increased 2003 power supply costs
related to UPPCO's integrated system. As of December 31, 2004, UPPCO has
deferred $2.6 million pretax and expensed $1.5 million pretax of costs
for damages resulting from the flood. In addition, UPPCO has recorded an
$0.8 million insurance receivable at December 31, 2004. The total
insurance payments received to date as of December 31, 2004 were
$2.7 million.

In January 2005, UPPCO announced its decision to restore Silver Lake as a
reservoir for power generation, pending approval of a design by FERC. Provided
that FERC approves a design in the spring of 2005, work is expected to begin in
2005 and be completed in 2006.

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Wausau, Wisconsin, to Duluth, Minnesota, Transmission Line

Construction of the 220-mile, 345-kilovolt Wausau, Wisconsin, to Duluth,
Minnesota, transmission line began in the first quarter of 2004 in Minnesota.

ATC has assumed primary responsibility for the overall management of the
project and will own and operate the completed line. WPSC received approval from
the PSCW and the FERC to transfer ownership of the project to ATC. WPSC will
continue to manage construction of the project and be responsible for obtaining
private property rights in Wisconsin necessary for the construction of the
project. Various WDNR permit related decisions are currently the subject of a
contested case hearing in Wisconsin. A decision on the contested case is
expected in the third quarter of 2005.

In December 2003, the PSCW issued an amended Certificate of Public
Convenience and Necessity per ATC's request for relief. This decision was
appealed to the Dane County Circuit Court by certain landowners. The court
affirmed the PSCW's decision. It is unknown whether the court decision will be
appealed.

WPS Resources committed to fund 50% of total project costs incurred up
to $198 million. WPS Resources will receive additional equity in ATC
in exchange for a portion of the project funding. During the year ended
December 31, 2004, WPS Resources invested $15.7 million in ATC,
related to its agreement to fund approximately half of the Wausau to Duluth
transmission line. WPS Resources may terminate funding if the project
extends beyond January 1, 2010. On December 19, 2003, WPSC and ATC
received approval to continue the project with the new cost estimate of
$420.3 million. The updated cost estimate reflects additional costs for the
project resulting from time delays, added regulatory requirements, changes and
additions to the project at the request of local governments, and ATC overhead
costs. Completion of the line is expected in 2008. WPS Resources has the
right, but not the obligation, to provide additional funding in excess of
$198 million up to its portion of the equity portion of revised cost
estimate. For the period 2005 through 2008, we expect to fund up to
approximately $175 million for our portion of the Wausau to Duluth
transmission line. Our commitment to fund this transmission line could decrease
up to 50% if Minnesota Power exercises its option to fund a portion of the
project.

Synthetic Fuel Production Facility

We have significantly reduced our consolidated federal income tax liability
for the past four years through tax credits available to us under Section 29 of
the Internal Revenue Code for the production and sale of solid synthetic fuel
from coal. In order to maximize the value of our synthetic fuel production
facility, we have reduced our interest in the facility from 67% to 23% through
sales to third parties. Our ability to fully utilize the Section 29 tax credits
that remain available to us in connection with our remaining interest in the
facility will depend on whether the amount of our federal income tax liability
is sufficient to permit the use of such credits. The Internal Revenue Service
strictly enforces compliance with all of the technical requirements of Section
29. Section 29 tax credits are currently scheduled to expire at the end of 2007.
Other future tax legislation and Internal Revenue Service review may also affect
the value of the tax credits and the value of our share of the facility.

We have recorded the tax benefit of approximately $113.3 million of
Section 29 tax credits as reductions of income tax expense from the
project's inception in June 1998 through December 31, 2004. As a
result of alternative minimum tax rules, approximately $71.1 million of
this tax benefit has been carried forward as a deferred tax asset as of
December 31, 2004. The tax benefit recorded with respect to
WPS Resources' share of tax credits from the facility is based on our
expected consolidated tax liability for all open tax years including the current
year, and all future years in which we expect to utilize deferred tax credits to
offset our future tax liability. Reductions in our expected consolidated tax
liability for any of these years could result in disallowance of previously
recorded credits, and/or a change in the amount of the tax benefit deferred to
future periods. A reduction in our expected consolidated tax liability for the
current year may result in a reduction of the level of synthetic fuel production
at the facility. A portion of future payments under one of the agreements
covering the sale of a portion of our interest in the facility are contingent on
the facility's continued production of synthetic fuel. Pre-tax gains
approximating $7 million annually are expected to be realized through 2007
from this sell-down.

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Dairyland Power Cooperative

Dairyland Power Cooperative has confirmed its intent to purchase an interest
in Weston 4 by signing a joint plant agreement in November 2004, subject to
a number of conditions. The agreement with Dairyland Power Cooperative is part
of our continuing plan to provide least-cost, reliable energy for the increasing
electric demand of our customers.

NOTE 18--EMPLOYEE BENEFIT PLANS

WPS Resources has a non-contributory qualified retirement plan covering
substantially all employees. During 2004, $1.6 million was contributed to
the Pension Plan. No contributions were made in 2003 or 2002. WPS Resources
also sponsors several nonqualified retirement plans, which are not funded.

WPS Resources also currently offers medical, dental, and life insurance
benefits to employees and their dependents. We expense these items for active
employees as incurred. We fund benefits for retirees through irrevocable trusts
as allowed for income tax purposes.

WPSC serves as plan sponsor and administrator for the qualified retirement
plan and the postretirement plans. Accordingly, WPSC's Consolidated Balance
Sheets reflect the assets and liabilities associated with these plans. With the
exception of UPPCO's Supplemental Employee Retirement Plan, the assets and
liabilities related to the non-qualified pension plans are also recorded on
WPSC's Consolidated Balance Sheets. The net periodic benefit cost associated
with the plans is allocated among WPS Resources' subsidiaries. Actuarial
calculations are performed (based upon specific employees and their related
years of service) in order to determine the appropriate benefit cost allocation.

The costs of pension and postretirement benefits are expensed over the period
in which the employee renders service. The transition obligation for
postretirement benefits of current and future retirees is being recognized over
a 20-year period beginning in 1993. WPS Resources uses a December 31
measurement date for the majority of its plans.

The Medicare Prescription Drug, Improvement and Modernization Act of 2003
("the Act") provides a prescription drug benefit under Medicare Part D
as well as a federal subsidy to sponsors of certain retiree health care benefit
plans. In May 2004, the FASB staff issued FASB Staff Position ("FSP")
106-2, "Accounting and Disclosure Requirements Related to the Medicare
Prescription Drug, Improvement and Modernization Act of 2003."

WPS Resources and its actuarial advisors determined that benefits
provided by the plan as of the date of enactment were at least actuarially
equivalent to Medicare Part D, and, accordingly, WPS Resources will be
entitled to the federal subsidy. WPS Resources performed a measurement of
the effects of the Act on its accumulated postretirement benefit obligation as
of July 1, 2004 (the date FSP 106-2 was adopted). As of July 1, 2004,
WPS Resources' and WPSC's accumulated postretirement benefit obligation
decreased $40.3 million and $33.5 million, respectively, as a result
of the Act. The change in the accumulated postretirement benefit obligation due
to the Act is considered an actuarial gain that will be recognized in future
periods and, therefore, had no cumulative effect on WPS Resources' or
WPSC's retained earnings as of July 1, 2004. The effect of the subsidy served to
reduce the net postretirement benefit cost by $2.6 million for
WPS Resources, including $2.2 million for WPSC, for the year ended
December 31, 2004.

The following tables provide a reconciliation of the changes in the plan's
benefit obligations and fair value of assets during 2004, 2003, and 2002, as
well as a statement of the funded status as of December 31 for each year.

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|                                                                        | Pension Benefits | Other Benefits
|----------------------------------------------------------------------- | ---------------- | --------------
|(Millions)                                                              | 2004             | 2003          
|Reconciliation of benefit obligation(qualified and non-qualified plans) |                  |               
|Obligation at January 1                                                 | $637.2           | $553.8        
|Service cost                                                            | 20.5             | 15.2          
|Interest cost                                                           | 39.8             | 36.9          
|Plan amendments                                                         | -                | -             
|Actuarial (gain) loss - net                                             | 62.0             | 67.0          
|Benefit payments                                                        | (38.8)           | (35.7)        
|Obligation at December 31                                               | $720.7           | $637.2        
|                                                                        |                  |               
|Reconciliation of fair value of plan assets (qualified plans)           |                  |               
|Fair value of plan assets at January 1                                  | $569.9           | $511.6        
|Actual return on plan assets                                            | 54.5             | 92.7          
|Employer contributions                                                  | 1.6              | -             
|Benefit payments                                                        | (37.1)           | (34.4)        
|Fair value of plan assets at
      December 31                          | $588.9           | $569.9        
|                                                                        |                  |               
|Funded status of plans                                                  |                  |               
|Funded status at December 31                                            | $(131.8)         | $(67.3)       
|Unrecognized transition obligation                                      | 0.4              | 0.6           
|Unrecognized prior-service cost                                         | 44.8             | 50.5          
|Unrecognized loss                                                       | 127.0            | 78.0          
|Net asset (liability) recognized                                        | $   40.4         | $ 61.8        

Amounts recognized in the Consolidated Balance Sheets related to the benefit
plans consist of:

|                                                                                                                        | Pension Benefits | Other Benefits
|----------------------------------------------------------------------------------------------------------------------- | ---------------- | --------------
|(Millions)                                                                                                              | 2004             | 2003          
|Prepaid benefit cost                                                                                                    | $      -         | $ 67.9        
|Accrued benefit cost                                                                                                    | (45.9)           | (87.8)        
|Intangible assets                                                                                                       | 45.0             | 41.6          
|Regulatory asset                                                                                                        | 6.4              | 15.2          
|Accumulated other comprehensive income
      (before tax effect of $14.0 million and $10.0 million,
      respectively) | 34.9             | 24.9          
|                                                                                                                        |                  |               
|Net asset (liability) recognized                                                                                        | $40.4            | $ 61.8        

Included in the above table is an accrued benefit cost of $1.7 million
at December 31, 2004, and $1.8 million at December 31, 2003,
related to UPPCO's Supplemental Employee Retirement Plan.

The accumulated benefit obligation for all defined benefit pension plans was
$634.8 million and $572.4 million at December 31, 2004, and 2003,
respectively. Information for pension plans with an accumulated benefit
obligation in excess of plan assets is presented in the following table.



|                               | December 31,
|------------------------------ | ------------
|(Millions)                     | 2004        
|Projected benefit obligation   | $720.7      
|Accumulated benefit obligation | 634.8       
|Fair value of plan assets      | 588.9       

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The following table presents the components of the consolidated net periodic
benefit cost (credit) for the plans for 2004, 2003, and 2002:

|                                                                  | Pension Benefits | Other Benefits
|----------------------------------------------------------------- | ---------------- | --------------
|(Millions)                                                        | 2004             | 2003          
|Net periodic benefit cost                                         |                  |               
|Service cost                                                      | $20.5            | $15.2         
|Interest cost                                                     | 39.8             | 36.9          
|Expected return on plan assets                                    | (45.9)           | (46.7)        
|Amortization of transition (asset) obligation                     | 0.2              | -             
|Amortization of prior-service cost (credit)                       | 5.7              | 5.8           
|Amortization of net (gain) loss                                   | 4.5              | 0.7           
|Special termination benefits                                      | -                | 0.8           
|Net periodic benefit cost (credit) before settlement/ curtailment | 24.8             | 12.7          
|Amortization of settlement gain regulatory liability              | -                | -             
|Amortization of curtailment loss regulatory asset                 | -                | -             
|Net periodic benefit cost (credit)                                | $24.8            | $12.7         

Net periodic benefit cost (credit) recorded by WPSC related to pension
benefits was $16.3 million in 2004, $6.7 million in 2003, and
($4.9) million in 2002. Net periodic benefit cost recorded by WPSC related
to other benefits was $12.4 million in 2004, $12.0 million in 2003,
and $4.5 million in 2002.

Assumptions

The weighted average assumptions used at December 31 in the accounting
for the plans are as follows:

|                                            | Pension Benefits | Other Benefits
|------------------------------------------- | ---------------- | --------------
|                                            | 2004             | 2003          
|Discount rate for benefit obligations       | 5.75%            | 6.25%         
|Discount rate for net periodic benefit cost | 6.25%            | 6.75%         
|Expected return on assets                   | 8.75%            | 8.75%         
|Rate of compensation increase               | 5.50%            | 5.50%         
|                                            |                  |               

Starting in 2005, WPS Resources plans to change its expected return on plan
assets from 8.75% to 8.50%. To develop the expected long-term rate of return on
assets, WPS Resources considered the historical returns and the future
expectations for returns for each asset class, as well as the target allocation
of the benefit trust portfolios.

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The assumptions used for WPS Resources' medical and dental cost trend
rates are shown in the following table:

|                                               | 2004  | 2003  | 2002 
|---------------------------------------------- | ----- | ----- | -----
|Assumed medical cost trend rate (under age 65) | 10.0% | 11.0% | 12.0%
|Ultimate trend rate                            | 5.0%  | 5.0%  | 5.0% 
|Ultimate trend rate reached in                 | 2010  | 2010  | 2010 
|                                               |       |       |      
|Assumed medical cost trend rate (over age 65)  | 12.0% | 13.0% | 14.0%
|Ultimate trend rate                            | 6.5%  | 6.5%  | 6.5% 
|Ultimate trend rate reached in                 | 2011  | 2011  | 2011 
|                                               |       |       |      
|Assumed dental cost trend rate                 | 5.0%  | 5.0%  | 6.0% 
|Ultimate trend rate                            | 5.0%  | 5.0%  | 5.0% 
|Ultimate trend rate reached in                 | 2004  | 2004  | 2004 

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A 1% change in assumed health care cost
trend rates would have the following effects:



|(Millions)                                                                                                             | 1% Increase | 1% Decrease
|---------------------------------------------------------------------------------------------------------------------- | ----------- | -----------
|                                                                                                                       |             |            
|Effects on total of service and interest cost components of net
      periodic postretirement health care benefit cost | $ 3.5       | $ (3.1)    
|Effect on the health care component of the
      accumulated postretirement benefit obligation                         | $42.0       | $(34.7)    

Plan Assets

Weighted-average asset allocations of the plans at December 31, 2004,
and 2003, are as follows:



|                  |  | Pension Plan Assets at December 31, |      | Postretirement Plan Assets at December 31,
|----------------- |  | ----------------------------------- | ---- | ------------------------------------------
|                  |  | 2004                                | 2003 |                                           
|Asset category    |  |                                     |      |                                           
|Equity securities |  | 63%                                 | 61%  |                                           
|Debt securities   |  | 33%                                 | 36%  |                                           
|Real Estate       |  | 4%                                  | 3%   |                                           
|Total             |  | 100%                                | 100% |                                           

The Board of Directors has established the Employee Benefits Administrator
Committee to manage the operations and administration of all benefit plans and
related trusts. The Committee has investment policies for the plan assets that
establish target asset allocations for the above listed asset classes as
follows: pension plan - equity securities 60%, debt securities 35%, and real
estate 5%; postretirement plan - equity securities 65%, debt securities 35%.

Cash Flows

WPS Resources expects to contribute $8.2 million to its pension
plans and $20.9 million to its other postretirement benefit plans in 2005.

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The following table shows the payments, reflecting expected future service,
that WPS Resources expects to make for pension and other postretirement
benefits. In addition, the table shows the expected federal subsidies under
Medicare Part D, which will partially offset other postretirement benefits, as
discussed earlier.



|(Millions) | Pension Benefits | Other Benefits | Federal Subsidies
|---------- | ---------------- | -------------- | -----------------
|2005       | $ 37.5           | $10.8          | $     -          
|2006       | 39.6             | 11.9           | (1.3)            
|2007       | 41.8             | 13.1           | (1.5)            
|2008       | 44.0             | 14.1           | (1.6)            
|2009       | 46.0             | 15.3           | (1.8)            
|2010-2014  | 262.3            | 89.9           | (10.9)           

Defined Contribution Benefit Plans

WPS Resources maintains a 401(k) Savings Plan for substantially all
full-time employees. Employees generally may contribute from 1% to 30% of their
base compensation to individual accounts within the 401(k) Savings Plan.
Participation in this plan automatically qualifies eligible non-union employees
for participation in the ESOP. The company match, in the form of
WPS Resources shares of common stock, is contributed to an employee's ESOP
account. The plan requires a match equivalent to 100% of the first 4% and 50% of
the next 2% contributed by non-union employees. Certain union employees receive
a contribution to their ESOP account regardless of their participation in the
401(k) Savings Plan. The ESOP held 2.2 million shares of WPS Resources
common stock (market value of approximately $109 million) at
December 31, 2004. Total costs incurred under these plans were
$7.7 million in 2004, $5.7 million in 2003, and $4.8 million in
2002. WPSC's share of the total costs was $6.5 million in 2004,
$4.6 million in 2003, and $3.9 million in 2002.

WPS Resources maintains a deferred compensation plan that enables
certain key employees and non-employee directors to defer a portion of their
compensation or fees on a pre-tax basis. Non-employee directors can defer up to
100% of their director fees. There are essentially two separate investment
programs available to plan participants. The first program ("Program
1") offers WPS Resources common stock as a hypothetical investment
option for participants; deemed dividends paid on the common stock are
automatically reinvested; and all distributions must be made in
WPS Resources common stock. The second program ("Program 2")
offers a variety of hypothetical investment options indexed to mutual funds,
WPS Resources' return on equity, and WPS Resources common stock.
Participants may not redirect investments between the two programs. All employee
deferrals are remitted to WPSC and, therefore, the liabilities and costs
associated with the deferred compensation plans are included on WPSC's
Consolidated Balance Sheets and Consolidated Statements of Income, respectively.

Program 1 is accounted for as a plan that does not permit diversification. As
a result, the deferred compensation arrangement is classified as an equity
instrument and changes in the fair value of the deferred compensation obligation
are not recognized. The deferred compensation obligation associated with Program
1 was $13.0 million at December 31, 2004, and $10.3 million at
December 31, 2003.

Program 2 is accounted for as a plan that permits diversification. As a
result, the deferred compensation obligation associated with this program is
classified as a liability in the Consolidated Balance Sheets and adjusted, with
a charge or credit to expense, to reflect changes in the fair value of the
deferred compensation obligation. The obligation, classified within other
long-term liabilities, was $21.0 million at December 31, 2004, and
$18.7 million at December 31, 2003. The costs incurred under Program 2
were $2.1 million in 2004, $2.4 million in 2003, and $1.6 million
in 2002.

The deferred compensation programs are partially funded through
WPS Resources common stock that is held in a rabbi trust. The common stock
held in the rabbi trust is classified in equity in a manner similar to
accounting for treasury stock. The total cost of WPS Resources common stock
held in the rabbi trust was $8.4 million at December 31, 2004, and
$6.5 million at December 31, 2003.

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NOTE 19--PREFERRED STOCK OF SUBSIDIARY

WPSC has 1,000,000 authorized shares of preferred stock with no mandatory
redemption and a $100 par value. Outstanding shares are as follows at December
31:



|                                 |        | 2004               | 2003          
|-------------------------------- | ------ | ------------------ | --------------
|(Millions, except share amounts) | Series | Shares Outstanding | Carrying Value
|                                 | 5.00%  | 130,799            | $13.1         
|                                 | 5.04%  | 29,920             | 3.0           
|                                 | 5.08%  | 49,928             | 5.0           
|                                 | 6.76%  | 150,000            | 15.0          
|                                 | 6.88%  | 150,000            | 15.0          
|Total                            |        | 510,647            | $51.1         

All shares of preferred stock of all series are of equal rank except as to
dividend rates and redemption terms. Payment of dividends from any earned
surplus or other available surplus is not restricted by the terms of any
indenture or other undertaking by WPSC. Each series of outstanding preferred
stock is redeemable in whole or in part at WPSC's option at any time on 30 days'
notice at the respective redemption prices. WPSC may not redeem less than all,
nor purchase any, of its preferred stock during the existence of any dividend
default.

In the event of WPSC's dissolution or liquidation, the holders of preferred
stock are entitled to receive (a) the par value of their preferred stock
out of the corporate assets other than profits before any of such assets are
paid or distributed to the holders of common stock and (b) the amount of
dividends accumulated and unpaid on their preferred stock out of the surplus or
net profits before any of such surplus or net profits are paid to the holders of
common stock. Thereafter, the remainder of the corporate assets, surplus, and
net profits shall be paid to the holders of common stock.

The preferred stock has no pre-emptive, subscription, or conversion rights,
and has no sinking fund provisions.

NOTE 20--COMMON EQUITY

|Shares outstanding at December 31                         | 2004       | 2003      
|--------------------------------------------------------- | ---------- | ----------
|Common stock, $1 par value, 200,000,000 shares authorized | 37,500,791 | 36,830,556
|Treasury stock                                            | 12,000     | 15,700    
|Average cost of treasury shares                           | $25.19     | $25.19    
|Shares in deferred compensation rabbi trust               | 229,238    | 192,880   
|Average cost of deferred compensation rabbi trust shares  | $36.84     | $33.72    

On November 24, 2003, 4,025,000 shares of WPS Resources common stock
were issued at $43.00 per share and resulted in a net increase in equity of
$166.8 million.

Treasury shares at December 31, 2004, relate to our Non-Employee
Directors Stock Option Plan. The number of stock options granted under this plan
may not exceed 100,000 shares. All options under this plan have a ten-year life,
but may not be exercised until one year after the date of grant.

Effective January 2001, we began issuing new stock under our Stock
Investment Plan and under certain of our stock-based employee benefit plans.
These stock issuances increased equity $28.3 million, $31.0 million,
and $28.3 million in 2004, 2003, and 2002, respectively.

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|Reconciliation of Common Shares                                    | Common Stock Shares Outstanding
|------------------------------------------------------------------ | -------------------------------
|Balance at December 31, 2001                                       | 31,053,250                     
|Stock Investment Plan and other stock-based employee benefit plans | 544,578                        
|Stock issued from Treasury Stock                                   | 241,402                        
|Increase in deferred compensation rabbi trust shares               | (30,451)                       
|                                                                   |                                
|Balance at December 31, 2002                                       | 31,808,779                     
|Common stock offering                                              | 4,025,000                      
|Stock Investment Plan and other stock-based employee benefit plans | 764,681                        
|Stock issued from Treasury Stock                                   | 49,950                         
|Increase in deferred compensation rabbi trust shares               | (26,434)                       
|                                                                   |                                
|Balance at December 31, 2003                                       | 36,621,976                     
|Stock Investment Plan and other stock-based employee benefit plans | 670,235                        
|Stock issued from Treasury Stock                                   | 3,700                          
|Increase in deferred compensation rabbi trust shares               | (36,358)                       
|                                                                   |                                
|Balance at December 31, 2004                                       | 37,259,553                     

In December 1996, we adopted a Shareholder Rights Plan. The plan is
designed to enhance the ability of the Board of Directors to protect
shareholders of WPS Resources if efforts are made to gain control of our
company in a manner that is not in the best interests of our shareholders. The
plan gives our existing shareholders, under certain circumstances, the right to
purchase stock at a discounted price. The rights expire on December 11,
2006.

WPS Resources is a holding company and our ability to pay dividends is
largely dependent upon the ability of our subsidiaries to pay dividends to us.
The PSCW has by order restricted our principal subsidiary, WPSC, to paying
normal dividends on its common stock of no more than 109% of the previous year's
common stock dividend. The PSCW also requires WPSC to maintain a capital
structure (i.e., the percentages by which each of common stock, preferred stock
and debt constitute the total capital invested in a utility), which has a common
equity range of 54% to 58%. Each of these limitations may be modified by a
future order of the PSCW. Our right to receive dividends on the common stock of
WPSC is also subject to the prior rights of WPSC's preferred shareholders and to
provisions in WPSC's restated articles of incorporation which limit the amount
of common stock dividends which WPSC may pay if its common stock and common
stock surplus accounts constitute less than 25% of its total capitalization.
These limitations are not expected to limit any dividend payments in the
foreseeable future.

UPPCO's indentures relating to its first mortgage bonds contain certain
limitations on the payment of cash dividends on its common stock, which is held
solely by WPS Resources. Under the most restrictive of these provisions,
approximately $19.6 million of retained earnings were available at
December 31, 2004 for the payment of common stock cash dividends by UPPCO.

At December 31, 2004, WPS Resources had $474.4 million of retained
earnings available for dividends.

Earnings per share is computed by dividing income available for common
shareholders by the weighted average number of shares of common stock
outstanding during the period. Diluted earnings per share is computed by
dividing income available for common shareholders by the weighted average number
of shares of common stock outstanding during the period adjusted for the
exercise and/or conversion of all potentially dilutive securities. Such dilutive
items include in-the-money stock options, restricted shares, and performance
share grants. The calculation of diluted earnings per share for the years shown
excludes some stock option plan shares that had an anti-dilutive effect. The
shares having an anti-dilutive effect are not significant for any of the years
shown. The following table reconciles the computation of basic and diluted
earnings per share:

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|Reconciliation of Earnings Per Share(Millions except per share amounts) | 2004   | 2003  | 2002  
|----------------------------------------------------------------------- | ------ | ----- | ------
|Income available for common shareholders                                | $139.7 | $94.7 | $109.4
|Basic weighted average shares                                           | 37.4   | 33.0  | 31.7  
|Incremental issuable shares                                             | 0.2    | 0.2   | 0.3   
|Diluted weighted average shares                                         | 37.6   | 33.2  | 32.0  
|Basic earnings per common share                                         | $3.74  | $2.87 | $3.45 
|Diluted earnings per common share                                       | $3.72  | $2.85 | $3.42 

NOTE 21--STOCK-BASED COMPENSATION

WPS Resources has three main stock option plans: the 2001 Omnibus
Incentive Compensation Plan ("Omnibus Plan"), the 1999 Stock Option
Plan ("Employee Plan"), and the 1999 Non-Employee Directors Stock
Option Plan ("Director Plan"). No additional stock options will be
issued under the Employee Plan, although the plan will continue to exist for
purposes of the existing outstanding options.

In May of 2001, shareholders approved the Omnibus Plan for certain management
personnel. The Long-Term Incentive Plan was approved under the 2001 Omnibus
Plan. The Long-Term Incentive Plan has two stock-based compensation components:
non-qualified stock options and performance shares.

Under the provisions of the Omnibus Plan, the number of shares for which
stock options may be granted may not exceed 2 million, and no single
employee that is the chief executive officer of the company or any of the other
four highest compensated officers of the company and its subsidiaries can be
granted options for more than 150,000 shares during any calendar year. Stock
options are granted by the Compensation Committee of the Board of Directors and
may be granted at any time. No stock options will have a term longer than ten
years. The exercise price of each stock option is equal to the fair market value
of the stock on the date the stock option was granted.

A portion of the executive long-term incentive was awarded in the form of
performance shares. These shares vest over a three-year performance period and
are paid out in shares of WPS Resources common stock. The number of shares
paid out is calculated by multiplying a performance percentage by a target
number of shares. The performance multiplier is based on the performance of
WPS Resources relative to the performance of a specific peer group of
companies. The payout may range from 0% to 200% of target. Based upon these
criteria, 119,296 shares are included in the denominator of the diluted earnings
per share computation at December 31, 2004. In accordance with Accounting
Principles Board Opinion No. 25, WPS Resources accrues the plan expense
over the three-year period in which the services are performed. Compensation
expense recorded was $2.3 million in 2004, $3.3 million in 2003, and
$1.8 million in 2002.

Restricted stock shares granted on April 18, 2002, totaled 12,186 shares and
had a one-year vesting period. Beginning April 18, 2003, 15% of the shares
became unrestricted, with an additional 15% release of restriction at each
six-month interval thereafter until fully unrestricted. Restricted shares have a
value equal to the fair market value of the shares on the grant date. No
compensation expense was recorded for these shares in 2004. In 2003 and 2002,
$0.2 million and $0.3 million of compensation expense was recorded,
respectively.

Under the provisions of the Director Plan, the number of stock options
granted under the plan may not exceed 100,000, and the shares to be delivered
will consist solely of treasury shares. Stock options are granted at the
discretion of the Board of Directors. No options may be granted under this plan
after December 31, 2008. All options have a ten-year life, but may not
be exercised until one year after the date of grant. Options granted under this
plan are immediately vested. The exercise price of each option is equal to the
fair market value of the stock on the date the stock options were granted.

One-fourth of the stock options granted under the Omnibus Plan and the
Employee Plan will become vested and exercisable each year on the anniversary
date of the grant. The number of shares subject to

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each stock option plan, each outstanding stock option, and stock option
exercise prices are subject to adjustment in the event of any stock split, stock
dividend, or other transaction affecting our outstanding common stock.

A summary of the activity of the stock option plans for 2004, is presented
below:

|Stock Options                                                                   | Shares    | Weighted-Average Exercise Price
|------------------------------------------------------------------------------- | --------- | -------------------------------
|                                                                                |           |                                
|Options outstanding at beginning of year                                        |           |                                
|Omnibus plan                                                                    | 993,677   | $38.9707                       
|Employee plan                                                                   | 283,621   | 33.1055                        
|Director plan                                                                   | 15,700    | 25.4853                        
|Granted during 2004                                                             |           |                                
|Omnibus plan                                                                    | 321,313   | 48.1100                        
|Exercised during 2004                                                           |           |                                
|Omnibus plan                                                                    | 30,431    | 35.1724                        
|Employee plan                                                                   | 38,301    | 30.5332                        
|Director plan                                                                   | 3,700     | 25.4375                        
|Forfeited during 2004                                                           |           |                                
|Omnibus plan                                                                    | 4,437     | 41.2294                        
|Outstanding at end of year                                                      |           |                                
|Omnibus plan                                                                    | 1,280,122 | 41.3472                        
|Employee plan                                                                   | 245,320   | 33.5071                        
|Director plan                                                                   | 12,000    | 25.5000                        
|Options exercisable at year-end                                                 |           |                                
|Omnibus plan                                                                    | 459,425   | 37.3676                        
|Employee plan                                                                   | 245,320   | 33.5071                        
|Director plan                                                                   | 12,000    | 25.5000                        
|Weighted-average fair value of options granted during 2004
        Omnibus plan | $4.40     |                                

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A summary of the activity of the stock option plans for 2003, is presented
below:

|Stock Options                                                            | Shares  | Weighted-Average Exercise Price
|------------------------------------------------------------------------ | ------- | -------------------------------
|                                                                         |         |                                
|Options outstanding at beginning of year                                 |         |                                
|Omnibus plan                                                             | 663,548 | $36.1131                       
|Employee plan                                                            | 492,021 | 31.5572                        
|Director plan                                                            | 19,400  | 25.4762                        
|Granted during 2003                                                      |         |                                
|Omnibus plan                                                             | 335,424 | 44.5601                        
|Exercised during 2003                                                    |         |                                
|Omnibus plan                                                             | 4,420   | 34.6538                        
|Employee plan                                                            | 207,150 | 29.4879                        
|Director plan                                                            | 3,700   | 25.4375                        
|Forfeited during 2003                                                    |         |                                
|Omnibus plan                                                             | 875     | 36.3014                        
|Employee plan                                                            | 1,250   | 23.1875                        
|Outstanding at end of year                                               |         |                                
|Omnibus plan                                                             | 993,677 | 38.9707                        
|Employee plan                                                            | 283,621 | 33.1055                        
|Director plan                                                            | 15,700  | 25.4853                        
|Options exercisable at year-end                                          |         |                                
|Omnibus plan                                                             | 241,076 | 35.4684                        
|Employee plan                                                            | 225,116 | 33.0890                        
|Director plan                                                            | 15,700  | 25.4852                        
|Weighted-average fair value of options granted during 2003  Omnibus plan | $4.53   |                                

A summary of the activity of the stock option plans for 2002, is presented
below:

|Stock Options                                                            | Shares  | Weighted-Average Exercise Price
|------------------------------------------------------------------------ | ------- | -------------------------------
|                                                                         |         |                                
|Options outstanding at beginning of year                                 |         |                                
|Omnibus plan                                                             | 327,427 | $34.1038                       
|Employee plan                                                            | 705,916 | 30.9806                        
|Director plan                                                            | 23,150  | 25.4699                        
|Granted during 2002                                                      |         |                                
|Omnibus plan                                                             | 341,613 | 38.0064                        
|Exercised during 2002                                                    |         |                                
|Employee plan                                                            | 206,849 | 29.5512                        
|Director plan                                                            | 3,750   | 25.4375                        
|Forfeited during 2002                                                    |         |                                
|Omnibus plan                                                             | 5,492   | 34.0900                        
|Employee plan                                                            | 7,046   | 32.6744                        
|Outstanding at end of year                                               |         |                                
|Omnibus plan                                                             | 663,548 | 36.1131                        
|Employee plan                                                            | 492,021 | 31.5572                        
|Director plan                                                            | 19,400  | 25.4762                        
|Options exercisable at year-end                                          |         |                                
|Omnibus plan                                                             | 80,484  | 34.1040                        
|Employee plan                                                            | 256,011 | 31.6679                        
|Director plan                                                            | 19,400  | 25.4762                        
|Weighted-average fair value of options granted during 2002  Omnibus plan | $3.64   |                                

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The following table summarizes the status of the stock options outstanding
and exercisable at December 31, 2004, under the 2001 Omnibus Plan.

|Stock Options
      Outstanding |           | Stock Options Exercisable                            
|------------------------------- | --------- | -----------------------------------------------------
|Exercise Prices                 | Shares    | Weighted-Average Remaining Contractual Life(in Years)
|$34.0900                        | 281,689   | 7                                                    
|34.3800                         | 13,386    | 6                                                    
|36.3800                         | 500       | 7                                                    
|37.9600                         | 325,310   | 8                                                    
|41.2900                         | 5,000     | 7                                                    
|38.2500                         | 8,797     | 8                                                    
|44.7300                         | 324,127   | 9                                                    
|48.1100                         | 321,313   | 10                                                   
|                                | 1,280,122 |                                                      

The following table summarizes the status of the stock options outstanding
and exercisable at December 31, 2004, under the 1999 Stock Option Plan.

|Stock Options
      Outstanding |         | Stock Options Exercisable                            
|------------------------------- | ------- | -----------------------------------------------------
|Exercise Prices                 | Shares  | Weighted-Average Remaining Contractual Life(in Years)
|$29.8750                        | 49,500  | 4                                                    
|23.1875                         | 5,500   | 5                                                    
|34.7500                         | 190,320 | 6                                                    
|                                | 245,320 |                                                      

The following table summarizes the status of the stock options outstanding
and exercisable at December 31, 2004, under the 1999 Non-Employee Director
Stock Option Plan.

|Stock Options
      Outstanding |        | Stock Options Exercisable                            
|------------------------------- | ------ | -----------------------------------------------------
|Exercise Prices                 | Shares | Weighted-Average Remaining Contractual Life(in Years)
|$25.4375                        | 9,000  | 5                                                    
|25.6875                         | 3,000  | 5                                                    
|                                | 12,000 |                                                      



NOTE 22--REGULATORY ENVIRONMENT

Wisconsin

On December 19, 2003, the PSCW issued a final written order authorizing
a retail electric rate increase of $59.4 million (9.4%) and a retail
natural gas rate increase of $8.9 million (2.2%), effective January 1,
2004. The rates reflect a 12.0% return on equity and allowed average equity of
56% of total capital.

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<PAGE>



As a result of the Kewaunee unplanned outage, which lasted approximately two
weeks during late January and into early February 2004, and other fuel cost and
purchased power increases expected in 2004, WPSC received an interim fuel rate
order from the PSCW allowing for a $6.0 million (1.2%) increase in rates
that went into effect April 2, 2004. In September 2004, the PSCW issued its
final order, requiring WPSC to refund $1.8 million of revenues collected
under the interim rate order to customers. The refund was returned to customers
in October and November 2004. The reduction from the interim rate was necessary
due to lower than anticipated fuel and purchased power costs in the third
quarter of 2004, which were the result of cooler than normal weather conditions.
The final order allowed WPSC recovery of an estimated $3.2 million of its
increased fuel and purchased power costs.

On December 21, 2004, the PSCW issued a final written order authorizing
a retail electric increase of $60.7 million (8.6%) and a retail natural gas
rate increase of $5.6 million (1.1%), effective January 1, 2005. The retail
electric rate increase is primarily driven by increased costs related to fuel
and purchased power, construction of Weston 4, benefit costs, and Midwest
Independent System Operator costs. The natural gas rate increase is primarily
related to increases in benefit costs and the cost of distribution system
improvements. The 2005 rates reflect an 11.5% return on equity. The PSCW also
approved a common equity ratio of 57.35% in the utility's regulatory capital
structure.

On November 5, 2004, WPSC filed an application with the PSCW to defer all
incremental costs, including carrying costs, resulting from unexpected problems
encountered in the refueling outage at Kewaunee. During the refueling outage, an
unexpected problem was encountered with equipment used for lifting internal
vessel components to perform a required 10-year inspection. These equipment
problems caused the outage to be extended by approximately three weeks. On
November 11, 2004, the PSCW authorized WPSC to defer the replacement fuel costs
related to the extended outage. On November 23, 2004, the PSCW authorized WPSC
to defer purchased power costs ($5.4 million) and operating and maintenance
expenses ($1.8 million) related to the extended outage, effective from when
the problems were discovered, including carrying costs at WPSC's authorized
weighted average cost of capital. Kewaunee returned to service on
December 4, 2004. On February 18, 2005, WPSC filed for PSCW approval to
recover these costs and it is anticipated that these costs will be recovered in
2006, pending final approval by the PSCW.

On November 9, 2004, WPSC filed an application with the PSCW to defer, with
carrying costs, the 2005 revenue requirement impacts resulting from the American
Jobs Creation Act of 2004 (Jobs Creation Act). The Jobs Creation Act reduces the
corporate income tax on certain manufacturing industries. Because the act was
not signed into law until October 22, 2004, it was not included in WPSC's 2005
rate proceeding. On December 7, 2004, the PSCW authorized WPSC to defer the
2005 revenue requirement impacts resulting from the Jobs Creation Act including
carrying costs at WPSC's authorized weighted average cost of capital.

On February 20, 2005, Kewaunee was temporarily removed from service after a
potential design weakness was identified in a backup cooling system. Plant
engineering staff identified the concern and the unit was shutdown in accordance
with the plant license. A modification is being made to resolve the issue and it
is anticipated that the unit will be back in service at 100% power by mid April.
WPSC intends to file a request with the PSCW for recovery of incremental costs
associated with fuel, purchased power, and operating and maintenance costs. WPSC
and Dominion remain committed to the sale of Kewaunee.

Michigan

On March 31, 2004, UPPCO submitted an application to the MPSC to recover
$5.2 million of increased 2003 power supply costs relating to UPPCO's
integrated system. In addition, UPPCO requested deferral of $1.8 million of
power supply costs related to the Dead River flood. On August 31, 2004, the MPSC
approved the deferral of the $1.8 million of power supply costs relating to
the Dead River flood, and authorized the interim recovery of the
$5.2 million pending a final prudence determination. On October 14,
2004, the Commission approved final recovery of the $5.2 million of
increased 2003 power

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<PAGE>



supply costs relating to UPPCO's integrated system. These costs will be
recovered from customers through December 2005.

On December 8, 2004, UPPCO submitted a request to the MPSC to approve UPPCO's
proposed treatment of the net gain proceeds from certain sales of undeveloped
and partially developed land located in the Upper Peninsula of Michigan as
appropriate for ratemaking purposes. If approved by the MPSC, UPPCO will
voluntarily forego retail electric service base rate increases through December
31, 2005; however, UPPCO may file for base rate increases in 2005 to be
effective on or after January 1, 2006. UPPCO may also file for MPSC
consideration of deferred accounting of any governmental mandates during the
moratorium and for any unusual and extraordinary events. At this time, the MPSC
has not accepted the proposal, and final approval or denial from the MPSC is
still pending.

On February 4, 2005, UPPCO submitted an application to the MPSC for a 7.6%
increase in retail electric rates ($5.7 million in revenues). UPPCO also
requested interim rate recovery of 6.0% ($4.5 million in revenues) to allow
UPPCO to recover costs during the time the MPSC is reviewing the full case. The
retail electric rate increase is primarily due to costs associated with
improving service quality and reliability, technology upgrades, and managing
rising employee and retiree benefit costs.

Federal

On April 30, 2003, WPSC received a draft order from the FERC approving a
$4.1 million (21%), interim increase in wholesale electric rates. The new
wholesale rates were effective on May 11, 2003, and were subject to refund if
the final rate increase was less. The draft order also granted the use of
formula rates, which allow for the adjustment of wholesale electric rates to
reflect actual costs without having to file additional rate requests. On March
4, 2004, the FERC and WPSC reached a tentative settlement regarding the final
rate increase. WPSC had no material refunds or other adjustments to revenues
recorded under the interim rates based on the terms of the tentative agreement.
The final settlement was approved by FERC on November 19, 2004. No material
refunds were required as a result of the settlement. This was WPSC's first rate
increase for its wholesale electric customers in 17 years.

On February 10, 2005 the FERC issued an order accepting compliance filings
implementing the Seams Elimination Charge Adjustment effective December 1, 2004,
subject to refund and surcharge, and set the matters raised for evidentiary
hearing. On February 28, 2005, Quest Energy, LLC, a wholly-owned subsidiary of
ESI, filed a motion for partial stay of FERC's February 10, 2005 order imposing
a Seams Elimination Charge Adjustment on Quest. The purpose of the Seams
Elimination Charge Adjustment is to compensate transmission owners for the
revenue they would no longer receive due to the elimination of the Regional
Through and Out Rates. Because ESI is a load serving entity, it will be billed
for Seams Elimination Charge Adjustment charges based on its power imports
during 2002 and 2003.

NOTE 23--VARIABLE INTEREST ENTITIES

The FASB has issued Interpretation No. 46R (as revised), "Consolidation
of Variable Interest Entities, an Interpretation of Accounting Research Bulletin
No. 51," in order to improve financial reporting by companies involved with
variable interest entities. Interpretation No. 46R requires certain variable
interest entities to be consolidated by the primary beneficiary of the entity if
the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional financial support from other
parties. The primary beneficiary is the party that absorbs the majority of the
expected losses and/or receives the majority of the expected residual returns of
the variable interest entity's activities.

The application of Interpretation No. 46R was required for financial
statements of public entities that have interests in special-purpose entities
for periods ending after December 15, 2003. WPS Resources identified
WPSR Capital Trust I as a special purpose entity that is within the scope of
Interpretation No. 46R. Refer to Note 24, "Company-Obligated
Mandatorily Redeemable Trust Preferred Securities of Preferred Stock
Trust," for further discussion of the impacts of implementing this portion
of Interpretation No. 46R on the financial statement of WPS Resources.

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<PAGE>



WPS Resources adopted the provisions of Interpretation No. 46R for
variable interest entities not defined as special purpose entities effective
March 31, 2004. The required adoption had no impact on our consolidated
financial statements, as we did not identify significant variable interests in
any unconsolidated variable interest entities where we were determined to be the
primary beneficiary. We have identified our equity ownership in a synthetic fuel
producing facility as a variable interest in a variable interest entity. Through
an affiliate of PDI, WPS Resources owns a partial interest in a synthetic
fuel facility located in Kentucky and received tax credits pursuant to Section
29 of the Internal Revenue Code based on sales to unaffiliated third-party
purchasers of synthetic fuel produced from coal. At December 31, 2004,
WPS Resources had a 23% ownership interest in the synthetic fuel facility.
No other variable interests were identified. WPS Resources' maximum
exposure to loss as a result of our involvement with this variable interest
entity is limited to our investment in this entity, which was not significant at
December 31, 2004. We were not identified as the primary beneficiary of
this entity and, therefore, were not required to consolidate the synthetic fuel
facility into our financial statements at December 31, 2004. The adoption
of Interpretation No. 46R also included an analysis of our power purchase and
sale agreements. We do not believe that any of our power purchase or sale
agreements constitute significant variable interests that would lead us to
consolidate entities not currently consolidated or deconsolidate any entities
currently consolidated.

NOTE 24--COMPANY-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFERRED
SECURITIES OF PREFERRED STOCK TRUST

On July 30, 1998, WPSR Capital Trust I, a Delaware business trust,
issued $50.0 million of trust preferred securities to the public.
WPS Resources owned all of the outstanding trust common securities of the
Trust, and the only asset of the Trust was $51.5 million of subordinated
debentures issued by WPS Resources. The debentures were due on
June 30, 2038, and bore interest at 7% per year. The terms and interest
payments on the debentures corresponded to the terms and distributions on the
trust preferred securities.

As discussed in Note 23, "Variable Interest Entities," it was
determined that WPSR Capital Trust I qualified as a special purpose entity and,
therefore, the provisions of Interpretation No. 46R were applied to the
Trust at December 31, 2003. Prior to this date, we consolidated the
preferred securities of the Trust into our financial statements as we held all
of the voting securities. Per the provisions of Interpretation No. 46R,
however, it was determined that the preferred security holders held the majority
of the residual economic risks associated with WPSR Capital Trust I and,
therefore, the Trust was deconsolidated effective December 31, 2003. As a
result of the deconsolidation, WPS Resources recorded a $1.5 million
investment in trust within other current assets and a $51.5 million note
payable to preferred stock trust, respectively, within the Consolidated Balance
Sheet at December 31, 2003.

On January 8, 2004, WPS Resources redeemed all of the subordinated
debentures that were initially issued to the Trust for $51.5 million and
paid accrued interest of $0.1 million. This action required the Trust to
redeem an equal amount of trust securities at face value plus any accrued
interest and unpaid distributions. As a result of these transactions, the Trust
was dissolved effective January 8, 2004.

NOTE 25--SEGMENTS OF BUSINESS

We manage our reportable segments separately due to their different operating
and regulatory environments.

Our principal business segments are the regulated electric utility operations
of WPSC and UPPCO and the regulated natural gas utility operations of WPSC.
WPSC's revenues are primarily derived from the service of electric and natural
gas retail customers in northeastern and central Wisconsin and an adjacent
portion of Upper Michigan. WPSC also provides wholesale electric service to
various customers, including municipal utilities, electric cooperatives, energy
marketers, other investor-owned utilities, and a municipal joint action agency.
Portions of WPSC's electric and natural gas operations cannot be specifically
identified as electric or natural gas and instead are allocated using either
actual labor hours, revenues,

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<PAGE>



number of customers, or number of meters. UPPCO derives revenues from the
sale of electric energy in the Upper Peninsula of Michigan.

Our other reportable segments include ESI and PDI. ESI offers nonregulated
natural gas, electric, and alternate fuel supplies as well as energy management
and consulting services to retail and wholesale customers primarily in the
northeastern quadrant of the United States and adjacent portions of Canada.
Although ESI has a widening array of products and services, revenues are
primarily derived through sales of electricity and natural gas to retail and
wholesale customers. ESI's marketing and trading operations manage power and
natural gas procurement as an integrated portfolio with its retail and wholesale
sales commitments. Electricity required to fulfill these sales commitments was
procured primarily from independent generators, energy marketers, and organized
electric power markets. Natural gas was purchased from a variety of suppliers
under daily, monthly, seasonal and long-term contracts with pricing delivery and
volume schedules to accommodate customer requirements. ESI's customers include
utilities, municipalities, cooperatives, commercial and industrial consumers,
aggregators, and other marketing and retail entities.

PDI competes in the wholesale merchant electric power generation industry,
primarily in the Midwest and northeastern United States and adjacent
portions of Canada. PDI's core competencies include power plant operation and
maintenance, and material condition assessment of assets. In order to enable PDI
to focus on its core competencies and improve the efficiency and reliability of
its existing fleet of power plants, ESI has assumed much of the market price
risk associated with these plants. In 2004, PDI entered into tolling and power
purchase agreements with ESI to manage electric production from many of its
facilities and to manage natural gas costs for its gas-fired generation
facilities. PDI continues to manage costs of fuel for its coal-fired facilities.
The agreements allow ESI to operate PDI facilities at its discretion, when
market conditions and fuel costs are advantageous. PDI has power purchase
agreements in place with third-party customers at facilities not under contract
with ESI.

The Holding Company and Other segment includes the operations of
WPS Resources and WPS Resources Capital Corporation as holding
companies and the nonutility activities at WPSC and UPPCO.

The tables below present information for the respective years pertaining to
our operations segmented by lines of business.

|Segments of Business                     |                    
|---------------------------------------- | -------------------
|(Millions)                               |                    
|                                         | Regulated Utilities
|2004                                     | Electric Utility(1)
|                                         |                    
|Income Statement                         |                    
|External revenues                        | $875.6             
|Internal revenues                        | 21.0               
|Depreciation and decommissioning         | 79.5               
|Miscellaneous
      income               | 10.4               
|Interest expense                         | 25.6               
|Provision for
      income taxes         | 39.2               
|Discontinued operations                  | -                  
|Income available for common shareholders | 68.8               
|Total assets                             | 2,225.2            
|Cash expenditures for long-lived assets  | 223.0              

(1)

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<PAGE>





|Segments of Business                                |                    
|--------------------------------------------------- | -------------------
|(Millions)                                          |                    
|                                                    | Regulated Utilities
|2003                                                | Electric Utility(1)
|                                                    |                    
|Income Statement                                    |                    
|External revenues                                   | $ 785.6            
|Internal revenues                                   | 28.5               
|Depreciation and decommissioning                    | 112.8              
|Miscellaneous
      income                          | 43.6               
|Interest expense                                    | 24.9               
|Provision for
      income taxes                    | 33.9               
|Discontinued operations                             | -                  
|Cumulative effect of change in accounting principle | -                  
|Income available for common shareholders            | 60.0               
|Total assets                                        | 2,102.1            
|Cash expenditures for long-lived assets             | 131.0              

(1) Includes only utility operations. Nonutility operations are
included in the Other column.

|Segments of Business                     |                    
|---------------------------------------- | -------------------
|(Millions)                               |                    
|                                         | Regulated Utilities
|2002                                     | Electric Utility(1)
|                                         |                    
|Income Statement                         |                    
|External revenues                        | $741.6             
|Intersegment revenues                    | 21.5               
|Depreciation and decommissioning         | 72.6               
|Miscellaneous
      income               | 6.3                
|Interest expense                         | 28.7               
|Provision for
      income taxes         | 31.9               
|Discontinued operations                  | -                  
|Income available for common shareholders | 61.0               
|Cash expenditures for long-lived assets  | 164.3              

> (1) Includes only utility operations. Nonutility operations are
>   included in the Other column.

|Geographic Information(Millions)
|--------------------------------
|                                
|                                
|United States                   
|Canada(1)                       
|Total                           

(1)

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<PAGE>



NOTE 26--QUARTERLY FINANCIAL INFORMATION (Unaudited)

|(Millions, except for share amounts)                                              | Three Months Ended
|--------------------------------------------------------------------------------- | ------------------
|                                                                                  | March             
|Operating revenues                                                                | $1,373.3          
|Operating Income                                                                  | 71.0              
|Income from continuing operations                                                 | 46.4              
|Income available for common shareholders                                          | 42.6              
|                                                                                  |                   
|Average number of shares of common stock (basic)                                  | 37.1              
|Average number of shares of common stock (diluted)                                | 37.3              
|                                                                                  |                   
|Earnings per common share (basic) (2)                                             |                   
|Income from continuing operations                                                 | $1.23             
|Earnings per common share (basic)                                                 | 1.15              
|                                                                                  |                   
|Earnings per common share (diluted) (2)                                           |                   
|Income from continuing operations                                                 | $1.22             
|Earnings per common share (diluted)                                               | 1.14              
|                                                                                  |                   
|                                                                                  | March             
|Operating revenues (1)                                                            | $1,281.8          
|Operating income                                                                  | 57.4              
|Income from continuing operations                                                 | 35.7              
|Net income before cumulative effect of change in 
        accounting principles   | 30.6              
|Income available for common shareholders                                          | 33.0              
|                                                                                  |                   
|Average number of shares of common stock                                          | 32.1              
|Average number of shares of common stock (diluted)                                | 32.4              
|                                                                                  |                   
|Earnings per common share (basic) (2)                                             |                   
|Income from continuing operations                                                 | $1.09             
|Net income before cumulative effect of change in 
          accounting principles | 0.93              
|Earnings per common share (basic)                                                 | 1.03              
|                                                                                  |                   
|Earnings per common share (diluted) (2)                                           |                   
|Income from continuing operations                                                 | $1.08             
|Net income before cumulative effect of change in 
          accounting principles | 0.92              
|Earnings per common share (diluted)                                               | 1.02              

(1) Revenue has been reclassified, including revenues related to discontinued
operation, to conform to current year presentation.

(2) Earnings per share for the individual quarters do not total the year
ended earnings per share amount because of the significant changes to the
average number of shares outstanding and changes in incremental issuable shares
throughout the year.

Because of various factors, which affect the utility business, the quarterly
results of operations are not necessarily comparable.



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<PAGE>

ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WPS RESOURCES CORPORATION
F. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Shareholders and Board of Directors of WPS Resources Corporation

We have audited the accompanying consolidated balance sheets of WPS Resources
Corporation and subsidiaries (the "Company") as of December 31, 2004
and 2003, and the related consolidated statements of income, common
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2004. Our audits also included the financial statement
schedules listed in the Index at Item 15.  These financial statements and
financial statement schedules are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial
statements and financial statement schedules based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States).  Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of WPS Resources Corporation and
subsidiaries as of December 31, 2004 and 2003, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America. Also, in our opinion, such financial
statement schedules, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.

As discussed in Note 1 to the consolidated financial statements, effective
January 1, 2003 the Company changed its method of accounting for certain energy
trading contracts to adopt EITF 02-3, "Issues Involved in Accounting for
Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy
Trading and Risk Management Activities." As discussed in Notes 1 and 15 to
the consolidated financial statements, effective January 1, 2003, the Company
changed its method of accounting for asset retirement obligations to adopt
Statement of Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations."

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of December 31, 2004, based on the
criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 9, 2005 expressed an unqualified opinion on
management's assessment of the effectiveness of the Company's internal control
over financial reporting and an unqualified opinion on the effectiveness of the
Company's internal control over financial reporting.



/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin
March 9, 2005

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<PAGE>

|ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                             
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                         
|                                                                                                                                             
|G. CONSOLIDATED STATEMENTS OF INCOME                                                                                                         
|                                                                                                                                             
|                                                                                                                                             
|Year Ended December 31                                                                                                                       
|(Millions)                                                                                                                                   
|                                                                                                                                             
|Operating revenues                                                                                                                           
|Electric                                                                                                                                     
|Gas                                                                                                                                          
|Total operating revenues                                                                                                                     
|Operating expenses                                                                                                                           
|Electric production fuels                                                                                                                    
|Purchased power                                                                                                                              
|Gas purchased for resale                                                                                                                     
|Other operating expenses                                                                                                                     
|Maintenance                                                                                                                                  
|Depreciation and decommissioning                                                                                                             
|Federal income taxes                                                                                                                         
|Investment tax credit restored                                                                                                               
|State income taxes                                                                                                                           
|Gross receipts tax and other                                                                                                                 
|Total operating expense                                                                                                                      
|Operating income                                                                                                                             
|Other income and (deductions)                                                                                                                
|Allowance for equity funds used during construction                                                                                          
|Other, net                                                                                                                                   
|Income taxes                                                                                                                                 
|Total other income                                                                                                                           
|Interest expense                                                                                                                             
|Interest on long-term debt                                                                                                                   
|Other interest                                                                                                                               
|Allowance for borrowed funds used during construction                                                                                        
|Total interest expense                                                                                                                       
|Minority interest                                                                                                                            
|Net income                                                                                                                                   
|Preferred stock dividend requirements                                                                                                        
|Earnings on common stock                                                                                                                     
|                                                                                                                                             
|The accompanying WPS Resources Corporation's and Wisconsin Public
      Service Corporation's notes are an integral part of these statements.
|                                                                                                                                             

-147-

<PAGE>



|ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA                                                                                 |          |         
|--------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
|                                                                                                                                              |          |         
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                         
|                                                                                                                                              |          |         
|H. CONSOLIDATED BALANCE SHEETS                                                                                                               
|                                                                                                                                              |          |         
|At December 31                                                                                                                                |          |         
|(Millions)                                                                                                                                    | 2004     | 2003    
|Assets                                                                                                                                        |          |         
|Utility plant                                                                                                                                 |          |         
|Electric                                                                                                                                      | $2,223.9 | $2,121.2
|Gas                                                                                                                                           | 510.0    | 457.2   
|Total                                                                                                                                         | 2,733.9  | 2,578.4 
|Less - Accumulated depreciation                                                                                                               | 1,189.3  | 1,132.4 
|Total                                                                                                                                         | 1,544.6  | 1,446.0 
|Nuclear decommissioning trusts                                                                                                                | 344.5    | 332.3   
|Construction in progress                                                                                                                      | 153.1    | 81.7    
|Nuclear fuel, less accumulated amortization                                                                                                   | 24.6     | 20.3    
|Net utility plant                                                                                                                             | 2,066.8  | 1,880.3 
|                                                                                                                                              |          |         
|Current assets                                                                                                                                |          |         
|Cash and cash equivalents                                                                                                                     | 3.5      | 4.7     
|Customer and other receivables, net of reserves of $5.5                                                                                       |          |         
|at December 31, 2004 and $4.4 at December 31, 2003                                                                                            | 106.2    | 103.6   
|Receivables from related parties                                                                                                              | 9.1      | 15.6    
|Accrued unbilled revenues                                                                                                                     | 68.4     | 51.3    
|Fossil fuel, at average cost                                                                                                                  | 15.2     | 14.9    
|Gas in storage, at average cost                                                                                                               | 60.2     | 50.9    
|Materials and supplies, at average cost                                                                                                       | 28.3     | 26.2    
|Assets from risk management activities                                                                                                        | 5.7      | 4.5     
|Prepayments and other                                                                                                                         | 39.3     | 38.8    
|Total current assets                                                                                                                          | 335.9    | 310.5   
|Regulatory assets                                                                                                                             | 156.5    | 125.0   
|Pension assets                                                                                                                                | -        | 67.8    
|Goodwill                                                                                                                                      | 36.4     | 36.4    
|Investments and other assets                                                                                                                  | 173.0    | 157.7   
|Total assets                                                                                                                                  | $2,768.6 | $2,577.7
|                                                                                                                                              |          |         
|Capitalization and Liabilities                                                                                                                |          |         
|Capitalization                                                                                                                                |          |         
|Common stock equity                                                                                                                           | $899.7   | $798.2  
|Preferred stock with no mandatory redemption                                                                                                  | 51.2     | 51.2    
|Long-term debt to parent                                                                                                                      | 12.0     | 12.4    
|Long-term debt                                                                                                                                | 496.0    | 495.4   
|Total capitalization                                                                                                                          | 1,458.9  | 1,357.2 
|                                                                                                                                              |          |         
|Current liabilities                                                                                                                           |          |         
|Current portion of long-term debt                                                                                                             | -        | 49.9    
|Short-term debt                                                                                                                               | 101.0    | 10.0    
|Accounts payable                                                                                                                              | 145.1    | 104.9   
|Payables to related parties                                                                                                                   | 8.9      | 14.9    
|Accrued interest and taxes                                                                                                                    | 8.1      | 9.3     
|Other                                                                                                                                         | 20.5     | 16.5    
|Total current liabilities                                                                                                                     | 283.6    | 205.5   
|                                                                                                                                              |          |         
|Long-term liabilities and deferred credits                                                                                                    |          |         
|Accumulated deferred income taxes                                                                                                             | 130.1    | 134.7   
|Accumulated deferred investment tax credits                                                                                                   | 15.2     | 16.5    
|Regulatory liabilities                                                                                                                        | 271.1    | 285.4   
|Environmental remediation liability                                                                                                           | 66.7     | 36.2    
|Pension and postretirement benefit obligations                                                                                                | 92.9     | 135.9   
|Asset retirement obligations                                                                                                                  | 364.4    | 344.0   
|Payables to related parties                                                                                                                   | 18.6     | -       
|Other long-term liabilities                                                                                                                   | 67.1     | 62.3    
|Total long-term liabilities and deferred credits                                                                                              | 1,026.1  | 1,015.0 
|Commitments and contingencies                                                                                                                 | -        | -       
|Total capitalization and liabilities                                                                                                          | $2,768.6 | $2,577.7
|                                                                                                                                              |          |         
|The accompanying WPS Resources Corporation's and Wisconsin Public
      Service Corporation's notes are an integral part of these statements.
|                                                                                                                                              |          |         

-148-

<PAGE>





|ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                             
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                         
|                                                                                                                                             
|I. CONSOLIDATED STATEMENTS OF CAPITALIZATION                                                                                                 
|                                                                                                                                             
|At December 31                                                                                                                               
|(Millions, except share amounts)                                                                                                             
|                                                                                                                                             
|Common stock equity                                                                                                                          
|Common stock                                                                                                                                 
|Premium on capital stock                                                                                                                     
|Accumulated other comprehensive loss                                                                                                         
|Retained earnings                                                                                                                            
|Total common stock equity                                                                                                                    
|                                                                                                                                             
|Preferred stock                                                                                                                              
|Cumulative, $100 par value, 1,000,000 shares authorized                                                                                      
|with no mandatory redemption -                                                                                                               
|Shares                                                                                                                                       
|Series      Outstanding                                                                                                                      
|5.00%        131,916                                                                                                                         
|5.04%          29,983                                                                                                                        
|5.08%          49,983                                                                                                                        
|6.76%        150,000                                                                                                                         
|6.88%        150,000                                                                                                                         
|Total preferred stock                                                                                                                        
|                                                                                                                                             
|Long-term debt to parent                                                                                                                     
|Series      Year
      Due                                                                                                                   
|8.76%         2015                                                                                                                           
|7.35%         2016                                                                                                                           
|Total long-term debt to parent                                                                                                               
|                                                                                                                                             
|Long-term debt                                                                                                                               
|First mortgage bonds                                                                                                                         
|Series      Year
      Due                                                                                                                   
|6.90%         2013                                                                                                                           
|7.125%      
      2023                                                                                                                      
|Senior notes                                                                                                                                 
|Series      Year
      Due                                                                                                                   
|6.08%        2028                                                                                                                            
|6.125%      2011                                                                                                                             
|4.875%      2012                                                                                                                             
|4.8%          2013                                                                                                                           
|Total                                                                                                                                        
|Unamortized discount and premium on bonds, net                                                                                               
|Total first mortgage bonds                                                                                                                   
|Current portion                                                                                                                              
|Total long-term debt                                                                                                                         
|Total capitalization                                                                                                                         
|                                                                                                                                             
|The accompanying WPS Resources Corporation's and Wisconsin Public
      Service Corporation's notes are an integral part of these statements.
|                                                                                                                                             

-149-

<PAGE>





|ITEM 8.     FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                             
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                         
|                                                                                                                                             
|J. CONSOLIDATED STATEMENTS OF COMMON
      SHAREHOLDER'S EQUITY                                                                              
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|                                                                                                                                             
|(Millions)                                                                                                                                   
|                                                                                                                                             
|Balance at December 31, 2001                                                                                                                 
|Earnings on common stock                                                                                                                     
|Other comprehensive loss - minimum pension liability
        (net of taxes of $1.8)                                                          
|Comprehensive income                                                                                                                         
|Net equity infusions from parent                                                                                                             
|Dividends to parent                                                                                                                          
|Other                                                                                                                                        
|                                                                                                                                             
|Balance at December 31, 2002                                                                                                                 
|Earnings on common stock                                                                                                                     
|Other comprehensive loss - minimum pension liability
        (net of taxes of $8.2)                                                          
|Comprehensive income                                                                                                                         
|Net equity infusions from parent                                                                                                             
|Dividends to parent                                                                                                                          
|Other                                                                                                                                        
|                                                                                                                                             
|Balance at December 31, 2003                                                                                                                 
|Earnings on common stock                                                                                                                     
|Other comprehensive loss - minimum pension liability
        (net of taxes of $3.8)                                                          
|Comprehensive income                                                                                                                         
|Net equity infusions from parent                                                                                                             
|Dividends to parent                                                                                                                          
|Other                                                                                                                                        
|                                                                                                                                             
|Balance at December 31, 2004                                                                                                                 
|                                                                                                                                             
|                                                                                                                                             
|The accompanying WPS Resources Corporation's and Wisconsin Public
      Service Corporation's notes are an integral part of these statements.
|                                                                                                                                             

-150-

<PAGE>



|                                                                                              |         |         |        
|--------------------------------------------------------------------------------------------- | ------- | ------- | -------
|ITEM 8.     FINANCIAL STATEMENTS AND SUPPLEMENTARY
      DATA                                 |         |        
|                                                                                              |         |         |        
|WISCONSIN PUBLIC SERVICE CORPORATION                                                         
|                                                                                              |         |         |        
|K. CONSOLIDATED STATEMENTS OF CASH FLOWS                                                     
|                                                                                              |         |         |        
|Year Ended December 31                                                                        |         |         |        
|(Millions)                                                                                    | 2004    | 2003    | 2002   
|                                                                                              |         |         |        
|Cash flows from operating activities:                                                         |         |         |        
|Net income                                                                                    | $107.9  | $82.0   | $86.2  
|                                                                                              |         |         |        
|Adjustments to reconcile net income to net cash from                                          |         |         |        
|operating activities -                                                                        |         |         |        
|Depreciation and decommissioning                                                              | 91.0    | 122.9   | 81.9   
|Gain on nuclear decommissioning trust                                                         | (5.5)   | (38.7)  | (1.7)  
|Amortization                                                                                  | 42.8    | 41.4    | 45.5   
|Deferred income taxes                                                                         | 1.0     | 12.1    | (0.3)  
|Allowance for equity funds used during construction                                           | (2.0)   | (2.4)   | (3.0)  
|Equity income, net of minority interest                                                       | (14.6)  | (9.3)   | (9.5)  
|Gain on sale of property                                                                      | (13.7)  | (7.3)   | (0.7)  
|Pension expense (credit)                                                                      | 16.3    | 6.7     | (4.9)  
|Postretirement expense                                                                        | 12.4    | 12.0    | 4.5    
|Pension and postretirement funding                                                            | (17.8)  | (15.6)  | (7.3)  
|Other, net                                                                                    | 14.3    | (13.3)  | 9.6    
|Changes in -                                                                                  |         |         |        
|Customer and other receivables                                                                | 1.0     | (4.0)   | (23.1) 
|Accrued utility revenues                                                                      | (17.1)  | (4.0)   | (6.4)  
|Fossil fuel inventory                                                                         | (0.3)   | 1.5     | (1.3)  
|Gas in storage                                                                                | (9.3)   | (19.9)  | 2.6    
|Miscellaneous assets                                                                          | (3.3)   | (10.4)  | (7.5)  
|Accounts payable                                                                              | 9.0     | 0.4     | 37.6   
|Accrued taxes and interest                                                                    | (1.2)   | (1.4)   | (9.3)  
|Miscellaneous current and accrued liabilities                                                 | 3.0     | (0.1)   | (7.5)  
|Net cash provided by operating activities                                                     | 213.9   | 152.6   | 185.4  
|                                                                                              |         |         |        
|Cash flows from investing activities:                                                         |         |         |        
|Capital expenditures                                                                          | (272.8) | (161.6) | (191.0)
|Purchase of equity investments and other acquisitions                                         | -       | (48.4)  | -      
|Sale of property, plant, and equipment                                                        | 19.5    | 27.7    | 1.5    
|Decommissioning funding                                                                       | (0.3)   | (3.0)   | (2.6)  
|Other                                                                                         | 1.6     | 3.1     | 8.1    
|Net cash used for investing activities                                                        | (252.0) | (182.2) | (184.0)
|                                                                                              |         |         |        
|Cash flows from financing activities:                                                         |         |         |        
|Short-term debt - net                                                                         | 91.0    | (16.0)  | 16.0   
|Issuance of long-term debt                                                                    | -       | 125.0   | 150.0  
|Payments of long-term debt and capital lease                                                  | (50.3)  | (59.5)  | (123.3)
|Equity contributions from parent                                                              | 75.0    | 50.0    | 60.0   
|Equity withdrawal by parent                                                                   | -       | -       | (45.0) 
|Dividends to parent                                                                           | (75.0)  | (69.0)  | (64.0) 
|Preferred stock dividends                                                                     | (3.1)   | (3.1)   | (3.1)  
|Other                                                                                         | (0.7)   | 3.5     | 1.5    
|Net cash provided by (used for) financing activities                                          | 36.9    | 30.9    | (7.9)  
|Net change in cash and equivalents                                                            | (1.2)   | 1.3     | (6.5)  
|Cash and equivalents at beginning of year                                                     | 4.7     | 3.4     | 9.9    
|Cash and equivalents at end of year                                                           | $3.5    | $4.7    | $3.4   
|                                                                                              |         |         |        
|The accompanying WPS Resources Corporation's and Wisconsin Public
      Service Corporation's |        
|notes are an integral part of these statements.                                               |         |         |        
|                                                                                              |         |         |        

-151-

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WISCONSIN PUBLIC SERVICE CORPORATION

L. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain notes to WPSC's financial statements are combined with the notes to
the financial statements of WPS Resources in Item 8, Section E. The
combined notes are listed below.



|                                            | Item 8, Section EFootnote Reference
|------------------------------------------- | -----------------------------------
|                                            |                                    
|Summary of Significant Accounting Policies  | Note 1                             
|Fair Value of Financial Instruments         | Note 2                             
|Risk Management Activities                  | Note 3                             
|Property, Plant, and Equipment              | Note 5                             
|Acquisitions and Sales of Assets            | Note 6                             
|Jointly Owned Utility Facilities            | Note 7                             
|Nuclear Plant Operation                     | Note 8                             
|Regulatory Assets and Liabilities           | Note 9                             
|Investments in Affiliates, at Equity Method | Note 10                            
|Goodwill and Other Intangible Assets        | Note 11                            
|Long-Term Debt                              | Note 14                            
|Asset Retirement Obligations                | Note
      15                      
|Commitments and Contingencies               | Note 17                            
|Employee Benefit Plans                      | Note 18                            
|Preferred Stock of Subsidiary               | Note 19                            
|Stock-Based Compensation                    | Note 21                            
|Regulatory Environment                      | Note 22                            

In addition to the combined notes, the following are supplemental notes for
WPSC. These notes should be read in conjunction with WPS Resources'
consolidated financial statements and the related notes. WPSC is subject to
regulation by the FERC under the Federal Power Act and follows the Uniform
System of Accounts prescribed by the FERC.

NOTE 1--CASH AND CASH EQUIVALENTS

Cash paid for taxes during 2004, 2003, and 2002 was $38.4 million,
$29.7 million, and $52.2 million, respectively. During 2004, 2003, and
2002, cash paid for interest totaled $28.7 million, $28.4 million, and
$25.4 million, respectively.

Non-cash transactions were as follows:

|(Millions)                                                  | 2004  | 2003   | 2002 
|----------------------------------------------------------- | ----- | ------ | -----
|Weston 4 construction costs funded through accounts payable | $22.6 | $    - | $   -
|Minimum pension liability equity adjustment                 | 5.8   | 12.2   | 2.7  
|Exchange of transmission assets for equity interest in ATC  | -     | 5.9    | -    

-152-

<PAGE>



NOTE 2--FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of WPSC's financial instruments as of
December 31 were:

|(Millions)                                     | 2004           | 2003     
|---------------------------------------------- | -------------- | ---------
|                                               | CarryingAmount | FairValue
|                                               |                |          
|Cash and cash equivalents                      | $ 3.5          | $ 3.5    
|Energy conservation loans                      | 1.6            | 1.6      
|Nuclear decommissioning trusts - utility plant | 344.5          | 344.5    
|Nuclear decommissioning trusts - other assets  | 26.8           | 26.8     
|Notes payable                                  | 10.0           | 10.0     
|Commercial paper                               | 91.0           | 91.0     
|Long-term debt                                 | 497.1          | 523.2    
|Preferred stock                                | 51.2           | 50.1     
|Risk management activities - net               | 10.4           | 10.4     

NOTE 3--REGULATORY ASSETS AND LIABILITIES

The following regulatory assets and liabilities were reflected in WPSC's
consolidated balance sheets as of December 31:



|(Millions)                                                             | 2004   | 2003  
|---------------------------------------------------------------------- | ------ | ------
|                                                                       |        |       
|Regulatory assets                                                      |        |       
|Manufactured gas plant remediation costs (net of insurance recoveries) | $ 71.3 | $ 39.6
|De Pere Energy Center                                                  | 45.3   | 47.7  
|Deferred nuclear costs                                                 | 10.9   | 4.9   
|Plant related costs                                                    | 6.5    | 2.6   
|Minimum pension liability                                              | 6.4    | 15.2  
|Reserve for uncollectible accounts                                     | 5.5    | 4.4   
|Unamortized loss on debt                                               | 2.4    | 1.4   
|Automated meter reading costs                                          | 1.8    | 4.5   
|Funding for enrichment facilities                                      | 1.8    | 2.4   
|Other                                                                  | 4.6    | 2.3   
|Total                                                                  | $156.5 | $125.0
|                                                                       |        |       
|Regulatory liabilities                                                 |        |       
|Cost of removal reserve                                                | $173.7 | $167.9
|Asset retirement obligations                                           | 46.6   | 66.9  
|Unrealized gain on decommissioning trust                               | 26.8   | 22.5  
|Derivatives                                                            | 11.0   | 8.4   
|Income tax related items                                               | 6.6    | 4.9   
|Deferred gain on emission allowance sales                              | 3.7    | 5.1   
|Deferred ATC costs                                                     | 1.6    | 3.4   
|Demand-side management expenditures                                    | 1.1    | 5.3   
|Other                                                                  | -      | 1.0   
|Total                                                                  | $271.1 | $285.4

-153-

<PAGE>



NOTE 4--LEASES

WPSC leases various property, plant, and equipment. Terms of the leases vary
but generally require WPSC to pay property taxes, insurance premiums, and
maintenance costs associated with the leased property. Rental expense
attributable to operating leases was $4.2 million, $3.9 million, and $3.9
million in 2004, 2003, and 2002 respectively. Future minimum rental obligations
under non-cancelable operating leases are payable as follows:



|Year ending December 31 |      
|----------------------- | -----
|(Millions)              |      
|                        |      
|2005                    | $ 3.2
|2006                    | 1.7  
|2007                    | 1.7  
|2008                    | 1.6  
|2009                    | 1.4  
|Later years             | 4.9  
|Total payments          | $14.5

NOTE 5--COMMON EQUITY

WPSC is restricted by a PSCW order to pay normal common stock dividends of no
more than 109% of the previous year's common stock dividend without the PSCW's
approval. WPS Resources may provide equity contributions or request a
return of capital in order to maintain utility common equity levels consistent
with those allowed by the regulators. Wisconsin law prohibits WPSC from making
loans to or guaranteeing obligations of WPS Resources or its other
subsidiaries.

During 2004, WPSC received equity contributions of $75.0 million from
WPS Resources. WPSC paid common dividends of $75.0 million to
WPS Resources in 2004. The equity contributions allowed WPSC's average
equity capitalization ratio for ratemaking to remain within the target range as
established by the PSCW in its most recent rate order.

NOTE 6--PREFERRED STOCK

WPSC has issued preferred stock with no mandatory redemption and a $100 par
value. The following table shows the carrying value and shares outstanding at
December 31, 2003, and 2004 of the 1,000,000 shares authorized:



|(Millions, except share amounts) | Series | Shares Outstanding | Carrying Value
|-------------------------------- | ------ | ------------------ | --------------
|                                 | 5.00%  | 131,916            | $13.2         
|                                 | 5.04%  | 29,983             | 3.0           
|                                 | 5.08%  | 49,983             | 5.0           
|                                 | 6.76%  | 150,000            | 15.0          
|                                 | 6.88%  | 150,000            | 15.0          
|Total                            |        | 511,882            | $51.2         

NOTE 7--LONG-TERM DEBT

At December 31, 2004, WPSC was in compliance with all covenants relating
to outstanding debt. A schedule of all principal debt payment amounts, including
bond maturities and early retirement payments is as follows:

-154-

<PAGE>





|Year ending December 31(Millions) |          
|--------------------------------- | ---------
|                                  |          
|2005                              | $       -
|2006                              | -        
|2007                              | -        
|2008                              | -        
|2009                              | -        
|Later years                       | 497.1    
|Total payments                    | $497.1   

NOTE 8--SHORT-TERM DEBT AND LINES OF CREDIT

The information in the table below relates to short-term debt and lines of
credit for the years indicated:

|(Millions, except for percentages)                    | 2004   | 2003   | 2002  
|----------------------------------------------------- | ------ | ------ | ------
|                                                      |        |        |       
|As of end of year                                     |        |        |       
|Commercial paper outstanding                          | $91.0  | $ -    | $16.0 
|Average discount rate on outstanding commercial paper | 2.44%  | -%     | 1.35% 
|Short-term notes payable outstanding                  | $10.0  | $10.0  | $10.0 
|Average interest rate on short-term notes payable     | 2.26%  | 1.12%  | 1.39% 
|Available (unused) lines of credit                    | $20.2  | $115.0 | $100.0
|                                                      |        |        |       
|For the year                                          |        |        |       
|Maximum amount of short-term debt                     | $116.0 | $103.0 | $80.0 
|Average amount of short-term debt                     | $36.3  | $64.7  | $22.9 
|Average interest rate on short-term debt              | 1.67%  | 1.24%  | 1.74% 

The commercial paper had varying maturity dates ranging from January 4, 2005,
through January 11, 2005.

NOTE 9--ASSET RETIREMENT OBLIGATIONS

WPSC has a legal obligation to decommission the irradiated portions of
Kewaunee in accordance with the Nuclear Regulatory Commission's minimum
decommissioning requirements. WPSC has also identified other legal retirement
obligations that are not significant to the financial statements. Upon
implementation of SFAS No. 143 on January 1, 2003, WPSC recorded a net
asset retirement cost of $90.8 million and an asset retirement obligation
of $324.8 million. The difference between the previously recorded
liabilities of $290.5 million and the cumulative effect of adopting SFAS
No. 143 was deferred as a regulatory liability pursuant to SFAS No. 71.

WPSC recognized removal costs for utility assets prior to the adoption of
SFAS No. 143. Historically these removal costs were reflected as a
component of depreciation expense and accumulated depreciation in accordance
with regulatory treatment. Upon adoption of SFAS No. 143 on January 1,
2003, costs of removal with associated legal retirement obligations were
accounted for as asset retirement obligations. Subsequent to adopting SFAS No.
143, amounts recognized for costs of removal that do not have an associated
legal obligation are reported as a regulatory liability pursuant to SFAS No. 71.

-155-

<PAGE>



NOTE 10--INCOME TAXES

The principal components of WPSC's deferred tax assets and liabilities
recognized in the balance sheet as of December 31 are as follows:

|(Millions)                              | 2004     | 2003   
|--------------------------------------- | -------- | -------
|                                        |          |        
|Deferred tax assets                     |          |        
|Plant related                           | $ 53.5   | $ 51.7 
|Employee benefits                       | 22.2     | 18.9   
|Deferred income and deductions          | 14.5     | 13.4   
|Other comprehensive income              | 13.8     | 10.0   
|Regulatory deferrals                    | 1.8      | 3.4    
|Other                                   | 4.6      | 1.4    
|Total                                   | $110.4   | $ 98.8 
|                                        |          |        
|Deferred tax liabilities                |          |        
|Plant related                           | $212.6   | $203.2 
|Employee benefits                       | 11.0     | 16.1   
|Regulatory deferrals                    | 10.6     | 5.7    
|Deferred income and deductions          | 3.8      | 3.3    
|Other                                   | 3.1      | 4.6    
|Total                                   | $241.1   | $232.9 
|                                        |          |        
|Consolidated Balance Sheet Presentation |          |        
|Prepayments and other                   | $      - | $ (0.6)
|Other current liabilities               | 0.6      | -      
|Long-term deferred tax liabilities      | 130.1    | 134.7  
|Net deferred tax liabilities            | $130.7   | $134.1 

-156-

<PAGE>



The following table presents a reconciliation of federal income taxes (which
are calculated by multiplying the statutory federal income tax rate by book
income before federal income tax) to the federal income tax expense reported in
the Consolidated Statements of Income for the periods ended December 31.

|(Millions, except for percentages) | 2004  | 2003   | 2002 
|---------------------------------- | ----- | ------ | -----
|                                   | Rate  | Amount | Rate 
|                                   |       |        |      
|Statutory federal income tax       | 35.0% | $55.7  | 35.0%
|State income taxes, net            | 5.1   | 8.1    | 5.5  
|Investment tax credit restored     | (0.9) | (1.4)  | (1.2)
|Plant related                      | 0.1   | 0.2    | (0.9)
|Benefits and compensation          | (1.9) | (3.1)  | (1.5)
|Federal tax credits                | (0.2) | (0.3)  | (0.2)
|Other differences, net             | (5.0) | (7.9)  | (1.4)
|Effective income tax               | 32.2% | $51.3  | 35.3%
|                                   |       |        |      
|Current provision                  |       |        |      
|Federal                            |       | $38.7  |      
|State                              |       | 11.6   |      
|Total current provision            |       | 50.3   |      
|Deferred provision                 |       | 2.3    |      
|Investment tax credit restored     |       | (1.3)  |      
|Total income tax expense           |       | $51.3  |      

As the related temporary differences reverse, WPSC is prospectively refunding
taxes to customers for which deferred taxes were recorded in prior years at
rates different than current rates. The regulatory liability for these refunds
and other regulatory tax effects totaled $6.6 and $4.9 million as of
December 31, 2004, and 2003, respectively.

NOTE 11--SEGMENTS OF BUSINESS

WPSC manages its reportable segments separately due to their different
operating and regulatory environments. Its principal business segments are the
regulated electric utility operations and the regulated gas utility operations.
The tables below present information for the respective years pertaining to the
operations of WPSC segmented by lines of business.

|                                        |                           |            |              |                 |                 
|--------------------------------------- | ------------------------- | ---------- | ------------ | --------------- | ----------------
|Segments of
      Business              |                           |            |              |                 |                 
|(Millions)                              |                           |            |              |                 |                 
|                                        | Regulated
      Utilities |            |             
|2004                                    | ElectricUtility           | GasUtility | TotalUtility | Other
      (1) | WPSCConsolidated
|                                        |                           |            |              |                 |                 
|Income Statement                        |                           |            |              |                 |                 
|Operating revenues                      | $ 801.2                   | $420.9     | $1,222.1     | $-              | $1,222.1        
|Depreciation and decommissioning        | 75.0                      | 16.0       | 91.0         | -               | 91.0            
|Other income, excluding taxes           | 10.4                      | 0.4        | 10.8         | 26.4            | 37.2            
|Interest expense                        | 23.1                      | 7.7        | 30.8         | 2.9             | 33.7            
|Income taxes                            | 38.4                      | 10.2       | 48.6         | 2.7             | 51.3            
|Earnings on common stock                | 65.8                      | 17.3       | 83.1         | 21.7            | 104.8           
|Total assets                            | 2,080.8                   | 577.9      | 2,658.7      | 109.9           | 2,768.6         
|Cash expenditures for long-lived assets | 210.1                     | 62.7       | 272.8        | -               | 272.8           

(1)

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<PAGE>

|                                        |                           |            |              |             |                 
|--------------------------------------- | ------------------------- | ---------- | ------------ | ----------- | ----------------
|Segments of
      Business              |                           |            |              |             |                 
|(Millions)                              |                           |            |              |             |                 
|                                        | Regulated
      Utilities |            |             
|2003                                    | ElectricUtility           | GasUtility | TotalUtility | Other
  (1) | WPSCConsolidated
|                                        |                           |            |              |             |                 
|Income Statement                        |                           |            |              |             |                 
|Operating revenues                      | $ 724.9                   | $404.2     | $1,129.1     | $ -         | $1,129.1        
|Depreciation and decommissioning        | 108.6                     | 14.3       | 122.9        | -           | 122.9           
|Other income, excluding taxes           | 43.7                      | 1.3        | 45.0         | 17.7        | 62.7            
|Interest expense                        | 22.3                      | 6.7        | 29.0         | 2.7         | 31.7            
|Income taxes                            | 31.7                      | 9.2        | 40.9         | 4.8         | 45.7            
|Earnings on common stock                | 53.6                      | 15.7       | 69.3         | 9.6         | 78.9            
|Total assets                            | 1,965.7                   | 497.0      | 2,462.7      | 115.0       | 2,577.7         
|Cash expenditures for long-lived assets | 120.6                     | 40.7       | 161.3        | 0.3         | 161.6           

(1)



|                                        |                           |            |              |               |                 
|--------------------------------------- | ------------------------- | ---------- | ------------ | ------------- | ----------------
|Segments of
      Business              |                           |            |              |               |                 
|(Millions)                              |                           |            |              |               |                 
|                                        | Regulated
      Utilities |            |             
|2002                                    | ElectricUtility           | GasUtility | TotalUtility | Other
    (1) | WPSCConsolidated
|                                        |                           |            |              |               |                 
|Income Statement                        |                           |            |              |               |                 
|Operating revenues                      | $696.9                    | $310.7     | $1,007.6     | $ -           | $1,007.6        
|Depreciation and decommissioning        | 68.6                      | 13.3       | 81.9         | -             | 81.9            
|Other income, excluding taxes           | 6.3                       | 0.3        | 6.6          | 12.4          | 19.0            
|Interest expense                        | 25.4                      | 6.3        | 31.7         | 2.2           | 33.9            
|Income taxes                            | 31.1                      | 12.4       | 43.5         | 3.3           | 46.8            
|Earnings on common stock                | 58.6                      | 18.4       | 77.0         | 6.1           | 83.1            
|Cash expenditures for long-lived assets | 157.0                     | 34.0       | 191.0        | -             | 191.0           

(1)

NOTE 12--QUARTERLY FINANCIAL INFORMATION (Unaudited)

|(Millions)               | Three Months Ended
|------------------------ | ------------------
|                         | 2004              
|                         | March             
|                         |                   
|Operating revenues       | $372.0            
|Operating income         | 37.7              
|Earnings on common stock | 32.5              
|                         |                   
|                         | 2003              
|                         | March             
|                         |                   
|Operating revenues       | $351.7            
|Operating income         | 29.7              
|Earnings on common stock | 23.9              

> Because of various factors that affect the utility business, the
>     quarterly results of operations are not necessarily comparable.

NOTE 13--RELATED PARTY TRANSACTIONS

WPSC routinely enters into transactions with related parties, including WPS
  Resources, its subsidiaries, and other entities in which WPSC has material
  interests.

The following table shows purchases from and sales to related parties:

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|(Millions)                    | 2004  | 2003  | 2002 
|----------------------------- | ----- | ----- | -----
|                              |       |       |      
|Electric sales to UPPCO       | $16.1 | $27.1 | $21.5
|Electric purchases from UPPCO | 4.9   | 1.4   | -    
|Gas sales to ESI              | 20.8  | 16.4  | 5.4  
|Gas purchases from ESI        | 15.4  | 5.9   | 3.3  
|                              |       |       |      

WPS Leasing, a consolidated subsidiary of WPSC, has a note payable to the
  WPS Resources parent company. The balance of the payable was $12.0 million and
  $12.4 million at December 31, 2004, and 2003, respectively. Interest expense
  on the note totaled $1.0 million per year in 2004, 2003, and 2002.

With the exception of UPPCO's Supplemental Employee Retirement Plan, the
  assets and liabilities related to the qualified and non-qualified pension
  plans and the postretirement plans of WPS Resources are recorded on
  WPSC's Consolidated Balance Sheets. The net periodic benefit cost associated
  with the plans is allocated among WPS Resources' subsidiaries. At December 31,
  2004, and 2003, WPSC's Consolidated Balance Sheets included $1.4 million and
  $1.1 million, respectively, in receivables from related parties related to
  these benefit plans.

WPS Resources and its consolidated subsidiaries file consolidated federal
  income tax returns. WPSC pays the income taxes, which are then allocated to
  the appropriate entities. The tax allocable to each subsidiary is the amount
  of tax it would have paid had it filed a separate return for the tax year in
  question, after application of any credit to which it would be entitled on a
  separate return basis. Adjustments are made as necessary to reflect any items
  which are usable on the consolidated return, but which would not be usable on
  a separate return, such as deducting a capital loss that can be used against
  capital gains attributable to another member of the consolidated group. At
  December 31, 2004, WPSC's Consolidated Balance Sheet included intercompany
  taxes receivable of $3.1 million and intercompany taxes payable of $24.4
  million. At December 31, 2003, intercompany taxes payable totaled $6.3
  million.

At December 31, 2004, WPSC had a 36.4% interest in WPS Investments,
  accounted for under the equity method. WPS Investments is a consolidated
  subsidiary of WPS Resources that is jointly owned by WPS Resources, WPSC,
  and UPPCO. Prior to 2003, WPS Investments was a consolidated subsidiary of
  WPSC, but capital contributions during 2003 resulted in majority ownership by
  WPS Resources. The ownership interests have varied throughout 2004, 2003, and
  2002 and will continue to change as cash is contributed by WPS Resources
  or additional assets are contributed by the utilities. Equity income recorded
  by WPSC during 2004 and 2003 was $6.9 million and $5.8 million, respectively.

WPSC also provides and receives other services, property, and things of
  value to and from its parent, WPS Resources, and other subsidiaries of WPS
  Resources. All such transactions are made pursuant to a master affiliated
  interest agreement approved by the PSCW. The agreement provides that WPSC
  receives payment equal to the higher of its cost or fair value for services
  and property and other things of value which WPSC provides to WPS Resources or
  its other nonregulated subsidiaries, and WPSC makes payments equal to the
  lower of the provider's cost or fair value for property, services, and other
  things of value which WPS Resources or its other nonregulated subsidiaries
  provide to WPSC. The agreement further provides that any services, property,
  or other things of value provided to or from WPSC to or for any other
  regulated subsidiary of WPS Resources be provided at cost. Modification or
  amendment to the master agreement requires the approval of the PSCW.

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<PAGE>



ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WISCONSIN PUBLIC SERVICE CORPORATION

M. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors of Wisconsin Public Service Corporation

We have audited the accompanying consolidated balance sheets and statements
of capitalization of Wisconsin Public Service Corporation and subsidiaries (the
"Company") as of December 31, 2004 and 2003, and the related
consolidated statements of income, common shareholder's equity, and cash flows
for each of the three years in the period ended December 31, 2004. Our audits
also included the financial statement schedules listed in the Index at Item
15.  These financial statements and financial statement schedules are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements and financial statement
schedules based on our audits.

We conducted our audits in accordance with the standards of the Public
Company Accounting Oversight Board (United States).  Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement.  An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements.  An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.  We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Wisconsin Public Service
Corporation and subsidiaries as of December 31, 2004 and 2003, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2004, in conformity with accounting principles
generally accepted in the United States of America. Also, in our opinion, such
financial statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.

As discussed in Note 8 to the consolidated financial statements, effective
January 1, 2003, the Company changed its method of accounting for asset
retirement obligations to adopt Statement of Financial Accounting Standard No.
143, "Accounting for Asset Retirement Obligations."

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the effectiveness of the Company's
internal control over financial reporting as of December 31, 2004, based on the
criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our
report dated March 9, 2005 expressed an unqualified opinion on management's
assessment of the effectiveness of the Company's internal control over financial
reporting and an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.

/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin
March 9, 2005

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<PAGE>





ITEM 9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON
                
ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A.   CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Annual Report on Form 10-K,
WPS Resources' and WPSC's management evaluated, with the participation of
WPS Resources' and WPSC's Chief Executive Officer and Chief Financial Officer,
the effectiveness of the design and operation of WPS Resources' and WPSC's
disclosure controls and procedures (as defined in the Securities Exchange Act of
1934 Rules 13a-15(e) and 15d-15(e)) and have concluded that, WPS Resources'
and WPSC's disclosure controls and procedures were effective as of the date of
such evaluation in timely alerting them to material information relating to
WPS Resources and WPSC (including their consolidated subsidiaries) required
to be included in their periodic SEC filings, particularly during the period in
which this Annual Report on Form 10-K was being prepared.

Changes in Internal Controls

There were no significant changes in WPS Resources' and WPSC's internal
control over financial reporting (as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act) that occurred during the quarter ended
December 31, 2004 that have materially affected, or are reasonably likely
to materially affect, internal control over financial reporting.

Management Reports on Internal Control over Financial Reporting

WPS Resources Corporation

The management of WPS Resources and its subsidiaries is responsible for
establishing and maintaining adequate internal control over financial reporting.
WPS Resources' control systems were designed to provide reasonable assurance to
WPS Resources' management and board of directors regarding the preparation and
fair presentation of published financial statements.

All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.

WPS Resources' management assessed the effectiveness of its internal control
over financial reporting as of December 31, 2004. In making this
assessment, it used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal
Control-Integrated Framework. Based on this assessment, management believes
that, as of December 31, 2004, WPS Resources' internal control over
financial reporting is effective based on those criteria.

WPS Resources Corporation's independent registered public accounting firm has
issued an audit report on management's assessment of WPS Resources' internal
control over financial reporting.

Wisconsin Public Service Corporation

The management of WPSC and its subsidiaries is responsible for establishing
and maintaining adequate internal control over financial reporting. WPSC's
control systems were designed to provide reasonable assurance to WPSC's
management and board of directors regarding the preparation and fair
presentation of published financial statements.

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<PAGE>



All internal control systems, no matter how well designed, have inherent
limitations. Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial statement
preparation and presentation.

WPSC's management assessed the effectiveness of its internal control over
financial reporting as of December 31, 2004. In making this assessment, it
used the criteria set forth by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on this assessment, management believes that, as of December 31, 2004,
WPSC's internal control over financial reporting is effective based on those
criteria.

WPSC's independent registered public accounting firm has issued an audit
report on management's assessment of WPSC's internal control over financial
reporting.

Reports of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of WPS Resources Corporation

We have audited management's assessment, included in the accompanying
Management Reports on Internal Control over Financial Reporting, that WPS
Resources Corporation and subsidiaries (the "Company") maintained
effective internal control over financial reporting as of December 31, 2004,
based on criteria established in Internal Control-Integrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway Commission. 
The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting.  Our responsibility is to
express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects.  Our audit included obtaining an understanding of
internal control over financial reporting, evaluating management's assessment,
testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we considered necessary in the
circumstances.  We believe that our audit provides a reasonable basis for
our opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  A company's internal control
over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis.  Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

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<PAGE>



In our opinion, management's assessment that the Company maintained effective
internal control over financial reporting as of December 31, 2004, is fairly
stated, in all material respects, based on the criteria established in Internal
Control-Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal
Control-Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements and financial statement schedules as of and for the year ended
December 31, 2004 of the Company and our report dated March 9, 2005 expressed an
unqualified opinion on those financial statements and financial statement
schedules.



/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin
March 9, 2005



To the Board of Directors of Wisconsin Public Service Corporation

We have audited management's assessment, included in the accompanying
Management Reports on Internal Control over Financial Reporting, that Wisconsin
Public Service Corporation and subsidiaries (the "Company") maintained
effective internal control over financial reporting as of December 31, 2004,
based on criteria established in Internal Control-Integrated Frameworkissued
by the Committee of Sponsoring Organizations of the Treadway Commission. 
The Company's management is responsible for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting.  Our responsibility is to
express an opinion on management's assessment and an opinion on the
effectiveness of the Company's internal control over financial reporting based
on our audit.

We conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States).  Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all
material respects.  Our audit included obtaining an understanding of
internal control over financial reporting, evaluating management's assessment,
testing and evaluating the design and operating effectiveness of internal
control, and performing such other procedures as we considered necessary in the
circumstances.  We believe that our audit provides a reasonable basis for
our opinions.

A company's internal control over financial reporting is a process designed
by, or under the supervision of, the company's principal executive and principal
financial officers, or persons performing similar functions, and effected by the
company's board of directors, management, and other personnel to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles.  A company's internal control
over financial reporting includes those policies and procedures that (1) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (2)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company's
assets that could have a material effect on the financial statements.

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<PAGE>



Because of the inherent limitations of internal control over financial
reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may not be
prevented or detected on a timely basis.  Also, projections of any
evaluation of the effectiveness of the internal control over financial reporting
to future periods are subject to the risk that the controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

In our opinion, management's assessment that the Company maintained effective
internal control over financial reporting as of December 31, 2004, is fairly
stated, in all material respects, based on the criteria established in Internal
Control-Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission.  Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial
reporting as of December 31, 2004, based on the criteria established in Internal
Control-Integrated Frameworkissued by the Committee of Sponsoring
Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company
Accounting Oversight Board (United States), the consolidated financial
statements and financial statement schedules as of and for the year ended
December 31, 2004 of the Company and our report dated March 9, 2005 expressed an
unqualified opinion on those financial statements and financial statement
schedules.

/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin
March 9, 2005



ITEM 9B.     OTHER INFORMATION

None.

PART III

ITEM 10.     DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANTS

Information required by this Item regarding the directors of
WPS Resources, Section 16 compliance and the members of the audit committee
and the audit committee financial expert can be found in WPS Resources'
Proxy Statement for its Annual Meeting of Shareholders to be held May 19, 2005,
under the captions "Election of Directors," "Ownership of Voting
Securities-Section 16(a) Beneficial Ownership Reporting Compliance" and
"Committees of the Board of Directors," respectively. Such information
is incorporated by reference as if fully set forth herein. The directors of WPS
Resources are also the directors of WPSC.

Information regarding the executive officers of WPS Resources and WPSC can be
found in this Annual Report on Form 10-K in Item 4A.

WPS Resources has adopted a Code of Conduct, which serves as our Code of
Business Conduct and Ethics. The Code of Conduct applies to all of our
directors, officers, and employees, including the Chief Executive Officer, Chief
Financial Officer, Chief Accounting Officer and Controller and any other persons
performing similar functions. The Code of Conduct also applies to WPSC and all
of its directors, officers, and employees. The Code of Conduct is available on
our web site at www.wpsr.com under "Investor Information" then select,
"Corporate Governance." A copy is also available to any shareholder,
upon request, by writing to Barth J. Wolf, Secretary and Manager - Legal
Services, WPS Resources

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<PAGE>



Corporation, P.O. Box 19001, Green Bay, Wisconsin 54307-9001. Any amendments
to, or waivers from, our Code of Conduct will be disclosed on our web site
within the prescribed time period.

WPS Resources has also adopted corporate governance guidelines. These
guidelines, as well as the charters for its audit committee, governance
committee, and compensation committee are available on our web site at
www.wpsr.com under "Investor Information" then select, "Corporate
Governance." A copy of our corporate governance guidelines and our audit
committee, governance committee and compensation committee charters are also
available to any shareholder, upon request by writing to Barth J. Wolf,
Secretary and Manager - Legal Services, WPS Resources Corporation, P.O. Box
19001, Green Bay, Wisconsin 54307-9001.

ITEM 11.     EXECUTIVE COMPENSATION

WPS Resources

Information required by this Item regarding compensation paid by
WPS Resources to its directors and its "named executive officers"
can be found in WPS Resources' Proxy Statement for its Annual Meeting of
Shareholders to be held May 19, 2005, under the captions "Board
Compensation" and "Executive Compensation." Such information is
incorporated by reference as if fully set forth herein. Named executive officers
include the Chief Executive Officer and the next four most highly compensated
executive officers for 2004.

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<PAGE>





> Wisconsin Public Service

Summary Compensation Table

The following table sets forth cash and other compensation paid to or earned
by each of the named executive officers of WPSC for the last three fiscal years.
Named executive officers include the Chief Executive Officer and the next four
most highly compensated executive officers for 2004. Compensation amounts for
those WPSC named executive officers also reported as named executive officers of
WPS Resources are repeated in this table and do not reflect
additional compensation.

|                                                                            | Long-Term Compensation     |                                    
|--------------------------------------------------------------------------- | -------------------------- | -----------------------------------
|Annual Compensation                                                         | Awards                     | Payouts                            
|Name and Title                                                              | Year                       | Salary                             
|                                                                            |                            | ($) (1)                            
|Larry L. Weyers
      Chairman and Chief Executive Officer                  | 2004
      2003
      2002 | 600,000
      544,817
      539,300
|Joseph P. O'Leary
      Senior Vice President and Chief Financial Officer   | 2004
      2003
      2002 | 261,862
      234,778
      232,400
|Charles A. Schrock
      President and Chief Operating Officer - Generation | 2004
      2003
      2002 | 248,153
      240,031
      237,600
|Thomas P. Meinz
      Executive Vice President - Public Affairs             | 2004
      2003
      2002 | 186,992
      174,265
      172,500
|Bernard J. Treml
      Senior Vice President - Human Resources              | 2004
      2003
      2002 | 175,213
      165,678
      164,000

> 

(1) In addition to base salary, these amounts include elective deferred
compensation in a reserve account for each individual.

(2) These amounts reflect above-market earnings on elective deferred
compensation. Perquisites for the Chief Executive Officer and the four other
named executive officers were less than $50,000 or 10% of the total of salary
and bonus for the year and, accordingly, are not listed.

(3) Performance shares of WPS Resources Common Stock have been awarded
to each of the named executive officers as reported in the Long-Term Incentive
Plan table presented below. At December 31, 2004, the closing stock price
of WPS Resources common stock was $49.96. Based on this valuation, an award
of the performance shares at target would have a value at year-end of $1,950,139
for Larry L. Weyers, $368,855 for Joseph P. O'Leary, $301,009 for
Charles A. Schrock, $235,561 for Thomas P. Meinz, and
$132,194 for Bernard J. Treml.

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<PAGE>



> (4) All Other Compensation for 2004 as reported in the table above is:

|Name and Title     | Year | Contributions to Employee Stock Ownership Plan($) | Deferred Compensation Contribution for 
      ESOP Restoration Benefit($) | Life Insurance Premiums($) | Above Market Earnings on Mandatory 
      Deferred Compensation($)
|------------------ | ---- | ------------------------------------------------- | ------------------------------------------------------------------------- | -------------------------- | ------------------------------------------------------------------
|Larry L. Weyers    | 2004 | 10,899                                            | 0                                                                         | 4,350                      | 10,420                                                            
|Joseph P. O'Leary  | 2004 | 5,198                                             | 0                                                                         | 2,519                      | -                                                                 
|Charles A. Schrock | 2004 | 10,904                                            | 0                                                                         | 2,304                      | 4,926                                                             
|Thomas P. Meinz    | 2004 | 8,601                                             | 2,117                                                                     | 1,791                      | 4,386                                                             
|Bernard J. Treml   | 2004 | 8,073                                             | 2,621                                                                     | 1,710                      | 4,658                                                             

Agreements with Named Executive Officers

Individual employment and severance agreements exist with each of the named
executive officers. The agreements are intended to retain the services of these
officers in the event of a change in control of WPS Resources. Each
agreement entitles the officer to a continuation of salary and benefits for a
maximum period of three years after a change in control. Each employment and
severance agreement also provides a cash termination payment should there be a
termination of the officer's employment after a change of control or in
anticipation of a change in control

Option Grants to Named Executives in Last Fiscal Year

|                   |                                                      |                                                                         |                              |                 |                           
|------------------ | ---------------------------------------------------- | ----------------------------------------------------------------------- | ---------------------------- | --------------- | --------------------------
|Individual Grants 
|Name               | Number of securities underlying options/SARs granted | Percent of total options/SARs granted to employees
      in fiscal year | Exercise or base price($/sh) | Expiration date | Grant date present value $
|                   |                                                      |                                                                         |                              |                 |                           
|Larry L. Weyers    | 111,607                                              | 34.73%                                                                  | $48.11                       | 12/8/14         | 629,463                   
|Joseph P. O'Leary  | 23,304                                               | 7.25%                                                                   | $48.11                       | 12/8/14         | 131,435                   
|Charles A. Schrock | 16,000                                               | 4.98%                                                                   | $48.11                       | 12/8/14         | 90,240                    
|Thomas P. Meinz    | 13,326                                               | 4.15%                                                                   | $48.11                       | 12/8/14         | 75,159                    
|Bernard J. Treml   | 7,634                                                | 2.38%                                                                   | $48.11                       | 12/8/14         | 43,056                    

As of December 31, 2004, WPS Resources has not granted SARs to any
employee.

All options for WPS Resources common stock reported above will vest at a
rate of 25% per year beginning on December 8, 2005 and ending on
December 8, 2008. The year-end closing price of WPS Resources stock
was $49.96. There were no stock appreciation rights granted to any employee in
2004.

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<PAGE>



The grant date present value in the last column of the table above is based
on option values of $5.64 per option granted on December 8, 2004. This
value was calculated using the standard Binomial Model. For purposes of
determining the value of these options, the following assumptions were made:

|Option Value             | $5.64    | 
|------------------------ | -------- | 
|Annual dividend yield    | 5.19%    | 
|Volatility               | 15.44%   | 
|Risk free rate of return | 4.40%    | 
|Time of exercise         | 10 years | 

The annual dividend yield assumption was based on actual dividends and stock
prices of WPS Resources common stock over the prior 36-month period to
determine an annualized 12-month yield. The risk free rate of return equals the
interest rate on 10-year treasuries on the grant date. Due to the lack of
experience with the plan, the time of exercise was assumed to be the maximum
exercise period of the options. Expected volatility is based on the monthly
price of WPS Resources common stock over the three years prior to the grant
date.

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values for the Named Executive Officers

|                   |                                 |                    | Number of securities underlying unexercised options/SARs
      at fiscal year end | Value of unexercised
      in-the-money options/SARs at fiscal year end (1)
|------------------ | ------------------------------- | ------------------ | --------------------------------------------------------------------------------- | ---------------------------------------------------------------------------
|                   |                                 |                    | (#)                                                                               | ($)                                                                        
|Name               | Shares acquired on exercise (#) | Value realized ($) | Exercisable/Unexercisable                                                         | Exercisable/Unexercisable                                                  
|                   |                                 |                    |                                                                                   |                                                                            
|Larry L. Weyers    | 0                               | 0                  | 213,195 / 255,410                                                                 | 2,884,329 / 1,522,834                                                      
|Joseph P. O'Leary  | 0                               | 0                  | 34,680 / 52,371                                                                   | 467,318 / 330,571                                                          
|Charles A. Schrock | 1,200                           | 21,582             | 43,534 / 39,436                                                                   | 699,822 / 253,756                                                          
|Thomas P. Meinz    | 8,000                           | 145,880            | 29,349 / 31,127                                                                   | 403,891 / 191,507                                                          
|Bernard J. Treml   | 0                               | 0                  | 16,091 / 17,520                                                                   | 220,927 / 105,897                                                          

> (1) Amounts represent the excess fair market value of the underlying stock
>   at year-end and the exercise price of each option. The year-end stock price
>   was $49.96.

Performance Share (Long-Term Incentive Plan) Awards to the Named Executive
Officers

|                                                             |                                                  |                                                             |                                                           |                |                
|------------------------------------------------------------ | ------------------------------------------------ | ----------------------------------------------------------- | --------------------------------------------------------- | -------------- | ---------------
|Long-Term Incentive Plans - Awards in Last Fiscal
      Year
|                                                             |                                                  |                                                             |                                                          
|                                                             |                                                  |                                                             | Estimated future payouts under non-stockprice-based plans
|Name                                                         | Number of
      shares, units orother rights (#) | Performance or
      other period until maturation orpayout | Threshold($ or #)                                         | Target($ or #) | Maximum($ or #)
|                                                             |                                                  |                                                             |                                                           |                |                
|Larry L. Weyers                                              | 12,991                                           | 3 years                                                     | -                                                         | -              | -              
|Joseph P. O'Leary                                            | 2,713                                            | 3 years                                                     | -                                                         | -              | -              
|Charles A. Schrock                                           | 1,862                                            | 3 years                                                     | -                                                         | -              | -              
|Thomas P. Meinz                                              | 1,551                                            | 3 years                                                     | -                                                         | -              | -              
|Bernard J. Treml                                             | 889                                              | 3 years                                                     | -                                                         | -              | -              

Performance shares are part of the WPS Resources 2001 Omnibus Incentive
Compensation Plan. The program sets performance goals, based on total
shareholder return, at the start of each three-year period. Comparison of
WPS Resources' total shareholder return with the shareholder return of a
peer group of major publicly traded energy service companies, for the three-year
period, determines if the performance share awards are ultimately issued, and if
so, how many. The number of shares initially awarded

-168-

<PAGE>



individuals within the plan is based on market levels of incentive
compensation and competitiveness of the total compensation package. Award levels
are targeted to meet the median of the range of similar awards paid by
comparable companies.

Pension Plans

The tables below show the lump sum retirement benefit payable to a covered
participant for specified salary levels and years of service under the
provisions of the WPSC Retirement Plan and the WPS Resources Corporation
Pension Restoration and Supplemental Retirement Plan in effect January 1,
2005, assuming termination of employment on that date:

|Pension Plan Table
      Lump Sum Retirement Benefits (1) at
      January 1, 2005
      For Years of Service Indicated
      (For Hires Prior to January 1, 2001)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                  
|Final Average Pay(2)                                                                                                                                              
|$ 200,000                                                                                                                                                         
|250,000                                                                                                                                                           
|300,000                                                                                                                                                           
|350,000                                                                                                                                                           
|400,000                                                                                                                                                           
|450,000                                                                                                                                                           
|500,000                                                                                                                                                           
|550,000                                                                                                                                                           
|600,000                                                                                                                                                           
|650,000                                                                                                                                                           
|700,000                                                                                                                                                           
|750,000                                                                                                                                                           
|800,000                                                                                                                                                           
|850,000                                                                                                                                                           
|900,000                                                                                                                                                           
|950,000                                                                                                                                                           
|1,000,000                                                                                                                                                         
|1,050,000                                                                                                                                                         
|1,100,000                                                                                                                                                         
|1,150,000                                                                                                                                                         
|1,200,000                                                                                                                                                         

> (1) The Pension Plan provides a lump sum benefit, which may be converted
>   into an actuarially equivalent annuity with monthly payments. The benefit is
>   not subject to any deduction for Social Security or other offset.
>   (2) "Final Average Pay" is the average of the last 60 months or
>   the 5 highest calendar years' compensation within the 10-year period
>   immediately proceeding the participant's termination of employment, whichever
>   is greater.

-169-

<PAGE>

> 

|Pension Plan Table
      Lump Sum Retirement Benefits(1) at
      January 1, 2005
      For Years of Service Indicated
      (For Hires After December 31, 2000)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                
|Final Average Pay(2)                                                                                                                                            
|$300,000                                                                                                                                                        
|350,000                                                                                                                                                         
|400,000                                                                                                                                                         

> (1) The pension plan provides a lump sum benefit, which may be converted
>   into an actuarially equivalent annuity with monthly payments. The benefit is
>   not subject to any deduction for Social Security or other offset.
>   (2) "Final Average Pay" is the average of the last 60 months or
>   the 5 highest calendar years' compensation within the 10-year period
>   immediately proceeding the participant's termination of employment,
>   whichever is greater.

Named executive officers' compensation for pension purposes differs from
annual compensation reported in the Summary Compensation Table. Pension
compensation for the named executive officers is:

|Name               | 2004 Pension Compensation ($) | Years of Service
|------------------ | ----------------------------- | ----------------
|Larry L. Weyers    | 989,966                       | 19              
|Joseph P. O'Leary  | 357,889                       | 3               
|Charles A. Schrock | 282,447                       | 25              
|Thomas P. Meinz    | 258,259                       | 35              
|Bernard J. Treml   | 234,786                       | 32              

Annual benefits payable from the pension plan were subject to a maximum
limitation of $165,000 for 2004 under the Internal Revenue Code. The amount of
compensation considered for purposes of the pension plan was limited to $205,000
for 2004 under the Internal Revenue Code. The pension restoration plan provides
additional pension benefits for pension restoration plan participants to
compensate for any loss of benefit payable under the pension plan caused by the
maximum benefit limitation, compensation limitation, or any salary deferral
under the WPS Resources Deferred Compensation Plan. Retirement benefits
presented in the pension plan tables include the pension restoration benefit.

The WPS Resources Supplemental Retirement Plan provides supplemental
monthly payments to its participants. Certain executive officers, including the
Chief Executive Officer and each of the other named executive officers,
participate in the supplemental retirement plan. Retirement benefits presented
in the pension plan tables do not include benefits under the supplemental
retirement plan.

Benefits under the supplemental retirement plan are payable if the
participant retires or terminates employment after reaching age 55 and
completing at least 10 years of credited service or 5 years in the event of
termination following a change in control. An eligible participant with 15 or
more years of credited service will receive a monthly benefit equal to 60
percent of the participant's "Final Average Earnings," reduced by the
monthly pension plan benefit and restoration plan benefit to which the
participant is entitled or would be entitled had the participant elected an
annuity form of payment. "Final Average Earnings" mean 1/36th
of the base salary and annual bonus paid to the participant during the month in
which the participant's employment is terminated and the immediately preceding
35 months, or during the 3 calendar years immediately preceding the
calendar year in which the participant's employment is terminated. If the
participant has fewer than 15 years of credited service, the 60 percent
target benefit percentage is reduced by 4 percent for each year by which the
participant's years of credited service is less than 15 years.

-170-

<PAGE>



Estimated annual benefits to be received by each of the named executive
officers under the Supplemental Retirement Plan upon normal retirement are as
follows:



|Name               | Estimated Supplemental Retirement Benefit ($)
|------------------ | ---------------------------------------------
|Larry L. Weyers    | 362,799                                      
|Joseph P. O'Leary  | 0                                            
|Charles A. Schrock | 103,231                                      
|Thomas P. Meinz    | 59,903                                       
|Bernard J. Treml   | 63,266                                       

ITEM 12.      SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT

WPS Resources

Information required by this Item regarding the principal securities holders
of WPS Resources and the security holdings of its directors and executive
officers can be found in WPS Resources' Proxy Statement for its Annual Meeting
of Shareholders to be held May 19, 2005 under the caption "Ownership of
Voting Securities--Beneficial Ownership." Such information is incorporated
by reference as if fully set forth herein.

Wisconsin Public Service

Ownership of Voting Securities

All of the common stock of WPSC is held by WPS Resources.

Listed in the following table are the shares of WPS Resources' common
stock owned as of February 21, 2005 by the directors and named executive
officers of WPSC, who are not directors or named executive officers of WPS
Resources, as well as the number of shares owned by the directors and executive
officers of WPSC as a group as of February 21, 2005.

|                                                                            |  | Amount and Nature of Shares Beneficially OwnedFebruary 21, 2004
|--------------------------------------------------------------------------- |  | ---------------------------------------------------------------
|Name and Title                                                              |  | Aggregate Number of Shares BeneficiallyOwned (1)               
|Charles A. Schrock
      President and Chief Operating Officer - Generation |  | 52,317                                                         
|Thomas P. Meinz
      Executive Vice President - Public Affairs             |  | 41,397                                                         
|Bernard J. Treml
      Senior Vice President - Human Resources              |  | 26,559                                                         
|All 18 directors and executive officers as a group                          |  | 611,601                                                        

> * Less than 1% of WPS Resources outstanding shares of common stock

> 

(1) Aggregate Number of Shares Beneficially Owned includes shares of common
stock held in the Employee Stock Ownership Plan and Trust, the WPSC Deferred
Compensation Trust, and all stock options, which are exercisable within 60 days
of February 21, 2005. Each director or officer has sole voting and investment
power with respect to the shares reported, unless otherwise noted. No voting or
investment power exists related to the stock options reported until exercised.

None of the persons listed beneficially owns shares of any other class of
WPS Resources' equity securities.

-171-

<PAGE>





Equity Compensation Plan Information

Information required by this Item regarding equity compensation plans of WPS
Resources can be found in WPS Resources' Proxy Statement for its Annual Meeting
of Shareholders to be held May 19, 2005 under the caption "Ownership of
Voting Securities--Equity Compensation Plan Information." Such information
is incorporated by reference as if fully set forth herein.

ITEM 13.     CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS

WPSC provides and receives services, property, and other things of value to
and from its parent, WPS Resources, and other subsidiaries of
WPS Resources. All such transactions are made pursuant to a master
affiliated interest agreement approved by the PSCW. The agreement provides that
WPSC receives payment equal to the higher of its cost or fair value for services
and property and other things of value which WPSC provides to WPS Resources
or its other nonregulated subsidiaries, and WPSC makes payments equal to the
lower of the provider's cost or fair value for property, services, and other
things of value which WPS Resources or its other nonregulated subsidiaries
provide to WPSC. The agreement further provides that any services, property, or
other things of value provided to or from WPSC to or for any other regulated
subsidiary of WPS Resources be provided at cost. Modification or amendment
to the master agreement requires the approval of the PSCW.

ITEM 14.     PRINCIPAL ACCOUNTING FEES AND SERVICES

The following is a summary of the fees billed to WPS Resources and WPSC
by Deloitte & Touche LLP for professional services performed for 2004 and
2003:



|Fees                   | 2004       | 2003      
|---------------------- | ---------- | ----------
|Audit Fees (a)         | $2,050,083 | $1,555,124
|Audit Related Fees (b) | 197,415    | 142,067   
|Tax Fees (c)           | -          | -         
|All Other Fees (d)     | 14,345     | 36,396    
|Total Fees             | $2,261,843 | $1,733,587

> a)  Audit Fees. Consists of aggregate fees billed to
>   WPS Resources and WPSC by Deloitte & Touche LLP for professional
>   services rendered for the audits of the annual consolidated financial
>   statements, reviews of the interim consolidated financial statements included
>   in quarterly reports and audits of the effectiveness of, and management's
>   assessment of the effectiveness of, internal control over financial reporting,
>   of WPS Resources and its subsidiaries. Audit fees also include services
>   that are normally provided by Deloitte & Touche in connection with
>   statutory and regulatory filings or engagements, including comfort letters,
>   consents and other services related to SEC matters, and consultations arising
>   during the course of the audits and reviews concerning financial accounting
>   and reporting standards.
>   b)  Audit Related Fees. Consists of fees billed for assurance and
>   related services that are reasonably related to the performance of the audit
>   or review of the consolidated financial statements or internal control over
>   financial reporting and are not reported under "Audit Fees." These
>   services include employee benefit plan audits, accounting consultations in
>   connection with potential transactions, and consultations concerning financial
>   accounting and reporting standards.
>   c)  Tax Fees. Consists of fees billed for professional services
>   for tax compliance, tax advice and tax planning. These services include
>   assistance regarding federal and state tax compliance, tax audit issues,
>   mergers and acquisitions, and tax planning.

-172-

<PAGE>





> d)  All Other Fees. Consists of other fees billed to
>   WPS Resources and WPSC by Deloitte & Touche LLP for products and
>   services other than the services reported above. All Other Fees are for
>   software licensing provided in 2004 and 2003. The nature of the software
>   license fees, which include support and learning services, have been deemed to
>   be permissible non-attest services.

In considering the nature of the services provided by the independent
auditor, the audit committee determined that such services are compatible with
the provision of independent audit services. The audit committee discussed these
services with the independent auditor and WPS Resources management and
determined that they are permitted under the rules and regulations concerning
auditor independence promulgated by the SEC to implement the Sarbanes-Oxley Act
of 2002, as well as those of the American Institute of Certified Public
Accountants. Since May 6, 2003, the audit committee has approved in advance 100%
of the services described in the table above under "Audit-Related
Fees," "Tax Fees" and "All Other Fees" in accordance
with its pre-approval policy.

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<PAGE>





PART IV

ITEM 15.     EXHIBITS AND FINANCIAL
STATEMENT SCHEDULES

|(a)                | Documents filed as part of this report:                                                                                                                                                                                                                                                                      
|------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                                                                                                                              
|(1)                | Consolidated Financial Statements included in Part II at Item 8 above:                                                                                                                                                                                                                                       
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Description                                                                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                              
|                   | WPS Resources                                                                                                                                                                                                                                                                                                
|                   | Consolidated Statements of Income for the three years ended
      December 31, 2004, 2003, and 2002                                                                                                                                                                                                          
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Balance Sheets as of December 31, 2004 and 2003                                                                                                                                                                                                                                                 
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Statements of Common Shareholders' Equity for the three
      years ended December 31, 2004, 2003, and 2002                                                                                                                                                                                     
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Statements of Cash Flows for the three years ended
      December 31, 2004, 2003, and 2002                                                                                                                                                                                                      
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                   
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                      
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Wisconsin Public Service                                                                                                                                                                                                                                                                                     
|                   | Consolidated Statements of Income for the three years ended
      December 31, 2004, 2003, and 2002                                                                                                                                                                                                          
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Balance Sheets as of December 31, 2004 and 2003                                                                                                                                                                                                                                                 
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Statements of Capitalization as of December 31, 2004
      and 2003                                                                                                                                                                                                                             
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Statements of Common Shareholder's Equity for the three
      years ended December 31, 2004, 2003, and 2002                                                                                                                                                                                     
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Consolidated Statements of Cash Flows for the three years ended
      December 31, 2004, 2003, and 2002                                                                                                                                                                                                      
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                   
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Report of Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                      
|-174-
      <PAGE>
|(2)                | Financial Statement Schedules.
      The following financial statement schedules are included in Part IV of
      this report. Schedules not included herein have been omitted because they
      are not applicable or the required information is shown in the financial
      statements or notes thereto.
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Description                                                                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Schedule I - Condensed Parent Company Only Financial Statements                                                                                                                                                                                                                                              
|                   |                                                                                                                                                                                                                                                                                                              
|                   | A.                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                              
|                   | B.                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                              
|                   | C.                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                              
|                   | D.                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Schedule II WPS Resources Valuation and Qualifying Accounts                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                              
|                   | Schedule II WPSC Valuation and Qualifying Accounts                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                              
|(3)                | Listing of all exhibits, including those incorporated by reference.                                                                                                                                                                                                                                          





|ExhibitNumber      | Description of Documents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|------------------ | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|2.1*               | Asset Contribution Agreement between ATC and Wisconsin Electric Power
      Company, Wisconsin Power and Light Company, WPSC, Madison Gas &
      Electric Co., Edison Sault Electric Company, South Beloit Water, Gas and
      Electric Company, dated as of December 15, 2000. (Incorporated by
      reference to Exhibit 2A-3 to WPS Resources' and WPSC's Form 10-K for
      the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.1                | Restated Articles of Incorporation of WPS Resources. (Incorporated
      by reference to Exhibit 3(i).(2) to WPS Resources' Form 10-Q for
      the quarter ended September 30, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.2                | Articles of Incorporation of WPSC as effective May 26, 1972 and amended
      through May 31, 1988 (Incorporated by reference to Exhibit 3A to Form 10-K
      for the year ended December 31, 1991); Articles of Amendment to
      Articles of Incorporation dated June 9, 1993 (Incorporated by reference to
      Exhibit 3 to Form 8-K filed June 10, 1993.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.3                | By-Laws of WPS Resources, as amended through April 1, 2004.
      (Incorporated by reference to Exhibit 3.1 to WPS Resources' and
      WPSC's Form 10-Q for the quarterly period ended March 31, 2004.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|3.4                | By-Laws of WPSC, as in effect August 15, 2004. (Incorporated by
      reference to Exhibit 3.1 to WPS Resources' and WPSC's Form 10-Q for
      the quarterly period ended September 30, 2005.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.1                | Rights Agreement, dated December 12, 1996, between
      WPS Resources and U.S. Bank National Association (successor to
      Firstar Trust Company) (Incorporated by reference to Exhibit 4.1 to
      WPS Resources' Form 8-A filed December 13, 1996 [File
      No.1-11337].)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|-175-
      <PAGE>
|4.2                | Amendment to Rights Agreement, effective as of October 9, 2002, by and
      among WPS Resources, U.S. Bank National Association and American
      Stock Transfer & Trust Company. (Incorporated by reference to Exhibit
      4(h) to WPS Resources' Form S-3 filed on April 28, 2003, File No.
      333-104787.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.3                | First Mortgage and Deed of Trust, dated as of January 1, 1941 from WPSC
      to U.S. Bank National Association (successor to First Wisconsin Trust
      Company), Trustee (Incorporated by reference to Exhibit 7.01 - File No.
      2-7229); Supplemental Indenture, dated as of November 1, 1947
      (Incorporated by reference to Exhibit 7.02 - File No. 2-7602);
      Supplemental Indenture, dated as of November 1, 1950 (Incorporated by
      reference to Exhibit 4.04 - File No. 2-10174); Supplemental Indenture,
      dated as of May 1, 1953 (Incorporated by reference to Exhibit 4.03 - File
      No. 2-10716); Supplemental Indenture, dated as of October 1, 1954
      (Incorporated by reference to Exhibit 4.03 - File No. 2-13572);
      Supplemental Indenture, dated as of December 1, 1957 (Incorporated by
      reference to Exhibit 4.03 - File No. 2-14527); Supplemental
      Indenture, dated as of October 1, 1963 (Incorporated by reference to
      Exhibit 2.02B - File No. 2-65710); Supplemental Indenture, dated
      as of June 1, 1964 (Incorporated by reference to Exhibit 2.02B - File No.
      2-65710); Supplemental Indenture, dated as of November 1, 1967
      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);
      Supplemental Indenture, dated as of April 1, 1969 (Incorporated by
      reference to Exhibit 2.02B - File No. 2-65710); Fifteenth Supplemental
      Indenture, dated as of May 1, 1971 (Incorporated by reference to Exhibit
      2.02B - File No. 2-65710); Sixteenth Supplemental Indenture, dated as
      of August 1, 1973 (Incorporated by reference to Exhibit 2.02B - File
      No. 2-65710); Seventeenth Supplemental Indenture, dated as of September 1,
      1973 (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);
      Eighteenth Supplemental Indenture, dated as of October 1, 1975
      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);
      Nineteenth Supplemental Indenture, dated as of February 1, 1977
      (Incorporated by reference to Exhibit 2.02B - File No. 2-65710);
      Twentieth Supplemental Indenture, dated as of July 15, 1980 (Incorporated
      by reference to Exhibit 4B to Form 10-K for the year ended
      December 31, 1980); Twenty-First Supplemental Indenture, dated as of
      December 1, 1980 (Incorporated by reference to Exhibit 4B to
      Form 10-K for the year ended December 31, 1980); Twenty-Second
      Supplemental Indenture dated as of April 1, 1981 (Incorporated by
      reference to Exhibit 4B to Form 10-K for the year ended December 31,
      1981); Twenty-Third Supplemental Indenture, dated as of February 1, 1984
      (Incorporated by reference to Exhibit 4B to Form 10-K for the year ended
      December 31, 1983); Twenty-Fourth Supplemental Indenture, dated as of
      March 15, 1984 (Incorporated by reference to Exhibit 1 to Form 10-Q for
      the quarter ended June 30, 1984); Twenty-Fifth Supplemental
      Indenture, dated as of October 1, 1985 (Incorporated by reference to
      Exhibit 1 to Form 10-Q for the quarter ended September 30,
      1985); Twenty-Sixth Supplemental Indenture, dated as of December 1,
      1987 (Incorporated by reference to Exhibit 4A-1 to Form 10-K for the year
      ended December 31, 1987); Twenty-Seventh Supplemental Indenture,
      dated as of September 1, 1991 (Incorporated by reference to Exhibit 4 to
      Form 8-K filed September 18, 1991); Twenty-Eighth Supplemental Indenture,
      dated as of July 1, 1992 (Incorporated by reference to Exhibit 4B - File
      No. 33-51428); Twenty-Ninth Supplemental Indenture, dated as of October 1,
      1992 (Incorporated by reference to Exhibit 4 to Form 8-K filed October 22,
      1992); Thirtieth Supplemental Indenture, dated as of February 1, 1993
      (Incorporated by reference to Exhibit 4 to Form 8-K filed
      January 27, 1993); Thirty-First Supplemental Indenture, dated as of
      July 1, 1993 (Incorporated by reference to Exhibit 4 to Form 8-K filed
      July 7, 1993); Thirty-Second Supplemental Indenture, dated as of
      November 1, 1993 (Incorporated by reference to Exhibit 4 to
      Form 10-Q for the quarter ended September 30, 1993); Thirty-Third
      Supplemental Indenture, dated as of December 1, 1998 (Incorporated by
      reference to Exhibit 4D to Form 8-K filed December 18, 1998);
      Thirty-Fourth Supplemental Indenture, dated as of August 1, 2001
      (Incorporated by reference to Exhibit 4D to Form 8-K filed August 24,
      2001); Thirty-Fifth Supplemental Indenture, dated as of December 1,
      2002 (Incorporated by reference to Exhibit 4D to Form 8-K filed
      December 16, 2002); and Thirty-Sixth Supplemental Indenture, dated as
      of December 8, 2003 (Incorporated by reference to Exhibit 4.2 to Form
      8-K filed December 9, 2003.)-176-
      <PAGE>
      
      All references to periodic reports are to those of WPSC (File No. 1-3016).
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.4                | Indenture, dated as of December 1, 1998, between WPSC and U.S.
      Bank National Association (successor to Firstar Bank Milwaukee, N.A.,
      National Association) (Incorporated by reference to Exhibit 4A to Form 8-K
      filed December 18, 1998); First Supplemental Indenture, dated as of
      December 1, 1998 between WPSC and Firstar Bank Milwaukee, N.A.,
      National Association (Incorporated by reference to Exhibit 4C to Form 8-K
      filed December 18, 1998); Second Supplemental Indenture, dated as of
      August 1, 2001 between WPSC and Firstar Bank, National Association
      (Incorporated by reference to Exhibit 4C of Form 8-K filed August 24,
      2001); Third Supplemental Indenture, dated as of December 1, 2002
      between WPSC and U.S. Bank National Association (Incorporated by reference
      to Exhibit 4C of Form 8-K filed December 16, 2002); and Fourth
      Supplemental Indenture, dated as of December 8, 2003, by and between
      WPSC and U.S. Bank National Association (successor to Firstar Bank,
      National Association and Firstar Bank Milwaukee, N.A., National
      Association). (Incorporated by reference to Exhibit 4.1 to Form 8-K filed
      December 9, 2003).References
      to periodic reports are to those of WPSC (File No. 1-3016).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|4.5                | Indenture, dated as of October 1, 1999, between WPS Resources and
      U.S. Bank National Association (successor to Firstar Bank Milwaukee,
      N.A., National Association) (Incorporated by reference to Exhibit 4(b) to
      Amendment No. 1 to Form S-3 filed October 21, 1999 [Reg. No. 333-88525]);
      First Supplemental Indenture, dated as of November 1, 1999 between
      WPS Resources and Firstar Bank, National Association (Incorporated by
      reference to Exhibit 4A of Form 8-K filed November 12, 1999); and Second
      Supplemental Indenture, dated as of November 1, 2002 between
      WPS Resources and U.S. Bank National Association. (Incorporated by
      reference to Exhibit 4A of Form 8-K filed November 25, 2002). All
      references to filings are those of WPS Resources (File No. 1-11337).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.1               | Joint Power Supply Agreement among WPSC, Wisconsin Power and Light
      Company, and Madison Gas and Electric Company, dated February 2, 1967.
      (Incorporated by reference to Exhibit 4.09 in File No. 2-27308.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.2               | Joint Power Supply Agreement (Exclusive of Exhibits) among WPSC,
      Wisconsin Power and Light Company, and Madison Gas and Electric Company
      dated July 26, 1973. (Incorporated by reference to Exhibit 5.04A
      in File No. 2-48781.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.3               | Basic Generating Agreement, Unit 4, Edgewater Generating Station, dated
      June 5, 1967, between Wisconsin Power and Light Company and WPSC.
      (Incorporated by reference to Exhibit 4.10 in File No. 2-27308.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.4               | Agreement for Construction and Operation of Edgewater 5 Generating
      Unit, dated February 24, 1983, between Wisconsin Power and Light
      Company, Wisconsin Electric Power Company, and WPSC. (Incorporated by
      reference to Exhibit 10C-1 to WPSC's Form 10-K for the year ended
      December 31, 1983.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.5               | Amendment No. 1 to Agreement for Construction and Operation of
      Edgewater 5 Generating Unit, dated December 1, 1988. (Incorporated by
      reference to Exhibit 10C-2 to WPSC's Form 10-K for the year ended
      December 31, 1988.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.6               | Revised Agreement for Construction and Operation of Columbia Generating
      Plant among WPSC, Wisconsin Power and Light Company, and Madison Gas and
      Electric Company, dated July 26, 1973. (Incorporated by reference to
      Exhibit 5.07 in File No. 2-48781.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.7+              | Form of Key Executive Employment and Severance Agreement entered into
      between WPS Resources and each of the following:
      Phillip M. Mikulsky and Larry L. Weyers. (Incorporated
      by reference to Exhibit 10.8 to WPS Resources' and WPSC's Form 10-K
      for the year ended December 31, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-177-
      <PAGE>
|10.8+              | Form of Key Executive Employment and Severance Agreement entered into
      between WPS Resources and each of the following: Larry B. Borgard,
      Diane L. Ford, David W. Harpole, Richard E. James,
      Bradley A. Johnson, Thomas P. Meinz, Barbara A. Nick, Joseph P.
      O'Leary, Mark A. Radtke, Charles A. Schrock, Bernard J. Treml
      and Daniel J Verbanac. (Incorporated by reference to Exhibit 10.9 to
      WPS Resources' and WPSC's Form 10-K for the year ended
      December 31, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.9+              | Form of Key Executive Employment and Severance Agreement entered into
      between WPS Resources and each of the following: Barth J. Wolf.
      (Incorporated by reference to Exhibit 10.10 to WPS Resources' and
      WPSC's Form 10-K for the year ended December 31, 2002.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.10+             | WPS Resources Deferred Compensation Plan as Amended and Restated
      Effective January 1, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.11+             | WPS Resources 2001 Omnibus Incentive Compensation Plan.
      (Incorporated by reference to Exhibit 10H-4 to WPS Resources' and
      WPSC's Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.12+             | WPS Resources 1999 Stock Option Plan. (Incorporated by reference
      to Exhibit 10-2 in WPS Resources' Form 10-Q for the quarter ended
      June 30, 1999, filed August 11, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.13+             | WPS Resources 1999 Non-Employee Directors Stock Option Plan.
      (Incorporated by reference to Exhibit 4.2 in WPS Resources' Form S-8,
      filed December 21, 1999. [Reg. No. 333-93193].)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.14              | Term Loan Agreement, dated as of November 5, 1999 among PDI
      New England, Inc., PDI Canada, Inc., and Bayerische Landesbank
      Girozentrale. (Incorporated by reference to Exhibit 4H to
      WPS Resources' and WPSC's Form 10-K for the year ended
      December 31, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.15*             | Credit Agreement dated as of April 14, 2000 among Sunbury
      Generation, LLC, as Borrower, Bayerische Landesbank Girozentrale, Cayman
      Islands Branch, as WC Lender, the Term Lenders Party Hereto From Time
      to Time and Bayerische Landesbank Girozentrale, New York Branch, as
      Administrative Agent. (Incorporated by reference to Exhibit 10J-2 to
      WPS Resources' and WPSC's Form 10-K for the year ended
      December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
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|10.17+             | Form of WPS Resources NonQualified Stock Option Agreement.
      (Incorporated by reference to Exhibit 10.1 to WPS Resources' and WPSC's
      Form 8-K filed December 13, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.18+             | Form of WPS Resources Performance Stock Right Agreement. (Incorporated
      by reference to Exhibit 10.2 to WPS Resources' and WPSC's Form 8-K filed
      December 13, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.19* #           | Joint Plant Agreement by and between WPSC and Dairyland Power
      Cooperative, dated as of November 23, 2004                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|12.1               | WPS Resources Ratio of Earnings to Fixed Charges                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|12.2               | WPSC Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed
      Charges and Preferred Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|21                 | Subsidiaries of the Registrants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|23.1               | Consent of Independent Registered Public Accounting Firm for WPS
      Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|-178-
      <PAGE>
|23.2               | Consent of Independent Registered Public Accounting Firm for WPSC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|24                 | Powers of Attorney                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.1               | Certification of Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities
      Exchange Act of 1934 for WPS Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.2               | Certification of Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities
      Exchange Act of 1934 for WPS Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.3               | Certification of Chief Executive Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities
      Exchange Act of 1934 for WPSC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|31.4               | Certification of Chief Financial Officer Pursuant to Section 302 of the
      Sarbanes-Oxley Act and Rule 13a-14(a) or 15d-14(a) under the Securities
      Exchange Act of 1934 for WPSC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|32.1               | Written Statement of the Chief Executive Officer and Chief Financial
      Officer Pursuant to 18 U.S.C. Section 1350 for WPS Resources                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|32.2               | Written Statement of the Chief Executive Officer and Chief Financial
      Officer Pursuant to 18 U.S.C. Section 1350 for WPSC                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|99                 | Proxy Statement for WPS Resources' 2005 Annual Meeting of Shareholders
      [To be filed with the SEC under Regulation 14A within 120 days after
      December 31, 2004; except to the extent specifically incorporated by
      reference, the Proxy Statement for the 2005 Annual Meeting of Shareholders
      shall not be deemed to be filed with the SEC as part of this Annual Report
      on Form 10-K]                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|*                  | Schedules and exhibits to this document are not filed therewith. The
      registrant agrees to furnish supplementally a copy of any such schedule or
      exhibit to the SEC upon request.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|+                  | A management contract or compensatory plan or arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|#                  | Portions of this exhibit have been redacted and are subject to a
      confidential treatment request filed with the Secretary of SEC pursuant to
      Rule 24b-2 under the Securities and Exchange Act of 1934, as amended. The
      redacted material is being filed separately with the SEC.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

-179-

<PAGE>



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrants have duly caused this report to be signed
on their behalf by the undersigned, thereunto duly authorized, on this 9th day
of March, 2005.

|WPS RESOURCES CORPORATION | WISCONSIN PUBLIC SERVICE CORPORATION                                    
|------------------------- | ------------------------------------------------------------------------
|                          |                                                                         
|(Registrants)            
|                          |                                                                         
|By:                       | /s/ L. L. Weyers                                                        
|                          | L. L. Weyers
      Chairman, President and
      Chief Executive Officer



Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of each of the
Registrants and in the capacities and on the dates indicated.

|Signature                      | Title                                                                                         | Date         
|------------------------------ | --------------------------------------------------------------------------------------------- | -------------
|                               |                                                                                               |              
|Richard A. Bemis*              | Director                                                                                      |              
|Albert J. Budney, Jr.*         | Director                                                                                      |              
|Ellen Carnahan*                | Director                                                                                      |              
|Robert C. Gallagher*           | Director                                                                                      |              
|Kathryn M. Hasselblad-Pascale* | Director                                                                                      |              
|James L. Kemerling*            | Director                                                                                      |              
|John C. Meng*                  | Director                                                                                      |              
|William F. Protz, Jr.*         | Director                                                                                      |              
|                               |                                                                                               |              
|/s/ L. L. Weyers               | Chairman, President, Chief Executive Officer and Director
      (principal executive officer) | March 9, 2005
|L. L. Weyers                   |                                                                                               |              
|                               |                                                                                               |              
|/s/ J. P. O'Leary              | Senior Vice President and Chief Financial Officer
      (principal financial officer)         | March 9, 2005
|J. P. O'Leary                  |                                                                                               |              
|                               |                                                                                               |              
|/s/ D. L. Ford                 | Vice President - Controller and Chief Accounting Officer
      (principal accounting officer) | March 9, 2005
|D. L. Ford                     |                                                                                               |              
|                               |                                                                                               |              
|                               |                                                                                               |              
|                               |                                                                                               |              
|                               |                                                                                               |              
|*By:/s/ L. L.
      Weyers     |                                                                                               |              
|L. L. Weyers                   | Attorney-in-Fact                                                                              | March 9, 2005

-180-

<PAGE>



|                                                                                                                                          |        |        |       
|----------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------ | ------
|SCHEDULE I - CONDENSED                                                                                                                    |        |        |       
|PARENT COMPANY FINANCIAL STATEMENTS                                                                                                       |        |        |       
|WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)                                                                                           |        |        |       
|                                                                                                                                          |        |        |       
|A. STATEMENTS OF INCOME AND RETAINED EARNINGS                                                                                            
|                                                                                                                                          |        |        |       
|                                                                                                                                          |        |        |       
|Year Ended December 31                                                                                                                    |        |        |       
|(Millions)                                                                                                                                | 2004   | 2003   | 2002  
|                                                                                                                                          |        |        |       
|Income                                                                                                                                    |        |        |       
|Equity earnings from subsidiaries in excess of dividends                                                                                  | $79.4  | $35.8  | $58.2 
|Dividends from subsidiaries                                                                                                               | 81.0   | 72.0   | 64.0  
|Equity earnings from subsidiaries                                                                                                         | 160.4  | 107.8  | 122.2 
|Investment income and other                                                                                                               | 1.8    | 3.4    | 3.3   
|                                                                                                                                          |        |        |       
|Total income                                                                                                                              | 162.2  | 111.2  | 125.5 
|                                                                                                                                          |        |        |       
|                                                                                                                                          |        |        |       
|Operating expenses                                                                                                                        | 12.3   | 7.6    | 7.8   
|Income before interest expense and income taxes                                                                                           | 149.9  | 103.6  | 117.7 
|Interest expense                                                                                                                          | 17.6   | 20.6   | 16.3  
|Income before income taxes                                                                                                                | 132.3  | 83.0   | 101.4 
|Income taxes                                                                                                                              | (7.4)  | (8.5)  | (8.0) 
|                                                                                                                                          |        |        |       
|Net income before cumulative effect of change in accounting principles                                                                    | 139.7  | 91.5   | 109.4 
|Cumulative effect of change in accounting principles, net of tax                                                                          | -      | 3.2    | -     
|Net Income                                                                                                                                | 139.7  | 94.7   | 109.4 
|                                                                                                                                          |        |        |       
|Retained earnings, beginning of year                                                                                                      | 438.8  | 415.9  | 373.6 
|Common stock dividends                                                                                                                    | (81.3) | (71.8) | (67.1)
|Other                                                                                                                                     | (0.2)  | -      | -     
|Retained earnings, end of year                                                                                                            | $497.0 | $438.8 | $415.9
|                                                                                                                                          |        |        |       
|Average shares of common stock                                                                                                            |        |        |       
|Basic                                                                                                                                     | 37.4   | 33.0   | 31.7  
|Diluted                                                                                                                                   | 37.6   | 33.2   | 32.0  
|                                                                                                                                          |        |        |       
|Earnings per common share (basic)                                                                                                         |        |        |       
|Net income before cumulative effect of change in accounting principles                                                                    | $3.74  | $2.77  | $3.45 
|Cumulative effect of change in accounting principles                                                                                      | -      | $0.10  | -     
|Earnings per common share (basic)                                                                                                         | $3.74  | $2.87  | $3.45 
|                                                                                                                                          |        |        |       
|Earnings per common share (diluted)                                                                                                       |        |        |       
|Net income before cumulative effect of change in accounting principles                                                                    | $3.72  | $2.75  | $3.42 
|Cumulative effect of change in accounting principles                                                                                      | -      | $0.10  | -     
|Earnings per common share (diluted)                                                                                                       | $3.72  | $2.85  | $3.42 
|                                                                                                                                          |        |        |       
|The accompanying notes to WPS Resources Corporation's parent company
      financial statements are an integral part of these statements.
|                                                                                                                                          |        |        |       
|                                                                                                                                          |        |        |       

-181-

<PAGE>



|                                                                                                                                          |          |         
|----------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
|SCHEDULE I - CONDENSED                                                                                                                    |          |         
|PARENT COMPANY FINANCIAL STATEMENTS                                                                                                       |          |         
|WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)                                                                                           |          |         
|                                                                                                                                          |          |         
|B. BALANCE SHEETS                                                                                                                        
|                                                                                                                                          |          |         
|                                                                                                                                          |          |         
|At December 31                                                                                                                            |          |         
|(Millions)                                                                                                                                | 2004     | 2003    
|Assets                                                                                                                                    |          |         
|Current assets                                                                                                                            |          |         
|Cash and cash equivalents                                                                                                                 | $0.5     | $0.5    
|Accounts receivable - affiliates                                                                                                          | 7.7      | 4.2     
|Other receivables                                                                                                                         | 2.2      | 2.5     
|Current deferred income taxes                                                                                                             | 0.1      | -       
|Notes receivable - affiliates                                                                                                             | 66.6     | 71.9    
|Total current assets                                                                                                                      | 77.1     | 79.1    
|                                                                                                                                          |          |         
|Long-term notes receivable - affiliates                                                                                                   | 27.0     | 27.4    
|                                                                                                                                          |          |         
|Investments in subsidiaries, at equity                                                                                                    |          |         
|Wisconsin Public Service Corporation                                                                                                      | 899.7    | 798.2   
|WPS Resources Capital Corporation                                                                                                         | 391.8    | 320.6   
|Upper Peninsula Power Company                                                                                                             | 64.0     | 59.8    
|Other                                                                                                                                     | 82.2     | 49.2    
|Total investments in subsidiaries, at equity                                                                                              | 1,437.7  | 1,227.8 
|                                                                                                                                          |          |         
|Net equipment                                                                                                                             | 0.3      | 0.4     
|Other investments                                                                                                                         | 21.2     | 21.5    
|Advance to affiliate                                                                                                                      | 18.6     | -       
|Deferred income taxes                                                                                                                     | 0.1      | 4.2     
|                                                                                                                                          |          |         
|Total assets                                                                                                                              | $1,582.0 | $1,360.4
|                                                                                                                                          |          |         
|                                                                                                                                          |          |         
|Liabilities and Capitalization                                                                                                            |          |         
|Current liabilities                                                                                                                       |          |         
|Notes payable - affiliates                                                                                                                | $20.5    | $2.0    
|Notes payable to preferred stock trust                                                                                                    | -        | $51.5   
|Commercial paper                                                                                                                          | 188.8    | 28.0    
|Accounts payable - affiliates                                                                                                             | 4.1      | 0.8     
|Accounts payable                                                                                                                          | 0.4      | 1.1     
|Dividends payable                                                                                                                         | -        | -       
|Other                                                                                                                                     | 6.3      | 3.9     
|Total current liabilities                                                                                                                 | 220.1    | 87.3    
|                                                                                                                                          |          |         
|Capitalization                                                                                                                            |          |         
|Total common stock equity                                                                                                                 | 1,091.8  | 1,003.2 
|Unsecured senior notes, net of unamortized discount                                                                                       | 249.1    | 248.9   
|Advances from affiliates                                                                                                                  | 21.0     | 21.0    
|Total capitalization                                                                                                                      | 1,361.9  | 1,273.1 
|                                                                                                                                          |          |         
|Total liabilities and capitalization                                                                                                      | $1,582.0 | $1,360.4
|                                                                                                                                          |          |         
|The accompanying notes to WPS Resources Corporation's parent company
      financial statements are an integral part of these statements.
|                                                                                                                                          |          |         

-182-

<PAGE>





|                                                                                                                                          |         |         |       
|----------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------- | ------
|                                                                                                                                          |         |         |       
|SCHEDULE I - CONDENSED                                                                                                                    |         |         |       
|PARENT COMPANY FINANCIAL STATEMENTS                                                                                                       |         |         |       
|WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)                                                                                           |         |         |       
|                                                                                                                                          |         |         |       
|C. STATEMENTS OF CASH FLOWS                                                                                                              
|                                                                                                                                          |         |         |       
|                                                                                                                                          |         |         |       
|Year Ended December 31                                                                                                                    |         |         |       
|(Millions)                                                                                                                                | 2004    | 2003    | 2002  
|                                                                                                                                          |         |         |       
|Operating                                                                                                                                 |         |         |       
|Net income                                                                                                                                | $139.7  | $94.7   | $109.4
|                                                                                                                                          |         |         |       
|(Deduct) equity earnings from subsidiaries in excess of dividends                                                                         | (79.4)  | (35.8)  | (58.2)
|Deferred income taxes                                                                                                                     | 4.0     | (0.2)   | (1.1) 
|Cumulative effect of change in accounting principles, net of tax                                                                          | -       | (3.2)   | -     
|Other - net                                                                                                                               | (14.8)  | 1.2     | 1.2   
|                                                                                                                                          |         |         |       
|Changes in other items                                                                                                                    |         |         |       
|Receivables                                                                                                                               | (3.2)   | (1.9)   | (0.1) 
|Accounts payable                                                                                                                          | 2.6     | 0.3     | (5.9) 
|Other                                                                                                                                     | 2.5     | (0.8)   | 0.3   
|Net cash - operating                                                                                                                      | 51.4    | 54.3    | 45.6  
|                                                                                                                                          |         |         |       
|Investing                                                                                                                                 |         |         |       
|Notes receivable - affiliates                                                                                                             | 5.7     | (83.7)  | 11.3  
|Capital contributions - affiliates, net                                                                                                   | (128.9) | (117.6) | (82.2)
|Investments - other                                                                                                                       | (1.1)   | (1.1)   | (4.3) 
|Net cash - investing                                                                                                                      | (124.3) | (202.4) | (75.2)
|                                                                                                                                          |         |         |       
|Financing                                                                                                                                 |         |         |       
|Commercial paper, net                                                                                                                     | 160.8   | 28.0    | (15.0)
|Intercompany debt, net                                                                                                                    | 18.5    | (13.6)  | (6.2) 
|Repayment of note to preferred stock trust                                                                                                | (51.5)  | -       | -     
|Proceeds from long-term debt                                                                                                              | -       | -       | 100.0 
|Purchase of deferred compensation stock                                                                                                   | -       | (1.0)   | (1.3) 
|Proceeds from issuance of common stock                                                                                                    | 26.3    | 197.7   | 28.3  
|Dividends paid on common stock                                                                                                            | (81.3)  | (71.8)  | (66.8)
|Financing - other                                                                                                                         | 0.1     | 0.2     | (0.8) 
|Net cash - financing                                                                                                                      | 72.9    | 139.5   | 38.2  
|                                                                                                                                          |         |         |       
|Net change in cash                                                                                                                        | -       | (8.6)   | 8.6   
|Cash, beginning of year                                                                                                                   | 0.5     | 9.1     | 0.5   
|Cash, end of year                                                                                                                         | $0.5    | $0.5    | $9.1  
|                                                                                                                                          |         |         |       
|The accompanying notes to WPS Resources Corporation's parent company
      financial statements are an integral part of these statements.
|                                                                                                                                          |         |         |       

-183-

<PAGE>

SCHEDULE I - CONDENSED
PARENT COMPANY FINANCIAL STATEMENTS
WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)

D. NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

The following are supplemental notes to the WPS Resources Corporation
(parent company only) financial statements and should be read in conjunction
with our consolidated financial statements and the related notes.

|SUPPLEMENTAL NOTES
|------------------
|                  
|Note 1            
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|Note 2            
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|                  
|Note 3            
|                  
|                  
|                  
|                  
|                  
|                  
|                  

-184-

<PAGE>



|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Note 4 | WPS Resources has long-term unsecured notes payable as follows.
      Interest is paid semiannually.                                                                                                                                                                                                                                                                                                                                                                                   
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | Unsecured senior notes (Millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|       | Series                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | 7.00%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | 5.375%                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       | Unamortized discount on notes                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | Total long-term notes payable                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Note 5 | WPS Resources has a long-term note payable to affiliates as follows. We
      also have guaranteed other long-term debt and obligations of our
      subsidiaries arising in the normal course of business for both years.                                                                                                                                                                                                                                                             
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | Affiliate                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | WPS Power Development (Millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       | Interest Rate                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|       | Market                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|       | Total                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Note 6 | At December 31, 2004, WPS Resources (parent company) was in compliance
      with all covenants relating to outstanding debt. A schedule of all
      principal debt payment amounts for WPS Resources (parent company) is
      as follows:                                                                                                                                                                                                                                           
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | Year Ending December 31 (Millions)                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|       | 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | 2009                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|       | Later years                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|       | Total payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Note 7 | As part of normal business, WPS Resources enters into various
      guarantees providing financial or performance assurance to third parties
      on behalf of certain subsidiaries. These guarantees are entered into
      primarily to support or enhance the creditworthiness otherwise attributed
      to a subsidiary on a stand-alone basis, thereby facilitating the extension
      of sufficient credit to accomplish the subsidiaries' intended commercial
      purposes.
|       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|       | At December 31, 2004, 2003, and 2002, outstanding guarantees totaled
      $967.8 million, $976.3 million, and $652.2 million,
      respectively, as follows:                                                                                                                                                                                                                                                                                                                         

-185-

<PAGE>



| |                                                             
| | ------------------------------------------------------------
| | WPS Resources'
      Outstanding Guarantees(Millions)       
| |                                                             
| | Guarantees of subsidiary debt                               
| | Guarantees supporting commodity transactions of subsidiaries
| | Standby letters of credit                                   
| | Surety bonds                                                
| | Total guarantees                                            



| | WPS Resources'
      Outstanding Guarantees
      (Millions)Commitments Expiring | Total
      Amounts Committed
      At December 31, 2004 | Less Than1 Year | 1 to 3Years | 4 to 5Years | Over 5 Years
| | -------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------- | ----------- | ----------- | ------------
| |                                                                                  |                                                          |                 |             |             |             
| | Guarantees of subsidiary debt                                                    | $ 27.2                                                   | $ -             | $ -         | $ -         | $27.2       
| | Guarantees supporting commodity transactions of subsidiaries                     | 863.9                                                    | 812.6           | 22.4        | 12.9        | 16.0        
| | Standby letters of credit                                                        | 76.1                                                     | 67.1            | 9.0         | -           | -           
| | Surety bonds                                                                     | 0.6                                                      | 0.6             | -           | -           | -           
| | Total guarantees                                                                 | $967.8                                                   | $880.3          | $31.4       | $12.9       | $43.2       

| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | At December 31, 2004, WPS Resources had outstanding
      $27.2 million in corporate guarantees supporting indebtedness. Of
      that total, $27.0 million supports outstanding debt at one of PDI's
      subsidiaries. The underlying debt related to these guarantees is reflected
      on the consolidated balance sheet.                                                                                                                                                                                                                                                                                                                                                               
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | Guarantees supporting commodity transactions include agreements on
      behalf of ESI, WPSC, PDI, and UPPCO. WPS Resources primarily issues
      guarantees on behalf of ESI to counterparties in the wholesale electric
      and natural gas marketplace to meet the counterparties' requirements. We
      also issue guarantees to counterparties in the wholesale electric
      marketplace to meet credit requirements on behalf of PDI. Guaranties have
      also been issued on behalf of PDI for indemnification obligations related
      to business purchase agreements. The Consolidated Balance Sheets reflect
      the obligations supported by these parental guarantees.
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | At December 31, 2004, and 2003, financial institutions have issued
      $76.1 million and $61.1 million respectively, in standby letters
      of credit for the benefit of third parties that have extended credit to
      certain subsidiaries. If a subsidiary does not pay amounts when due under
      a covered contract, the counterparty may present its claim for payment to
      the financial institution, which will request payment from
      WPS Resources. Any amounts owed by our subsidiaries are reflected in
      the Consolidated Balance Sheets.                                                                                                                    
| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | At December 31, 2004 and 2003, WPS Resources furnished
      $0.6 million and $1.1 million of surety bonds for various
      reasons including worker compensation coverage and obtaining various
      licenses, permits and rights-of-way. Liabilities incurred as a result of
      activities covered by surety bonds are included in the Consolidated
      Balance Sheets.                                                                                                                                                                                                                                                                                                              

-186-

<PAGE>



|                                                                    |              |              |            |              |            
|------------------------------------------------------------------- | ------------ | ------------ | ---------- | ------------ | -----------
|SCHEDULE II                                                         |              |              |            |              |            
|WPS RESOURCES CORPORATION                                           |              |              |            |             
|VALUATION AND QUALIFYING ACCOUNTS                                   |              |              |           
|                                                                    |              |              |            |              |            
|Allowance for Doubtful Accounts                                    
|Years Ended December 31, 2004, 2003, and 2002                      
|(In Millions)                                                      
|                                                                    |              |              |            |              |            
|                                                                    | Balance at   | Acquisitions | Additions  |              |            
|                                                                    | Beginning of | of           | Charged to |              | Balance at 
|Fiscal Year                                                         | Year         | Businesses   | Expense    | Reductions * | End of Year
|                                                                    |              |              |            |              |            
|2002                                                                | $5.0         | $0.1         | $7.9       | $6.0         | $7.0       
|                                                                    |              |              |            |              |            
|2003                                                                | $7.0         | -            | $7.0       | $7.4         | $6.6       
|                                                                    |              |              |            |              |            
|2004                                                                | $6.6         | -            | $7.1       | $5.7         | $8.0       
|                                                                    |              |              |            |              |            
|                                                                    |              |              |            |              |            
|* Represents amounts written off to the reserve, net of recoveries. |              |             
|                                                                    |              |              |            |              |            



-187-

<PAGE>



|                                                                    |  |              |  |              |  |            |  |              |  |            
|------------------------------------------------------------------- |  | ------------ |  | ------------ |  | ---------- |  | ------------ |  | -----------
|SCHEDULE II                                                         |  |              |  |              |  |            |  |              | 
|WISCONSIN PUBLIC SERVICE CORPORATION                                |  |              |  |              |  |           
|VALUATION AND QUALIFYING ACCOUNTS                                   |  |              |  |              |  |           
|                                                                    |  |              |  |              |  |            |  |              |  |            
|Allowance for Doubtful Accounts                                    
|Years Ended December 31, 2004, 2003, and 2002                      
|(In Millions)                                                      
|                                                                    |  |              |  |              |  |            |  |              |  |            
|                                                                    |  |              |  |              |  |            |  |              |  |            
|                                                                    |  | Balance at   |  | Acquisitions |  | Additions  |  |              |  |            
|                                                                    |  | Beginning of |  | of           |  | Charged to |  |              |  | Balance at 
|Fiscal Year                                                         |  | Year         |  | Businesses   |  | Expense    |  | Reductions * |  | End of Year
|                                                                    |  |              |  |              |  |            |  |              |  |            
|2002                                                                |  | $3.5         |  | -            |  | $3.9       |  | $3.7         |  | $3.7       
|                                                                    |  |              |  |              |  |            |  |              |  |            
|2003                                                                |  | $3.7         |  | -            |  | $5.2       |  | $4.5         |  | $4.4       
|                                                                    |  |              |  |              |  |            |  |              |  |            
|2004                                                                |  | $4.4         |  | -            |  | $6.0       |  | $4.9         |  | $5.5       
|                                                                    |  |              |  |              |  |            |  |              |  |            
|                                                                    |  |              |  |              |  |            |  |              |  |            
|* Represents amounts written off to the reserve, net of recoveries. |  |              |  |             
|                                                                    |  |              |  |              |  |            |  |              |  |            

-188-

<PAGE>



|EXHIBITS FILED HEREWITH
|-----------------------
|                       
|10.10                  
|                       
|10.19#*                
|                       
|12.1                   
|                       
|12.2                   
|                       
|21                     
|                       
|23.1                   
|                       
|23.2                   
|                       
|24                     
|                       
|31.1                   
|                       
|31.2                   
|                       
|31.3                   
|                       
|31.4                   
|                       
|32.1                   
|                       
|32.2                   
|                       
|#                      
|                       
|*                      

-189-

<PAGE>