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, 2001

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 | Registrant; State of IncorporationAddress; 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
        800-450-7260 | 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 | New York Stock Exchange                 



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 Registrant (1) has 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) has 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. [X]



|State the aggregate market value
      of the voting stock held bynonaffiliates of the Registrant.
|--------------------------------------------------------------------------------------------------
|                                                                                                  
|WPS RESOURCES CORPORATION                                                                         
|                                                                                                  
|WISCONSIN PUBLIC SERVICE CORPORATION                                                              



|Number of shares outstanding of each classof common stock, as of December 31, 2001
|----------------------------------------------------------------------------------
|                                                                                  
|WPS RESOURCES CORPORATION                                                         
|                                                                                  
|WISCONSIN PUBLIC SERVICE CORPORATION                                              

DOCUMENTS INCORPORATED BY REFERENCE

(1) Definitive proxy statement for the WPS Resources Corporation
    Annual Meeting of Shareholders on May 9, 2002 is incorporated into Parts I
    and III.



WPS RESOURCES CORPORATION
and
WISCONSIN PUBLIC SERVICE CORPORATION
FORM 10-K
ANNUAL REPORT TO THE SECURITIES AND EXCHANGE COMMISSION
For the Year Ended December 31, 2001



TABLE OF CONTENTS

|PART I |                                                    
|------ | ---------------------------------------------------
|       |                                                    
|1.     | BUSINESS                                           
|       |                                                    
|       | A.                                                 
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|       | B.                                                 
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|       | C.                                                 
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|       | D.                                                 
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|       | E.                                                 
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|       | F.                                                 
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|       | G.                                                 
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|       | H.                                                 
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|       | I.                                                 
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|2.     | PROPERTIES                                         
|       | A.                                                 
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|       | B.                                                 
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|3.     | LEGAL PROCEEDINGS                                  
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|4.     | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|       |                                                    
|4A.    | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 
|       | A.                                                 
|       | B.                                                 

|PART II |                                                                                            
|------- | -------------------------------------------------------------------------------------------
|        |                                                                                            
|5.      | MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS                      
|        |                                                                                            
|        |                                                                                            
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|6.      | SELECTED FINANCIAL DATA                                                                    
|        |                                                                                            
|        |                                                                                            
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|7.      | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
      OF OPERATIONS
|        |                                                                                            
|        |                                                                                            
|        |                                                                                            
|7A.     | QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK                                 
|        |                                                                                            
|8.      | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                                                
|        |                                                                                            
|        | WPS RESOURCES CORPORATION                                                                  
|        | A.                                                                                         
|        | B.                                                                                         
|        | C.                                                                                         
|        | D.                                                                                         
|        | E.                                                                                         
|        | F.                                                                                         
|        |                                                                                            
|        | WISCONSIN PUBLIC SERVICE CORPORATION                                                       
|        | G.                                                                                         
|        | H.                                                                                         
|        | I.                                                                                         
|        | J.                                                                                         
|        | K.                                                                                         
|        | L.                                                                                         
|        | M.                                                                                         
|        |                                                                                            
|9.      | CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE  

|         |                                                                                                                  |                                                   
|-------- | ---------------------------------------------------------------------------------------------------------------- | --------------------------------------------------
|PART III |                                                                                                                 
|         |                                                                                                                  |                                                   
|10.      | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                               | 134                                               
|         |                                                                                                                  |                                                   
|11.      | EXECUTIVE COMPENSATION                                                                                           | 134                                               
|         |                                                                                                                  | WPS Resources Corporation                         
|         |                                                                                                                  | Wisconsin Public Service Corporation              
|         |                                                                                                                  |                                                   
|         |                                                                                                                  |                                                   
|         |                                                                                                                  |                                                   
|         |                                                                                                                  |                                                   
|         |                                                                                                                  |                                                   
|12.      | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                   | 139                                               
|         |                                                                                                                  | WPS Resources Corporation                         
|         |                                                                                                                  | Wisconsin Public Service Corporation              
|         |                                                                                                                  |                                                   
|         |                                                                                                                  |                                                   
|13.      | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                                                                   | 141                                               
|         |                                                                                                                  | WPS Resources Corporation                         
|         |                                                                                                                  | Wisconsin Public Service Corporation              
|         |                                                                                                                  |                                                   
|PART IV  | 142                                                                                                             
|         |                                                                                                                  |                                                   
|14.      | EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K                                                  | 142                                               
|         |                                                                                                                  |                                                   
|         | Description
      of Documents                                                                                   | 142                                               
|         | Signatures                                                                                                       | 150                                               
|         |                                                                                                                  |                                                   
|         | SCHEDULE I - CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
      WPS RESOURCES CORPORATION (PARENT COMPANY ONLY) |                                                   
|         | A.                                                                                                               | Report
      of Independent Public Accountants    
|         | B.                                                                                                               | Statements
      of Income and Retained Earnings  
|         | C.                                                                                                               | Balance
      Sheets                              
|         | D.                                                                                                               | Statements
      of Cash Flows                    
|         | E.                                                                                                               | Notes
      to Parent Company Financial Statements



|EXHIBITS
|--------
|        
|12      
|        
|21      
|        
|23      
|        
|24      



> PART I

ITEM 1. BUSINESS

> GENERAL

WPS Resources Corporation



WPS Resources was incorporated in Wisconsin in 1993 as a holding company
for regulated utility and nonregulated business units. Principal operating
subsidiaries and their approximate percentages of revenues, net income, and
assets are:



|                                     | Percent ofRevenues* | Percent of Net Income* | Percent ofAssets
|------------------------------------ | ------------------- | ---------------------- | ----------------
|                                     |                     |                        |                 
|Wisconsin Public Service Corporation | 35%                 | 104%                   | 60%             
|Upper Peninsula Power Company        | 2%                  | 1%                     | 4%              
|WPS Energy Services, Inc.            | 59%                 | 8%                     | 25%             
|WPS Power Development, Inc.          | 5%                  | 3%                     | 11%             
|WPS Resources Corporation            | 0%                  | -17%                   | 0%              

* The percentages above do not total 100% due to intercompany transactions.



Wisconsin Public Service, WPS Energy Services, and WPS Power
Development are all Wisconsin corporations. Upper Peninsula Power is a
Michigan corporation. Wisconsin Public Service and Upper Peninsula Power
are regulated utilities. WPS Energy Services and WPS Power Development
are nonregulated entities.



Wisconsin Public Service Corporation

Wisconsin Public Service, which began operations in 1883, 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. In 2001, Wisconsin Public Service served 400,862 electric retail
customers and 290,353 natural gas retail customers. Wholesale electric service
is provided to various customers including municipal utilities, electric
cooperatives, energy marketers, other investor-owned utilities, and a municipal
joint action agency.



|2001 Operating Revenues
|-----------------------
|                       
|State                  
|Customers              
|Electric               
|Natural gas            

Upper Peninsula Power Company

Upper Peninsula Power is a regulated utility providing electric service
to a 4,500 square mile area of Michigan's Upper Peninsula. Electric service
was provided to 50,724 retail customers. Wholesale electric service was provided
to various municipal utilities, electric cooperatives, and other investor-owned
utilities. Total revenues consisted of 90% retail sales and 10% wholesale sales.

WPS Resources Capital Corporation

WPS Resources Capital Corporation was created in 1999 as an intermediate
holding company for the nonregulated subsidiaries of WPS Resources. At the
end of 2001, WPS Resources Capital Corporation had total assets of
$1.0 billion, consisting primarily of its investments in WPS Energy
Services and WPS Power Development.

WPS Energy Services, Inc.

WPS Energy Services is a nonregulated subsidiary of WPS Resources
Capital Corporation. WPS Energy Services provides energy and related
products and services in the nonregulated energy market throughout the Midwest
and northeastern United States. WPS Energy Services had revenues of $1.6
billion and assets of $720 million in 2001. Revenues in 2001 have risen
significantly over 2000 due to increased natural gas and electric sales volumes
and higher natural gas prices in the first half of 2001.

WPS Power Development, Inc.

WPS Power Development is also a nonregulated subsidiary of
WPS Resources Capital Corporation. Energy-related services provided by
WPS Power Development include project development, engineering and
management services, and operations and maintenance services. WPS Power
Development currently owns, through its subsidiaries, electric generation
facilities in Wisconsin, Maine, Pennsylvania, and New Brunswick, Canada, a
synthetic fuel processing facility located in Kentucky, and steam production
facilities located in Arkansas and Oregon. WPS Power Development had
revenues of $141.5 million in 2001 and assets of $323.1 million at
December 31, 2001.

Forwarding-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. Forward-looking statements included or incorporated in this document
include, but are not limited to statements regarding:

> 

- expectations regarding future
    revenues,
- estimated future capital
    expenditures,
- expected costs of purchased
    power in the future,
- costs of decommissioning
    nuclear generating plants,
- recovery of deferred costs,
- future cleanup costs
    associated with manufactured gas plant sites and
- statements in Management's
    Discussion and Analysis of Financial Condition and Results of Operations
    regarding trends or estimates.

We cannot predict the course of future events or anticipate the interaction
of multiple factors beyond our control and their effect on revenues, project
timing, and costs. Some risk factors that could cause results different from any
forward-looking statement include:

> General economic, business,
>     and regulatory conditions
>     
>   Legislative and regulatory
>     initiatives regarding deregulation and restructuring of the utility industry
>     which could affect costs and investment recovery
>     
>   State and federal rate
>     regulation
>     
>   Growth and competition and
>     the extent and timing of new business development in the markets of
>     subsidiary companies
>     
>   The performance of projects
>     undertaken by subsidiary companies
>     
>   Business combinations among
>     our competitors and customers
>     
>   Energy supply and demand
>     
>   Financial market conditions,
>     including availability, terms, and use of capital
>     
>   Nuclear and environmental
>     issues
>     
>   Weather and other natural
>     phenomena
>     
>   Commodity price and interest
>     rate risk
>     
>   Acts of terrorism

We make no commitment to disclose any revisions to the forward-looking
statements as a result of facts, events or circumstances after the date of this
report.



B. ELECTRIC UTILITY MATTERS

Electric Operations

WPS Resources electric utility operations are provided through Wisconsin
Public Service and Upper Peninsula Power. In Wisconsin, the largest communities
served by Wisconsin Public Service at the electric retail level are the cities
of Green Bay, Oshkosh, Wausau, and Stevens Point. In Michigan, the largest
community served at the electric retail level is the Houghton/Hancock area,
which is served by Upper Peninsula Power.

Generating Capacity

In 2001, Wisconsin Public Service reached a firm net design peak of 2,014
megawatts on the afternoon of August 8. At the time of this summer peak, our
total firm resources, i.e., generation plus firm purchases, totaled 2,330
megawatts. The summer time period is the most relevant for capacity planning
purposes. We expect future supply reserves to meet the minimum 18% planning
criteria, imposed by the Public Service Commission of Wisconsin, through 2004.

For additional information regarding our generation facilities, see
"UTILITY" in Part I, Item 2, PROPERTIES.

In 2001, Upper Peninsula Power purchased 87% of its total energy
requirements. Remaining energy requirements were supplied by hydroelectric and
combustion turbine facilities owned by Upper Peninsula Power. During 2001,
Upper Peninsula Power purchased 65 megawatts of firm power from Wisconsin
Public Service. Upper Peninsula Power also purchased non-firm power from
Wisconsin Public Service and Alliant Energy Corporation among others. The
purchases from Wisconsin Public Service represented 78% of Upper Peninsula
Power's total energy requirements in 2001. Upper Peninsula Power has
contracted for 65 megawatts of capacity and energy from Wisconsin Public Service
for 2002.

In 2001, Wisconsin Public Service sold 25% of its ownership interest in
Wisconsin River Power Company to Wisconsin Power and Light Company. This
transaction decreased the ownership interest of Wisconsin Public Service in
Wisconsin River Power from 66.88% to 50% and increased the ownership percentage
of Wisconsin Power and Light from 33.12% to 50%. The disposition was effective
December 31, 2001. Wisconsin River Power is the owner and operator of two dams
and related hydroelectric plants, on the Wisconsin River, which have an
aggregate installed capacity of approximately 39 megawatts.

Kewaunee Nuclear Power Plant

General

The Kewaunee plant is a pressurized water reactor plant with a nameplate
capacity of 562 megawatts. Since September 24, 2001, the Kewaunee plant has been
jointly-owned by Wisconsin Public Service (59%) and Wisconsin Power and Light
(41%). The plant is operated by Nuclear Management Company LLC. Nuclear
Management Company is owned by five utilities in the upper Midwest and operates
these utilities six nuclear power plants. The plants are located in Iowa,
Minnesota, Wisconsin, and Michigan. WPS Resources owns a 20% interest in
Nuclear Management Company. The plant's operating license expires in 2013.
Wisconsin Public Service is considering whether or not to seek extension of the
plant operating license to 2033.

Ownership

On September 24, 2001 Wisconsin Public Service acquired Madison Gas and
Electric Company's 17.8% share of the Kewaunee plant for $15.8 million.

Madison Gas and Electric also agreed to:

> 1) transfer its qualified decommissioning trust to Wisconsin
>             Public Service,
>             2) transfer all securities and cash balances in the Madison Gas
>             and Electric Non-Qualified Fund without reduction for any imputed
>             tax liability, to the Wisconsin Public Service Non-Qualified Trust,
>             and
>             3) continue to make contributions to its Non-Qualified Fund as
>             required by its funding plan for the period September 24, 2001
>             through December 31, 2002. The fund's investments will be
>             transferred to the Wisconsin Public Service Non-Qualified Trust on
>             January 2, 2003.

These funds and contributions are expected to fully fund Madison Gas and
Electric's share of total expected plant decommissioning costs.

Madison Gas and Electric will retain its obligation for its share of the
costs for final disposal of spent nuclear fuel created up to the time of
ownership transfer.

Steam Generator Replacement

On September 23, 2001, Wisconsin Public Service began its scheduled 72-day
outage to refuel the plant and replace its two steam generators. The refueling
and steam generator replacement were completed and the plant was back in service
on December 4, 2001. Total gross cost of the replacement was approximately
$121 million, of which Wisconsin Public Service's share is
$71 million. The steam generator replacement recaptured production capacity
that had been lost due to degradation of the steam generators over their life,
increasing the net production capacity of the plant by 35 megawatts. There were
no material unexpected repairs identified during the outage. In response to a
general bulletin from the Nuclear Regulatory Commission, the reactor vessel head
was inspected and no damage was found.

Plant Regulation

The Kewaunee plant has been implementing a plan over the last several years
to make improvements to plant processes and procedures. Assessments performed by
Nuclear Management Company and Kewaunee staff, the Nuclear Regulatory
Commission, the Institute of Nuclear Plant Operations, and others reinforced the
need to continue this improvement plan.

In 2000, the Nuclear Regulatory Commission issued a Revised Oversight
Process. Although the Oversight Process did not revise any Commission
regulations, it provided, for the first time, objective measures of performance,
some of which the Nuclear Regulatory Commission had not monitored closely in the
past. The Nuclear Regulatory Commission performance measures expanded from
solving equipment performance issues to the procedural causes underlying such
performance issues. As industry standards evolved toward more rigorous and
structured processes, the Kewaunee plant procedures required improvement to
remain in compliance. Management has now identified certain areas for
improvement in order to ensure the Kewaunee plant operates in accordance with
evolving industry and regulatory standards and to minimize the potential for a
significant event or regulatory shutdown in light of the new Oversight Process.
In 2001, approximately $19 million was spent to address these issues, of
which $9.9 million was deferred. Wisconsin Public Service was responsible
for its 59% share of these costs.

We estimate that additional incremental costs for these improvements over the
period of 2002 through 2005 to be approximately $52 million. These costs
will be included in future rate requests of the Kewaunee co-owners. The Kewaunee
co-owners received approval from the Public Service Commission of Wisconsin and
the Michigan Public Utility Commission for deferral of the 2001 and 2002
incremental costs associated with these improvements. Wisconsin Public Service
will include its 59% share of these costs in its future rate requests.

Total additional plant capital costs associated with these improvements, over
the 2002 through 2003 period are estimated to be $5 million. Wisconsin
Public Service will be responsible for its 59% share of these costs.

Radioactive Waste Storage



Security

As a result of the events of September 11,
2001, Nuclear Management Company implemented additional security measures at the
Kewaunee plant, which remain in effect. The additional measures increased
security costs at the plant approximately $480,000 in 2001 and are expected to
cost approximately $1.25 million in 2002. Nuclear Management Company, the
plant operator, is reviewing the need for additional security measures. The
Public Service Commission of Wisconsin has allowed the deferral of the security
costs for 2002 and indicated that reasonable additional security costs will be
recoverable in rates.

Plant Capacity

Nuclear Management Company is considering the possibility of implementing
improved instrumentation and other changes at the Kewaunee plant to increase net
production capacity at the plant by as much as 30 megawatts. The potential
improvements, estimated to cost approximately $12 million, could be
completed in 2003 or 2004. Wisconsin Public Service would be responsible for its
59% share of these costs.

Depreciation and Decommissioning

Wisconsin Public Service's current rate order requires the investment in the
new steam generators to be recovered using the sum-of-the-years-digits
depreciation method over an 8.5-year period beginning with completion of
installation of the new steam generators in 2001. The unrecovered plant
investment at the end of 2000 and future plant additions will be recovered over
a period ending 8.5 years after the installation of the steam generators using a
straight-line depreciation methodology. The order further provides for the
funding period for decommissioning to be extended from 2002 to the end of 2010.

At December 31, 2001, the net carrying amount of our investment in Kewaunee
plant, including construction work in progress, was approximately
$88.5 million. The cost in current dollars for our 59% share of the
estimated costs to decommission the Kewaunee plant is $319 million.
Wisconsin Public Service decommissioning trust assets at December 31, 2001
totaled $311.3 million. The increases from 2000, in the decommissioning
costs and the trust assets are due to the acquisition of Madison Gas and
Electric's 17.8% interest in the plant and its decommissioning assets.

During 2001, $3.3 million of depreciation expense related to unrecovered
plant investment was recognized compared with $8.9 million recognized in
2000. As a result of the extension of our funding period through the end of
2010, the 2001 decommissioning funding requirements decreased to
$2.6 million compared with $8.9 million in 2000.

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 CONSOLIDATED FINANCIAL STATEMENTS.

FUEL SUPPLY

Electric Generation Mix

Wisconsin Public Service's electric generation mix for 2001 and 2000 was:



Energy Sources
    2001
    2000Coal
    61.4%
    63.3%Purchased power
    22.9%
    19.4%Nuclear
    11.2%
    12.0%Natural gas/fuel oil
    2.6%
    3.4%Hydro
    1.9%
    1.9%


Purchased power represents short-term energy purchases.

Fuel Costs

Wisconsin Public Service's fuel costs for 2001 and 2000 were:



Fuel Source Costs(per million
      Btus)
  

    2001
    2000Coal
    $1.10
    $1.08Nuclear
    0.41
    0.45Natural gas
    4.42
    4.42Fuel oil
    6.83
    6.46


Coal

Coal is the primary fuel source for Wisconsin Public Service, 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 Act
for 2001 and beyond. This coal has been our least-cost coal source from any
of the subbituminous coal-producing regions in the United States.

Wisconsin Public Service continues to test alternative coal sources for its
Pulliam and Weston plants. Alternative sources could provide more competitive
market pricing and higher Btu content. Coal with higher Btu content will
increase generation output and provide flexibility in meeting peak electric
demands.

Most of the coal purchased by Wisconsin Public Service 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. Historically, Wisconsin Public Service has purchased
the subbituminous coal directly from the producer. For 2002 and 2003,
approximately 23% of the coal requirements for the wholly-owned plants and 13%
for the jointly-owned plants have been awarded to a marketer. For 2002, 99% of
the wholly-owned and jointly-owned plant requirements are under contract. One
long-term contract, for our wholly-owned plants, covers approximately 23% of
total requirements and has take-or-pay obligations totaling $83.7 million
for the years 2002 through 2016.

Wisconsin Public Service contracts for coal transportation for its plants
under contracts of up to five years duration. Over 90% of our coal
transportation is under competitive transportation agreements, which we expect
to continue to contribute to competitive fuel costs.

See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS,COMMITMENTS AND
CONTINGENCIES regarding "Coal Contracts."

Nuclear Fuel Cycle

Wisconsin Public Service purchases uranium concentrates, conversion services,
enrichment services, and fabrication services for nuclear fuel assemblies at the
Kewaunee plant. Wisconsin Public Service removes and replaces approximately
one-third of the 121 fuel assemblies from the reactor every 18 months. Wisconsin
Public Service stores spent fuel assemblies at the plant site pending permanent
disposal by the United States Department of Energy.

Wisconsin Public Service purchases uranium concentrates, conversion services,
and enrichment services either on the spot market, through a bidding process, or
using existing contracts.

Nuclear Management Company's uranium inventory policy's to maintain
sufficient inventory for up to two reactor refuelings. As of December 31,
2001, after the November 2001 refueling, approximately 563,000 pounds of
yellowcake (a processed form of uranium ore), or its equivalent, were held in
inventory for the plant. Each refueling requires approximately 450,000 pounds of
yellowcake. Approximately 350,000 pounds of yellowcake will be acquired in 2002
to meet the requirements of the inventory policy. Inventory includes uranium
under contract.

Conversion services are complete for the nuclear fuel reload scheduled in
2003.

Wisconsin Public Service has contracted for a fixed quantity of enrichment
services through the year 2004. Wisconsin Public Service has the option of
purchasing future enrichment services under an existing contract or purchasing
from the spot market.

Wisconsin Public Service has contracted for fuel fabrication services for the
next six reloads.

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 $6.5 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.
Uranium inventories could be sold on the spot market.

Spent Nuclear Fuel Disposal

The federal government is responsible for the disposal or permanent storage
of spent nuclear fuel. Legislation is being considered on the federal level to
provide for the establishment of a permanent storage facility.

Spent nuclear fuel is currently being stored at the Kewaunee plant. In 2001,
the plant added storage capacity for 215 spent fuel assemblies. At current
production levels, this is sufficient storage for all fuel assemblies until the
expiration of our current operating license in 2013. Additional capacity will be
needed in 2013 for fuel assemblies in use at shutdown or if the plant license is
extended.

Funding Decontamination and Decommissioning of Federal
Facilities

The Energy Policy Act of 1992 requires nuclear power companies to fund the
decontamination and decommissioning of Department of Energy facilities relating
to the processing of nuclear fuel. As a result, we are required to pay a
surcharge for uranium enrichment services purchased from the Federal government
prior to October 23, 1992. On an inflation-adjusted basis, our portion of the
obligation related to the Kewaunee plant is approximately $600,000 per year
through the year 2007. Madison Gas and Electric has agreed to continue to pay
its portion of this annual assessment through 2007.

Wisconsin Public Service and a number of other nuclear power companies sued
the Department of Energy in the United States Court of Federal Claims
seeking a refund of the previously paid decontamination and decommissioning
surcharge payments. This claim continues in the Court of Federal Claims pending
the resolution of other litigation.

Regulatory Matters in the Wisconsin Jurisdiction

Industry Restructuring

Electric reliability was the primary issue for the Public Service Commission
of Wisconsin in 2001. The Public Service Commission of Wisconsin in 2001 focused
on:

> transfer of the eastern
>         Wisconsin utilities' transmission assets to American Transmission
>         Company LLC,
>         
>     a generic docket to
>         address the recovery of deferred start-up costs and the increased cost
>         of transmission service from American Transmission Company in member
>         utility rates,
>         
>     approval for construction
>         of the Wausau to Duluth transmission line, and
>         
>     review of various utility
>         and Independent Power Producer proposals for construction of new
>         generation facilities in the state.

The Public Service Commission of Wisconsin issued an order in 2001
  approving the proposed Wausau to Duluth transmission line. The Wausau to
  Duluth transmission line is a proposed 220-mile, 345-kilovolt transmission
  line from Wausau, Wisconsin to Duluth, Minnesota. The line will be constructed
  by Wisconsin Public Service and Minnesota Power and Light Company. Wisconsin
  Public Service will transfer its portion of the construction project to
  American Transmission Company in exchange for an additional equity interest in
  American Transmission Company. Wisconsin Public Service is responsible for the
  management and construction of the Wisconsin portion of this project for
  American Transmission Company.

The Commission initiated a generic docket to address the potential recovery
  of deferred 2000 and 2001 start-up costs and increased transmission operating
  costs of American Transmission Company by the member Wisconsin utilities;
  Madison Gas and Electric Company, Wisconsin Electric Power Company, Wisconsin
  Power and Light Company and Wisconsin Public Service. We anticipate completion
  of the docket in the summer of 2002 , which should identify the costs to be
  recovered and the method for recovery. Wisconsin Public Service began
  recovering some of these costs, as a result of its interim rate case order,
  which was implemented January 1, 2002. The interim recovery of these
  costs is subject to refund should the costs in the final generic docket be
  less than the costs included in the interim rates.

The Commission began evaluating proposals from Wisconsin Electric Power,
  Customer's First! Coalition (a group of environmental and customer groups),
  municipal utilities, and cooperative energy providers regarding future
  construction and ownership of generation facilities in the state. In its first
  ruling on these proposals, the Commission indicated that
  Wisconsin Electric Power may proceed with its planning for generation
  construction and will be able to recover prudent planning expenditures
  from its customers. On February 1, 2002, Wisconsin Electric Power applied
  for Certificates of Public Convenience and Necessity for its generation
  construction proposals.

Electric Supply Issues

Although the summer of 2001 was generally warmer than normal, the regional
  electric system did not experience electric shortages and price spikes as
  experienced in the late 1990s. Purchased power, generation capacity, low
  natural gas prices and transmission capacity were sufficient to satisfy
  customer demand. In the summer of 2001, Wisconsin Public Service offered On
  Line Power Exchange, a new option for its largest customers. On Line Power
  Exchange is a customer buyback program, which allows Wisconsin Public Service
  to repurchase capacity from its customers during peak demand periods. This
  option allows customers to voluntarily sell back all or a portion of their
  supply. The program allows customers to set the price for their capacity on
  the Internet in real time based on current, day ahead, or hourly prices. There
  was significant customer interest in this program, but due to adequate power
  supply on the system at reasonable prices during the summer, there were very
  few periods of supply shortages and higher prices for there to be a benefit to
  the customer or Wisconsin Public Service in 2001.

Customer Rate Matters

In 2001, Wisconsin Public Service's electric rates were 93% of the state
  average for residential rates, 81% for commercial rates, and 79% for large
  industrial rates.

In 2001, Wisconsin Public Service filed for a 16.1% electric rate increase
  for 2002, the second year of the biennial rate case filed in 2000. Primary
  reasons for requesting higher rates in the second year of the biennial period
  were the costs relating to the Kewaunee steam generator replacement completed
  in 2001, process improvements necessary to bring the Kewaunee plant operations
  up to evolving industry standards, deferred startup and higher operating costs
  from American Transmission Company, transmission and generation
  infrastructure, customer information system improvements, facilities
  management system enhancements, security costs at the Kewaunee plant and
  continuation of the automated meter reading installation project. These
  increased costs were partially offset by decreased costs for fuel and
  purchased power due to increased generation from the Kewaunee plant and lower
  natural gas prices. Wisconsin Public Service requested a 12.6% return on
  equity, based on a capital structure consisting of 55% equity.

Due to the fact that a rate order could not be issued by January 1, 2002,
  Wisconsin Public Service filed for interim rate relief to be effective January
  1, 2002. On December 19, 2001, the Commission issued its order for interim
  rate relief authorizing a $55.5 million, or 10.3%, increase in electric
  rates effective January 1, 2002. Interim rates are based on a 12.1% return on
  equity and a 55% common equity capital structure. The interim rates are
  subject to refund in the event that the revenue requirement in the final rate
  case is less than the authorized interim revenue requirement. The interim
  rates will continue until a final rate order is issued. A final decision on
  the original rate request is expected in April 2002.

Regulatory Matters in the Michigan Jurisdiction

Industry Restructuring

On June 2, 2000, a law became effective in Michigan, providing all electric
  customers of investor-owned and cooperative utilities the right to choose
  their generation supplier by January 1, 2002. This law allows customers to
  choose their supplier; it did not deregulate utility generation services.

Wisconsin Public Service and Upper Peninsula Power, along with other
  Michigan Electric and Gas Association electric utility members, jointly
  developed and filed open-access tariffs and business practices with the
  Michigan Public Service Commission. The Commission approved the tariffs with
  minimal changes. All of the Michigan Electric and Gas Association Companies
  had open-access tariffs available for customer choice on January 1, 2002. The
  Michigan Public Service Commission also completed initial orders during 2001
  on Slamming and Cramming, Code-of-Conduct, Distribution Performance Standards,
  Environmental Disclosure, Customer Choice Education, Transition Cost
  Recovery, Stranded Cost Recovery, a Market Power Study and Supplier
  Licensing. Some of these orders are or will be challenged for rehearing or in
  court proceedings. Orders related to Slamming and Cramming are intended to
  minimize the ability of suppliers to switch customers or add services and
  associated charges without the customer's consent.

Customer Rate Matters

In 2001, Wisconsin Public Service continued to be the lowest-cost provider
  of electric service in Michigan for all customer classes, although one other
  Upper Peninsula utility had equally low rates for residential and small
  commercial customers. Wisconsin Public Service rates were 77% of the state
  average for residential rates, 75% for commercial rates, and 63% for large
  industrial rates.

In 2001, Upper Peninsula Power's rates were similar to other small Michigan
  utilities serving predominantly rural service territories. In comparison to
  the major utilities in Michigan, Upper Peninsula Power Company rates were 123%
  of the state average for residential rates, 108% for commercial rates, and
  106% for large industrial rates.

Wisconsin Public Service and Upper Peninsula Power have one-for-one
  recovery mechanisms for electric fuel and purchased power in Michigan.
  Although a number of utilities froze their one-for-one recovery mechanisms
  during the 1990s, Wisconsin Public Service and Upper Peninsula Power did not
  request a freeze. In the current volatile electric energy market, we feel that
  passing through these one-for-one costs of energy encourages a competitive
  market and sends appropriate price signals to customers.

Other than power supply recovery adjustments, Wisconsin Public Service has
  not had a Michigan electric rate increase since 1987.

In August 2001, Upper Peninsula Power's application for a $5.7 million
  rate increase which had been pending before the Michigan Public Service
  Commission since October 2000 was dismissed at Upper Peninsula Power's
  request. Upper Peninsula Power requested a dismissal of this rate case because
  the information filed in the case was outdated. Upper Peninsula Power intends
  to submit a new application for rate increases sometime in 2002. Upper
  Peninsula Power has not experienced a rate increase since 1994.

Regulatory Matters in the Federal Energy Regulatory
  Commission Jurisdiction

Independent System Operator

In December 2001, Midwest Independent Transmission System Operator received
  approval from the Federal Energy Regulatory Commission as the first Regional
  Transmission Organization in the nation and became operational in the first
  quarter of 2002. The Federal Energy Regulatory Commission will require several
  additional compliance filings as part of the approval order.

As required by Wisconsin Act 9, American Transmission Company joined the
  Midwest Independent Transmission System Operator. American Transmission
  Company is made up of the transmission systems formerly owned by Wisconsin
  Public Service, Upper Peninsula Power, Wisconsin Power and Light Company,
  Wisconsin Electric Power Company, Madison Gas and Electric Company, Edison
  Sault Electric Company, South Beloit Water, Gas and Electric Company, and a
  number of electric municipal and cooperative utilities.

In a companion order, the Federal Energy Regulatory Commission also denied
  approval of Alliance Regional Transmission Operator's application to become
  the second Regional Transmission Company in the Midwest. Alliance proposed to
  serve the Midwest in portions of Illinois, Michigan, Ohio, the Virginias, and
  the Carolinas. During 2000, three major members of Midwest Independent
  Transmission System Operator Illinois Power, Commonwealth Edison, and Ameren,
  received approval from the Federal Energy Regulatory Commission to withdraw
  from Midwest Independent Transmission System Operator and join Alliance. The
  December 2001 Federal Energy Regulatory Commission order strongly encourages
  Alliance member companies to join the Midwest Independent Transmission System
  Operator.

In 2001, additional utilities joined the Midwest Independent Transmission
  System Operator, extending its market to the Rocky Mountains. Discussions are
  underway on a combination of Midwest Independent Transmission System Operator
  with Southwest Power Pool, which covers portions of Louisiana, Mississippi,
  Arkansas, Oklahoma, Texas, Kansas and New Mexico. Discussions are also
  underway for a merger of Pennsylvania, Jersey, Maryland Regional Transmission
  Organization and Midwest Independent Transmission System Operator, which would
  add portions of Pennsylvania, New Jersey, Maryland and West Virginia.

Customer Rate Matters

Other than transmission open access tariff cases, ancillary service rates,
  and adjustments for fuel buyouts, Wisconsin Public Service has not had a
  Federal Energy Regulatory Commission wholesale rate case since 1987. Wisconsin
  Public Service anticipates filing a Federal Energy Regulatory Commission
  general rate case by the end of 2003.

Open Access Transmission Tariff

On January 1, 2001, Wisconsin Public Service turned over its transmission
  system to American Transmission Company in exchange for an equity interest in
  American Transmission Company. Upper Peninsula Power Company also transferred
  its transmission system to American Transmission Company on June 28,
  2001. Wisconsin Public Service filed for new transmission open access tariffs
  with the Federal Energy Regulatory Commission to eliminate the transmission
  provisions in its current rates, which are now a part of American Transmission
  Company's open access transmission tariff. The remaining portions of the
  Wisconsin Public Service tariff are ancillary service and distribution service
  provisions. The Upper Peninsula Power portion of this open access transmission
  tariff will be revised in a similar manner.

Regional Transmission Organizations

During 2000, the Federal Energy Regulatory Commission accepted American
  Transmission Company's open access transmission tariff effective January 1,
  2001, subject to refund and set it for hearing. The Commission identified four
  issues that were not approved as filed:

> a 12.2% return on equity,
>         
>     recovery of start-up
>         costs,
>         
>     operating costs to be
>         included in the rate formula, and
>         
>     the phase-in mechanism.

Settlements on all four issues were reached with all interveners in this
  case and the Federal Energy Regulatory Commission approving the settlements in
  late 2001. The settlements reduced American Transmission Company rates for
  Wisconsin Public Service by approximately $7.5 million during the 2001
  through 2005 phase-in period. The settlements provided for a 12.2% return on
  common equity. WPS Resources has a 15% equity investment in American
  Transmission Company.

Standard Market Design

In late 2001, the Federal Energy Regulatory Commission started a new
initiative to develop a standard wholesale market design. This initiative so far
has included preliminary orders on:

> 

- standards of conduct,
- a new test for
        determining market power related to applications for market-based rate
        authority, and
- setting all market-based
        rates subject to refund if a utility is ever found to have exercised
        market power.

This initiative is expected to affect almost all aspects of utility
regulation on the wholesale level. Wisconsin Public Service has filed for a
triennial review of its market-based rate authority using the new market power
test and has also filed comments on the issue of setting market-based rates
subject to refunds and the development of electric market design and structure.

Hydroelectric Licenses

All the Federal Energy Regulatory Commission hydroelectric facility licenses
held by Wisconsin Public Service, Upper Peninsula Power, and Wisconsin River
Power have been renewed, with the exception of the licenses for Upper Peninsula
Power's Bond Falls and Dead River facilities. The Federal Energy Regulatory
Commission issued 30-year licenses for the Petenwell and Castle Rock facilities,
owned by Wisconsin River Power effective December 7, 2001. Wisconsin Public
Service owns 50% of the stock of Wisconsin River Power.

In 1998, Upper Peninsula Power reached a settlement agreement with
federal and state agencies and special interest groups regarding its Bond Falls
license. All parties signed the agreement early in 2001. The agreement is the
basis for a new license from the Federal Energy Regulatory Commission. Issuance
of the new license is expected in late 2002. The license will have a term of 30
to 50 years from the date it is granted.

Licensing of the Upper Peninsula Power Dead River facility is also
progressing. During 2000, Upper Peninsula Power obtained long-term water-power
easements from adjacent landowners providing flowage rights required by the
Federal Energy Regulatory Commission and the Clean Water Act. Upper Peninsula
Power expects issuance of the license in late 2002. The license will have a 30
to 50-year term beginning in August 1991, the date the Federal Energy Regulatory
Commission claimed jurisdiction over the Dead River facility.

Other Matters

Research and Development

Electric research and development expenditures for Wisconsin Public Service
totaled $1.1 million for 2001, $1.8 million for 2000, and
$1.7 million for 1999. These expenditures were primarily charged to
electric operations as incurred.

Customer Segmentation

Twenty-nine paper mills account for 11% of Wisconsin Public Service's
electric revenues. There is no single customer, or small group of customers, the
loss of which would have a materially adverse effect on the electric business of
Wisconsin Public Service in the current regulatory environment.

|                                                       |            |            |           
|------------------------------------------------------ | ---------- | ---------- | ----------
|ELECTRIC OPERATING STATISTICS                          |            |            |           
|                                                       |            |            |           
|WISCONSIN PUBLIC SERVICE CORPORATION                   |            |            |           
|                                                       |            |            |           
|                                                       |            |            |           
|                                                       |            |            |           
|WISCONSIN PUBLIC SERVICE CORPORATION                   | 2001       | 2000       | 1999      
|Operating revenues (Millions)                          |            |            |           
|Residential and farm                                   | $214.0     | $195.4     | $183.2    
|Small commercial and industrial                        | 173.3      | 164.1      | 151.3     
|Large commercial and industrial                        | 137.4      | 134.3      | 127.0     
|Resale and other                                       | 86.1       | 82.2       | 66.4      
|Total                                                  | $610.8     | $576.0     | $527.9    
|Kilowatt-hour sales (Millions)                         |            |            |           
|Residential and farm                                   | 2,865.6    | 2,797.6    | 2,747.6   
|Small commercial and industrial                        | 3,310.9    | 3,257.0    | 3,135.7   
|Large commercial and industrial                        | 4,024.0    | 4,117.7    | 4,053.2   
|Resale and other                                       | 2,418.4    | 2,234.6    | 1,983.6   
|Total                                                  | 12,618.9   | 12,406.9   | 11,920.1  
|Customers served (End of period)                       |            |            |           
|Residential and farm                                   | 356,497    | 351,440    | 345,962   
|Small commercial and industrial                        | 43,305     | 42,570     | 41,394    
|Large commercial and industrial                        | 227        | 225        | 220       
|Resale and other                                       | 898        | 890        | 875       
|Total                                                  | 400,927    | 395,125    | 388,451   
|Average kilowatt-hour price (Cents)                    |            |            |           
|Residential and farm                                   | 7.47       | 6.98       | 6.67      
|Small commercial and industrial                        | 5.23       | 5.04       | 4.82      
|Large commercial and industrial                        | 3.41       | 3.26       | 3.13      
|Production capacity (Summer - kilowatts)               |            |            |           
|Coal                                                   | 1,334,100  | 1,303,200  | 1,326,100 
|Nuclear                                                | 205,200    | 204,200    | 208,000   
|Hydroelectric                                          | 40,500     | 40,700     | 53,400    
|Combustion turbine                                     | 375,450    | 386,200    | 382,736   
|Other                                                  | 8,000      | 7,600      | 8,600     
|Purchased capacity                                     | 14,900     | 14,900     | 14,900    
|Total system capacity                                  | 1,978,150  | 1,956,800  | 1,993,736 
|Generation and purchases (Thousands of kilowatt-hours) |            |           
|Coal                                                   | 8,179,997  | 8,295,098  | 8,055,350 
|Nuclear                                                | 1,480,429  | 1,565,612  | 1,823,147 
|Hydroelectric                                          | 253,475    | 249,747    | 250,306   
|Purchases and other                                    | 3,355,554  | 2,926,876  | 2,435,409 
|Total                                                  | 13,269,455 | 13,037,333 | 12,564,212
|Steam fuel costs (Cents per million Btu)               |            |            |           
|Fossil                                                 | 112.483    | 109.990    | 109.101   
|Nuclear                                                | 40.680     | 45.241     | 45.298    
|Total                                                  | 101.255    | 99.766     | 97.378    
|System peak - firm (Kilowatts)                         | 2,014,000  | 1,793,000  | 1,751,000 
|Annual load factor                                     | 70.61%     | 80.05%     | 77.71%    
|                                                       |            |            |           
|                                                       |            |            |           
|                                                       |            |            |           
|                                                       |            |            |           
|ELECTRIC OPERATING STATISTICS                          |            |            |           
|                                                       |            |            |           
|UPPER PENINSULA POWER COMPANY                          |            |            |           
|                                                       |            |            |           
|                                                       |            |            |           
|                                                       |            |            |           
|UPPER PENINSULA POWER COMPANY                          | 2001       | 2000       | 1999      
|Operating revenues (Millions)                          |            |            |           
|Residential and farm                                   | $26.3      | $26.3      | $25.1     
|Small commercial and industrial                        | 20.6       | 21.0       | 19.0      
|Large commercial and industrial                        | 11.1       | 10.8       | 10.8      
|Resale and other                                       | 7.0        | 8.6        | 7.5       
|Total                                                  | $65.0      | $66.7      | $62.4     
|Kilowatt-hour sales (Millions)                         |            |            |           
|Residential and farm                                   | 265.4      | 269.3      | 263.7     
|Small commercial and industrial                        | 253.9      | 259.4      | 239.7     
|Large commercial and industrial                        | 215.5      | 203.5      | 226.9     
|Resale and other                                       | 179.1      | 178.3      | 147.3     
|Total                                                  | 913.9      | 910.5      | 877.6     
|Customers served (End of period)                       |            |            |           
|Residential and farm                                   | 44,865     | 44,460     | 43,309    
|Small commercial and industrial                        | 5,474      | 5,446      | 5,304     
|Large commercial and industrial                        | 12         | 12         | 9         
|Resale and other                                       | 404        | 386        | 183       
|Total                                                  | 50,755     | 50,304     | 48,805    
|Average kilowatt-hour price (Cents)                    |            |            |           
|Residential and farm                                   | 9.98       | 9.78       | 9.57      
|Small commercial and industrial                        | 8.11       | 8.08       | 7.95      
|Large commercial and industrial                        | 5.17       | 5.32       | 4.78      
|Production capacity (Summer - kilowatts)               |            |            |           
|Coal                                                   | 17,700     | 17,700     | 17,700    
|Hydroelectric                                          | 30,000     | 30,000     | 30,000    
|Combustion turbine                                     | 55,000     | 55,000     | 55,000    
|Purchased capacity                                     | 65,000     | 65,000     | 65,000    
|Total system capacity                                  | 167,700    | 167,700    | 167,700   
|Generation and purchases (Thousands of kilowatt-hours) |            |           
|Coal                                                   | 9,444      | 524        | (451)     
|Hydroelectric                                          | 109,355    | 104,144    | 126,146   
|Purchases and other                                    | 878,107    | 890,156    | 846,088   
|Total                                                  | 996,906    | 994,824    | 971,783   
|Steam fuel costs (Cents per million Btu)               |            |            |           
|Fossil                                                 | 427.746    | 933.630    | -         
|System peak - firm (Kilowatts)                         | 158,124    | 146,100    | 149,300   
|Annual load factor                                     | 65.90%     | 71.47%     | 68.65%    
|                                                       |            |            |           
|                                                       |            |            |           



C. NATURAL GAS UTILITY MATTERS

Natural Gas Market

WPS Resources' natural gas utility operations are provided by Wisconsin
Public Service. As of December 31, 2001, Wisconsin Public Service provided
natural gas distribution service to 285,047 customers in 278 municipalities in
northeastern and central Wisconsin, and 5,306 customers in and around the City
of Menominee, Michigan, for a total of 290,353 natural gas distribution
customers. This represents an increase of 54,883 customers, or 23.3%, compared
with December 31, 2000. The large increase is due mainly to the acquisition
of approximately 50,595 customers as a result of the merger of Wisconsin Fuel
and Light into Wisconsin Public Service. The principal cities served by
Wisconsin Public Service include Green Bay, Oshkosh, Manitowoc, Sheboygan,
Two Rivers, Marinette, Stevens Point, Wausau, and Rhinelander, in
Wisconsin, and the City of Menominee in Michigan.

The natural gas distribution business of Wisconsin Public Service has a
significant seasonal component and is impacted by varying weather conditions
from year-to-year. In the calendar year 2001, 64% of its natural gas sales and
54% of its total natural gas system throughput occurred during the five winter
months of November through March. Total natural gas throughput includes natural
gas sales and natural gas delivered for transportation customers. Competition
with other forms of energy exists in varying degrees, particularly for large
commercial and industrial customers who have the ability to switch between
natural gas and alternate fuels. Wisconsin Public Service offers interruptible
natural gas sales and natural gas transportation service for these customers to
enable them to reduce their energy costs through the use of natural gas.
Transportation customers purchase their natural gas from other suppliers and
contract with Wisconsin Public Service to transport the natural gas from
interstate natural gas pipelines to their facilities. Additionally, customers
still purchase their natural gas commodity directly from Wisconsin Public
Service, but have elected to do so on an interruptible basis. These customers
continue to switch from firm system supply to either interruptible system supply
or transportation service each year as the economics and service options become
attractive for them.

Natural gas operations also provide interruptible natural gas service to
Wisconsin Public Service electric operations for its combustion turbine peaking
generators and for start-up, flame stabilization, and peaking use at its Weston
and Pulliam coal-fired plants.

Natural gas sales for customer-owned power generation use are provided on an
interruptible basis, with the power plants maintaining alternate fuel
capability.

Natural gas supply has been adequate in Wisconsin, with the only significant
constraints being created by the demand of electric generation peakers. While
the cost of natural gas increased four fold during the winter of 2000-2001 due
to tight supplies nationwide, the cost of natural gas has decreased
significantly for the winter of 2001-2002. As a result of the purchased natural
gas adjustment clause, Wisconsin Public Service passes all prudently incurred
increases and decreases in natural gas purchase costs directly to customers on a
current basis.

Total natural gas deliveries in 2001 for Wisconsin Public Service, including
customer-owned natural gas transported, were 74,272,193 dekatherms, a 5.7%
increase over 2000. A dekatherm is equivalent to 10 therms or
1 million Btus of energy. Natural gas transported for end-user transport
customers made up approximately 45% or 33,718,400 dekatherms of natural gas
delivered.

Peak day natural gas throughput for 2001 occurred on Wednesday,
February 21, 2001, with 413,465 dekatherms total natural gas throughput at
an average Green Bay temperature of 5.4 degrees Fahrenheit. This compares
with the previously reported record natural gas system throughput of
432,928 dekatherms set on February 2, 1996 at an average
Green Bay temperature of -23.8 degrees Fahrenheit.



Natural Gas Supply

General

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

Pipeline Capacity and Storage

The service territory of Wisconsin Public Service is primarily served by a
single interstate pipeline, ANR Pipeline Company. Through ANR's system,
Wisconsin Public Service directly or indirectly accesses North American natural
gas supplies from three major natural gas-supply areas:

> Oklahoma, the Texas
>         panhandle, and western Kansas through ANR's Southwest system,
>         
>     the Province of Alberta,
>         Canada through the pipelines of NOVA to the Alberta border, TransCanada
>         Pipelines to Emerson, Manitoba, Viking Gas Transmission to Marshfield,
>         Wisconsin, and then into ANR's system, and
>         
>     the Chicago area through
>         ANR's Joliet Hub.

Wisconsin Public Service holds firm long-term transportation capacity on
  the pipeline from each of these three supply areas through November 2010.
  Wisconsin Public Service holds firm transportation capacity with Viking Gas
  Transmission Company, to deliver natural gas on a firm basis from its
  interconnection with TransCanada Pipelines at Emerson, in the Canadian
  Province of Manitoba, to the interconnection with ANR at Marshfield,
  Wisconsin. These Canadian natural gas suppliers hold firm capacity on
  TransCanada Pipelines from Emerson back into the production areas in Alberta,
  Canada.

Because of the substantial daily and
seasonal swings in natural gas usage in our service territory, Wisconsin Public
Service also has contracted with ANR for firm underground storage capacity
located in Michigan. Wisconsin Public Service's total firm storage capacity with
ANR is 11.6 million dekatherms. There are no known geological formations in
Wisconsin capable of being developed into underground storage facilities.

Besides providing the ability to manage significant changes in daily natural
gas demand, storage also provides the ability to purchase natural gas from the
production areas at high load factors, thus minimizing supply costs. During the
summer, natural gas purchased in excess of market demand is injected into
storage. During the winter, natural gas is withdrawn from storage and combined
with natural gas purchased in the production areas to meet the increased winter
demand. Natural gas from storage provides up to 52% of our supply on winter peak
days, approximately 30% of our winter sales volumes, and approximately 20% of
our total annual sales volumes.

For winter peak day needs, Wisconsin Public Service also contracts with
third-party suppliers for high deliverability storage in production areas. This
high deliverability storage service provides a back-up supply of natural gas for
our transportation contracts when other supplies cannot be delivered due to
production supply losses caused by extremely cold weather in the production
areas.

Supply Contracts

Wisconsin Public Service contracts for fixed-term firm supplies with between
10 and 15 suppliers each year for natural gas produced in each of the three
production areas. Due to the current uncertainty regarding the future role of
natural gas utilities in continuing the natural gas supply function, Wisconsin
Public Service has continued to pursue contracting for domestic natural gas
supplies for terms of one year or less. This will minimize potential stranded
natural gas supply contract costs if retail natural gas deregulation should
proceed quickly in Wisconsin. Our supply portfolio, as of December 31,
2001, contained domestic contracts with remaining terms of up to ten months, and
Canadian contracts with remaining terms of up to 22 months.

Wisconsin Public Service purchases additional supplies on the monthly spot
market as required to supplement supplies from fixed-term firm contracts.
Wisconsin Public Service has been an active spot market purchaser since 1985 and
has contracts in place with a number of suppliers of spot market natural gas.

Wisconsin Public Service acquired the natural gas supply and transportation
contracts of Wisconsin Fuel and Light on April 1, 2001. Because Wisconsin Public
Service and Wisconsin Fuel and Light held similar natural gas supply and
transportation contracts, the acquisition of the Wisconsin Fuel and Light
contracts is expected to have no significant impact on the combined company's
cost of natural gas.

Regulatory Matters in the Wisconsin Jurisdiction

Industry Restructuring

Little progress was made on natural gas restructuring in Wisconsin over the
last year. The timing and details of implementation could have an impact on
Wisconsin Public Service because of potential stranded costs associated with
interstate pipeline capacity contracts. It is expected that the Public Service
Commission of Wisconsin will allow for stranded cost recovery from customers or
direct assignment to specific customers of applicable ongoing fixed costs of
stranded pipeline capacity contracts should restructuring progress.

In its 2001-2002 rate application, Wisconsin Public Service proposed to
facilitate customer choice of natural gas suppliers through the use of its new
automated meter reading system. This customer choice program was approved by the
Public Service Commission of Wisconsin to provide customer choice of natural gas
suppliers for commercial customers using between 20,000 and 75,000 therms
per year beginning November 1, 2001. In its 2002 rate application, Wisconsin
Public Service proposes to expand the natural gas customer choice program to all
commercial customers using more than 15,000 therms per year beginning
November 1, 2002. Wisconsin Public Service expects approval for this
expansion from the Public Service Commission of Wisconsin in April 2002.
Wisconsin Public Service anticipates expanding this program in the future to all
customers, including residential natural gas customers, as the automated meter
reading system is installed on its entire system.

Cost Recovery Mechanism

Wisconsin Public Service implemented a modified one-for-one natural gas cost
recovery mechanism in January 1999, in response to Public Service Commission of
Wisconsin requirements. This method allows for the recovery of all prudent
natural gas supply costs provided those costs meet index-based benchmarks. Under
this method, Wisconsin Public Service has been authorized to recover all natural
gas commodity costs incurred to date.

Natural Gas Supply Plan

On June 29, 2001, Wisconsin Public Service filed a three-year natural gas
supply plan with the Public Service Commission of Wisconsin detailing its plans
to purchase and transport the necessary natural gas supplies for the period
November 2001 through October 2004. The Commission approved the Natural Gas
Supply Plan in October 2001.

Customer Rates

In 2001, Wisconsin Public Service filed for a 4.5% natural gas rate increase
for 2002, the second year of the biennial rate case filed in 2000. The primary
reasons for requesting higher rates in the second year of the biennium included
the cost of improvements to the natural gas infrastructure, the customer
information system, the facilities management system and the continuation of the
automated meter reading project.

Due to the fact that a rate order could not be issued by January 1, 2002,
Wisconsin Public Service filed for interim rate relief to be effective January
1, 2002. In December 2001, the Public Service Commission of Wisconsin issued an
order for interim rate relief, authorizing an $11.2 million, or 4.7%,
natural gas rate increase starting January 1, 2002. The interim rates will
continue until the final rates go into affect, which is expected in April 2002,
and are subject to refund with interest if the final authorized revenue
requirement is less than the interim authorized revenue requirement. The
Commission's interim order included the current authorized return on equity of
12.1% and a capital structure consisting of 55% equity, and several other minor
adjustments to the current Commission staff audit revenue requirements in the
case.

Wisconsin Public Service's 2001 natural gas rates were competitive in
Wisconsin. Rates were 76% of the state average for commercial and industrial
rates, and 101% of the state average for residential rates.

Regulatory Matters in the Michigan Jurisdiction

Industry Restructuring

In Michigan, the majority of the largest natural gas customers have had a
choice of their natural gas commodity supplier since the 1980s. In 2001, the
Michigan Public Service Commission approved permanent choice programs for
smaller customers for the two largest natural gas utilities in Michigan.

The small natural gas utilities in the state, including Wisconsin Public
Service, are to propose a customer choice program for all customer classes when
it is in the best interests of each utility and its customers. There is no
timetable for moving this process to the smaller utilities in the state, such as
Wisconsin Public Service, but we intend to provide for customer choice of
natural gas suppliers for all customers following installation of our automated
meter reading system in Michigan.

Natural Gas Cost Recovery Plan

As required, on December 20, 2001, Wisconsin Public Service filed a five-year
Natural Gas Cost Recovery Plan with the Michigan Public Service Commission
detailing its plan to purchase and transport the necessary natural gas supplies
for the April 2002 through March 2007 period. Wisconsin Public Service expects
approval of the Natural Gas Cost Recovery Plan, by the Michigan Public Service
Commission, in April 2002.

Customer Rates

Wisconsin Public Service had some of the lowest commercial and industrial
natural gas rates in Michigan during 2001. Its rates were 84% of the state
average for commercial and industrial rates, and 114% of the state average for
residential rates.

Wisconsin Public Service has not had a natural gas rate case in Michigan
since 1986.

Regulatory Matters in the Federal Energy Regulatory Commission
Jurisdiction

Most of Wisconsin Public Service's involvement in federal regulatory
activities in the natural gas area has been through the Wisconsin Distributor
Group. This group is made up of several Wisconsin natural gas utilities.

In 2001, the Wisconsin Distributor Group has been working with ANR and other
interested parties to come to an agreement on ANR's compliance filing in
response to Order 637 regarding capacity release and intra-day nominations. In
July 2001, ANR filed a settlement with the Federal Energy Regulatory Commission
that was supported by the Wisconsin Distributor Group and Wisconsin Public
Service. In late December, the Federal Energy Regulatory Commission issued an
order in this docket. ANR has concerns with some of the changes to the
settlement agreement imposed by the Federal Energy Regulatory Commission, and
ANR is currently working with interested parties, including the Wisconsin
Distributor Group and Wisconsin Public Service, to resolve these issues.

Also during the past year, Wisconsin Public Service has been working on its
own and through the Wisconsin Distributor Group to resolve issues with ANR and
the Federal Energy Regulatory Commission concerning negotiated rate agreements.
Wisconsin Public Service and ANR negotiated new contracts which both companies
felt were in compliance with the then stated policies of the Federal Energy
Regulatory Commission. However, after ANR filed the new contracts, the
Commission rejected the filing and required ANR to make changes, which reflected
changes in Commission policy. Wisconsin Public Service will continue to work
with ANR and the Federal Energy Regulatory Commission to resolve the issues
concerning negotiated rate agreements in order to maintain the economic and
other benefits that it gained through its negotiation with ANR.

On-going activities in which Wisconsin Public Service will be participating
as a member of the Wisconsin Distributor Group include:

> 1) ANR's compliance filings made in response to Federal Energy
>         Regulatory Commission Orders 637, 637-A and 637-B,
>         2) a new Viking rate case that was filed in December 2001,
>         3) the resolution of negotiated rate issues, and
>         4) the continued monitoring of various dockets filed by ANR Pipeline
>         Company and Viking Gas Transmission Company at the Federal Energy
>         Regulatory Commission.

|NATURAL GAS OPERATING STATISTICS     |         |         |        
|------------------------------------ | ------- | ------- | -------
|                                     |         |         |        
|WISCONSIN PUBLIC SERVICE CORPORATION |         |         |        
|                                     |         |         |        
|                                     |         |         |        
|                                     |         |         |        
|Wisconsin Public Service Corporation | 2001    | 2000    | 1999   
|Operating revenues (Millions)        |         |         |        
|Residential                          | $178.4  | $147.4  | $114.6 
|Small commercial and industrial      | 38.3    | 28.9    | 21.9   
|Large commercial and industrial      | 70.4    | 64.8    | 44.0   
|Other                                | 34.5    | 23.4    | 11.0   
|Total                                | $321.6  | $264.5  | $191.5 
|Therms delivered (Millions)          |         |         |        
|Residential                          | 211.3   | 203.4   | 190.8  
|Small commercial and industrial      | 51.8    | 45.1    | 42.5   
|Large commercial and industrial      | 114.4   | 123.7   | 112.5  
|Other                                | 28.0    | 34.4    | 27.1   
|Total therm sales                    | 405.5   | 406.6   | 372.9  
|Transportation                       | 337.2   | 294.5   | 289.7  
|Total                                | 742.7   | 701.1   | 662.6  
|Customers served (End of period)     |         |         |        
|Residential                          | 263,420 | 213,976 | 208,975
|Small commercial and industrial      | 23,242  | 18,285  | 17,647 
|Large commercial and industrial      | 3,114   | 2,840   | 2,952  
|Other                                | 1       | 1       | 1      
|Transportation customers             | 576     | 368     | 330    
|Total                                | 290,353 | 235,470 | 229,905
|Average therm price (Cents)          |         |         |        
|Residential                          | 84.42   | 72.48   | 60.07  
|Small commercial and industrial      | 73.94   | 64.13   | 51.63  
|Large commercial and industrial      | 61.54   | 52.38   | 39.08  
|                                     |         |         |        
|                                     |         |         |        

D. WPS POWER DEVELOPMENT, INC.

WPS Power Development develops, owns, and operates nonregulated electric
generation facilities and provides services to the electric power generation
industry nationwide and in Canada. Services include project development,
engineering and management services, and operation and maintenance services.
WPS Power Development has expertise in cogeneration, distributed
generation, generation from renewables, and generation plant repowering
projects. As of December 31, 2001, WPS Power Development had 175
employees, the majority of whom are members of the International Brotherhood of
Electrical Workers Local 1600 Union.

WPS Power Development owns:

> two-thirds of the Stoneman
>       Power Plant, a 53-megawatt coal-fired merchant steam plant located in
>       southwestern Wisconsin, with plans to expand it to a 250-megawatt
>       coal-fired generating facility by 2006 at a cost of approximately
>       $300 million.
>       
>   69 megawatts of hydro and
>       fossil-fueled generation assets located in northern Maine and New
>       Brunswick, Canada,
>       
>   the 473-megawatt
>       coal-fired Sunbury Generation Station in Pennsylvania,
>       
>   the 30-megawatt Westwood
>       Generating Station, which burns waste anthracite coal material, i.e.,
>       culm, located in Pennsylvania,
>       
>   a 50-megawatt single cycle
>       natural gas-fired combustion turbine located in Combined Locks, Wisconsin,
>       
>   one-third of a facility in
>       Kentucky which produces synthetic fuel from coal fines,
>       
>   steam boilers in Arkansas
>       and Oregon, and
>       
>   landfill and wood waste
>       gas-generating facilities in Wisconsin.

The 50-megawatt single cycle Combined Locks facility was completed and began
generating electricity in October of 2001. WPS Power Development is
converting it to a combined cycle system in 2002. Upon completion of the
project, which is expected in the second quarter of 2002, the facility will
deliver steam energy to Appleton Coated LLC. This will bring the total cost of
the facility to approximately $40 million.

In December 2001, WPS Power Development entered into a stock purchase
agreement to acquire CH Resources, Inc. WPS Power Development expects to
close this $62 million transaction in the second quarter of 2002.
WPS Resources expects to provide temporary financing for this transaction
through short-term debt. CH Resources owns three power plants, with a combined
capacity of 257 megawatts, and other assets in New York. The power plants are:

> a 95-megawatt combined
>       cycle facility, put in service in 1995, located in Beaver Falls, New York,
>       
>   a 53-megawatt fluidized-bed
>       facility, put in service in 1991, located in Niagara Falls, New York,
>       and
>       
>   a 109-megawatt combined
>       cycle facility, put in service in 1994, located in Syracuse,
>       New York.

In October 2000, WPS Power Development signed an asset purchase
agreement with Sierra Pacific Resources to acquire its 545-megawatt natural gas
and oil-fired Tracy/Pinon Power Station. In 2001, before the transaction was
finalized, the Nevada legislature passed legislation prohibiting divestiture of
utility generation assets in the State of Nevada until July 2003. WPS Power
Development is currently working with Sierra Pacific to evaluate the engineering
and economic feasibility of modifying the coal gasification unit at the site in
order to achieve commercial operation. The original asset purchase agreement
does not contain an automatic termination provision if closing does not occur.
The agreement does allow either party to terminate the agreement after specified
dates in 2002.

In November 2001 WPS Power Development, through its subsidiary ECO Coal
Pelletization #12 LLC, entered into a transaction with a subsidiary of a public
company resulting in ECO #12 contributing its synthetic fuel producing machinery
to Synfuel Solutions Operating, LLC, a newly formed entity, in exchange for cash
and a one-third interest in Synfuel Solutions LLC. The synthetic fuel
produced by this facility qualifies for tax credits under Section 29 of the
Internal Revenue Code. WPS Power Development entered into this transaction
to optimize the economic value of the project, due to the fact that at full
capacity the facility generates more tax credits than can be used by
WPS Resources on a consolidated basis.

The transaction generated a pre-tax gain of $40.1 million of which
$38.0 million has been deferred as of December 31, 2001, as a result of
certain rights of rescission and puts being granted to the transaction's buyer.
As these rights of rescission expire and the value of the economic put options
to the buyer diminish, WPS Power Development will recognize through
earnings the deferred gain on the transaction. The primary contingency in 2002
relates to the receipt of a new private letter ruling from the Internal Revenue
Service for this facility. If this ruling is not received, the buyer has the
right to rescind the transaction; although, in the event of rescission,
WPS Power Development would receive a breakage fee based upon overall
production of the facility from the date of the transaction through the date of
rescission. In addition, if annualized production at the facility is less than a
specified level, the purchase price will be reduced. Conversely, if production
levels are higher than a previously negotiated level, WPS Power Development
will receive a royalty payment for excess production. WPS Power Development
will also receive a royalty payment if Section 29 is extended beyond 2007. The
contingency requiring deferral of a portion of the gain until 2003, relates to a
series of put options available to the buyer in the event that the facility is
destroyed and under IRS regulations would not qualify for tax credits if
rebuilt. All such options expire in 2003.

Concurrent with the sale of a portion of its interest in this project,
WPS Power Development purchased the interest of its previous partner in the
ECO #12 project. The actual payments to this former partner are contingent upon
the same provisions referred to above. As a result, on December 31, 2001,
$21.3 million was held in escrow, for the former partner, which will be
released proportionally as the respective rescission rights and put options
expire.

The annual coal requirements for WPS Power Development owned plants are
estimated at 1.2 million tons. Of this amount, approximately 50% will be
met through the burning of coal silt. In 2001, WPS Power Development
purchased all of its coal supplies through the spot market and short-term
contracts due to the breach of a coal supply contract. In 2002, WPS Power
Development expects to supply approximately 80% of its annual coal needs through
annual coal contracts and its reserves of coal and coal silt. WPS Power
Development has approximately a 9-year reserve of coal silt. The remaining coal
requirements will be purchased through the spot market.

In 2002, coal transportation for approximately 25% of annual coal
requirements will be supplied under a two-year contract with Norfolk Southern
Railroad. The remaining coal transportation is contracted through short term
agreements with a variety of transportation providers.

All the Federal Energy Regulatory Commission hydroelectric facility licenses
held by WPS Power Development are current. The 33-megawatt hydroelectric
facility owned in New Brunswick, Canada is not subject to licensing.

Although identifiable price peaks do not occur at any certain time of the
year, WPS Power Development 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 fuel consumption, generally the winter months, the purchase
price of coal and natural gas increase.

Equity and working capital requirements of WPS Power Development are
generally financed through WPS Resources. Project nonrecourse debt
financing has been put in place for the Sunbury, Maine, and Canadian generation
plants owned by WPS Power Development.

WPS Power Development acquired the Sunbury generating plant in November
of 1999. As a result of both market conditions and issues related to the
physical performance of the plant, the project to date has not met management's
projected near-term financial performance levels. Due to this lower level of
performance in 2001, WPS Resources infused additional capital of
$24.5 million into the project to fund operating expenses, capital
expenditures, and to ensure the project is in compliance with its project
financing debt covenants. Projections going forward indicate that Sunbury will
produce adequate cash flows for its operations, with capital contributions being
required for capital expenditures. In 2002, capital contributions will be
required primarily to fund the project to reduce NOx emissions from the plant by
2003. Those expenditures are estimated to be approximately $13 million.
WPS Power Development anticipated these costs when it acquired the plant.

Of WPS Power Development's approximately 650 megawatts of existing
capacity, fixed price contracts are in place to sell approximately
350 megawatts. Of this, 250 megawatts are firm commitments. The remainder
of the energy production of WPS Power Development is sold on the spot
market. Although WPS Power Development operates in the nonregulated energy
market, the existence of various long-term out-take contracts entered into as
part of the generation asset acquisition agreements mitigates some of the impact
of spot market competition.

The generation assets of WPS Power Development are subject to
regulations on sulfur dioxide and nitrogen oxide emissions similar to those that
apply to Wisconsin Public Service. In addition, the Sunbury generation
facilities of WPS Power Development are located in an ozone non-attainment
area. As a result, these generation facilities are subject to additional
restrictions on emissions of nitrogen oxide. WPS Power Development has
acquired emission credits sufficient to meet all emission requirements through
the year 2002. Although WPS Power Development has emission credits for
2003, it is unknown whether these will be sufficient to meet its requirements.
WPS Power Development estimates that it will incur $16 million in
capital costs over the next two years to address environmental regulations at
its Sunbury facility.

E. WPS ENERGY SERVICES, INC.

WPS Energy Services is a diversified, nonregulated energy supply and
services company with its principal operations in Illinois, Maine, Michigan,
Ohio, and Wisconsin. WPS Energy Services operates in the retail and
wholesale nonregulated energy marketplace. Its emphasis is on servicing
commercial, industrial, and wholesale customers, as well as
"aggregated" residential customers, in the northeast quadrant of the
United States and adjacent portions of Canada. Aggregated residential customers
are associations or groups of residential 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 customers. WPS Energy Services had 103
employees as of December 31, 2001.

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

WPS Energy Services operates in nonregulated energy markets. Its
competitors consist of regulated utilities, large energy traders, and other
energy marketers. WPS Energy Services competes with other energy providers
on the basis of price, reliability, service, consumer convenience, performance,
and reputation.

In 2001, WPS Energy Services entered into several retail electric
aggregation contracts, adding 103,500

On January 8, 2002, WPS Energy Services received a license to operate as
an alternative electric supplier to sell electric energy to Michigan retail
customers. WPS Energy Services became 1 of 14 licensed alternative electric
suppliers in the state. Beginning January 1, 2002, the majority of Michigan
retail customers of electric utilities will be able to choose an alternative
supplier. WPS Energy Services is also a Federal Energy Regulatory
Commission licensed marketer and is transacting business in Maine, Ohio,
Pennsylvania, Illinois, and Wisconsin and will soon be in the New York market.

Since May 2000, WPS Resources has provided limited financial support and
energy supply services to a third party, Quest Energy, LLC, a Michigan limited
liability company. Quest is a retail electricity marketing entity, doing
business as a registered Alternative Electric Supplier in the state of Michigan.
Financial support is in the form of an interest-bearing note with an initial
maturity date of May 2005, secured by the assets of Quest. On
December 31, 2001, the loan amount remaining was $1.0 million. The
note contains certain restrictions on Quest's ability to enter into additional
debt instruments. WPS Resources also provides corporate guaranties on
behalf of Quest that are not included in its consolidated financial statements.
Guaranties have been made to Quest's transmission providers in the amount of
$4.5 million. These guaranties assure Quest's ability to pay for the
transmission services it purchases from these entities.

WPS Energy Services provides substantially all of the electric energy
supply to Quest on a wholesale basis without requiring the credit assurances
required of other wholesale customers. WPS Energy Services exercises its
right to evaluate Quest's sales portfolio to verify the portfolio's ability to
generate the revenues necessary to pay for purchased wholesale supply.
WPS Energy Services further provides computational infrastructure and
support services related to the daily operational activities of Quest. At
year-end, Quest was current in its payables to WPS Energy Services. On
occasion, however, payments from Quest have been late and WPS Energy
Services imposes payment penalties on these late payments.

Although WPS Energy Services is an energy marketer, it has experienced
little impact on day-to-day operations as a result of the bankruptcy of Enron
Corporation, and is in a net payable position with Enron affiliates.
WPS Energy Services has liquidated all open positions with the Enron
affiliates and replaced them with other suppliers. The forward contracts with
the Enron affiliates provided for payments representing the net liquidation
value of the contracts at the time of liquidation, and this net liquidation
amount is recorded on the balance sheet as a current accounts payable,
contingent upon the outcome of Enron's bankruptcy proceedings. Management
believes WPS Energy Services has properly recorded these liabilities. The
Enron bankruptcy is expected to have an effect on other companies throughout the
industry. As a result, WPS Energy Services is more closely monitoring its
credit exposure with other trading partners.

WPS Energy Services applies mark-to-market accounting in accordance with
EITF 98-10. There are no contracts with a term longer than 4 years and most
mature within the next 24 months. Contracts are valued on a forward curve
derived from exchange based or liquid over-the-counter market quotations. A
reserve is created for potential costs and risks, which is netted against
expected profits. WPS Energy Services recorded operating reserves, which it
deemed sufficient to cover its market positions. WPS Energy has no off
balance sheet liabilities related to these contracts.

WPS Energy is party to a lease, with an independent third party, related
to its corporate offices.

WPS Energy Services works with WPS Power Development to supply fuel
for its production facilities and sell the electric energy produced for its
current operations as well as future acquisitions.

WPS Energy Services 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. Currently, WPS Energy
Services' gross margin mix is between 40% and 50% for both electric and natural
gas.

Currently, capital requirements of WPS Energy Services are financed
through the holding company, WPS Resources.

Although WPS Energy Services is not dependent on any one customer, a
significant percentage of its retail sales volume is derived from the paper and
forest products industry. WPS Energy Services' concentration of sales in
any single market sector is decreasing as it expands into the electric
aggregation sector of the market.

WPS Energy Services has a majority interest in a Michigan natural gas
storage field, which has been in a test mode and is expected to be commercially
operational in April 2002. The storage field will allow for additional
flexibility in supplying retail and wholesale customers, sale of storage
services to the market, and potential power peaking services.

WPS Energy Services is not directly subject to significant environmental
regulations at this time.

See MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION for additional information regarding
nonregulated operations.

F. ENVIRONMENTAL MATTERS

WPS Resources and its subsidiaries are subject to federal, state, and
local regulations regarding environmental impacts of their operations on air and
water quality and solid waste. The application of federal and state restrictions
to protect the environment can involve review, certification, or issuance of
permits by various federal and state authorities, including the United States
Environmental Protection Agency and the various states' environmental agencies,
including the Wisconsin Department of Natural Resources. These restrictions may
limit, prevent, or substantially increase the cost of the operation of
generation facilities and may require substantial investments in new equipment
at existing installations. Such restrictions may require substantial additional
investments for new projects and may delay or prevent completion of projects. We
cannot forecast the effects of such regulation on our generation, transmission,
and other facilities or operations.

Wisconsin Public Service is subject to regulation by the United States
Environmental Protection Agency and the Wisconsin Department of Natural
Resources with respect to thermal and other discharges from its power plants
into Lake Michigan and other waters of Wisconsin. Wastewater discharge permits,
with a term of five years, were re-issued by the Wisconsin Department of Natural
Resources for the Kewaunee plant in 2000, for the Pulliam plant and Weston Unit
3 in 2002, and for Weston Units 1 and 2 in 2001.

The ash disposal site for Upper Peninsula Power's John H. Warden Station
was closed in 1993. Subsequent groundwater testing indicated elevated levels of
boron and lithium. Supplemental remedial investigations were performed and a
revised remedial action plan was developed. The plan was submitted to the
Michigan Department of Environmental Quality for approval in 2001. A liability
of $1.5 million and an associated regulatory asset of $1.5 million
have been recorded for estimated future expenditures associated with remediation
of this site. Upper Peninsula Power received an order permitting deferral
and future recovery of these costs.

Wisconsin Public Service continues to investigate the environmental cleanup
of 10 manufactured gas plant sites, two of which were previously owned by
Wisconsin Fuel and Light. The cleanup of the Stevens Point manufactured gas
plant site is substantially complete with monitoring of the site continuing. As
of August 2001, cleanup of the land portion of both of the Sheboygan sites was
substantially complete. Sediment remains to be addressed at the
Sheboygan-Campmarina site. Wisconsin Public Service anticipates that work will
commence on the land portion of the Oshkosh site in 2002. Costs of these
cleanups are within the range expected for these sites. Wisconsin Public Service
estimates future undiscounted investigation and cleanup costs to be in the range
of $43.0 million to $49.8 million. Wisconsin Public Service may adjust
these estimates in the future contingent upon remedial technology, regulatory
requirements and the assessment of natural resource damages.

Effective with the Wisconsin Fuel and Light merger, Wisconsin Public Service
acquired two former manufactured gas plant sites - Manitowoc and Wausau.
Wisconsin Fuel and Light performed the cleanup of the land portion of the
Manitowoc site in 1994, and the cleanup is substantially complete. Groundwater
treatment and monitoring of the Manitowoc site continue. Wisconsin Public
Service has not addressed river sediments near the former Manitowoc gas plant
site or any portion of the Wausau site.

Wisconsin Public Service currently has a $43.4 million liability
recorded for gas plant cleanup with an offsetting regulatory asset. Wisconsin
Public Service expects to recover cleanup costs net of insurance recoveries in
future customer rates. Wisconsin Public Service will not recover carrying costs
associated with the cleanup expenditures. Wisconsin Public Service has received
$12.7 million in insurance recoveries, which have been recorded as a
reduction in the regulatory asset.

The United States Environmental Protection Agency has designated
southeastern Wisconsin as an ozone non-attainment area. As part of the State of
Wisconsin's plan to reduce ozone levels in the non-attainment area, the state
mandated nitrogen oxide reductions for large emission sources. The nitrogen
oxide reductions begin in 2003, and the requirements are gradually increased
through 2007. This reduction plan affects Edgewater Unit 4. Wisconsin
Public Service owns 31.8% of this unit. Edgewater Unit 4 initiated a compliance
plan in 2000. The plan includes a combination of combustion optimization and
emission trading at a potential cost of approximately $5.0 million for
Wisconsin Public Service's share. The State of Wisconsin is also seeking
voluntary reductions from utilities with generating facilities located in
Wisconsin, but outside the United States Environmental Protection Agency
designed ozone non-attainment area, which may lead to additional expenditures
for nitrogen oxide reductions at other units. Wisconsin Public Service is
participating in voluntary efforts to reduce nitrogen oxide levels at the
Columbia Energy Center. Wisconsin Public Service owns 31.8% of Columbia. The
Public Service Commission of Wisconsin has approved recovery of the costs
associated with nitrogen oxide compliance.

Based on recent ambient air testing, the State of Wisconsin will be
petitioning the United States Environmental Protection Agency to redesignate the
ozone non-attainment area to attainment status. The effect the redesignation
will have on mandated future nitrogen oxide reduction requirements for Edgewater
Unit 4 is uncertain.

The Wisconsin Department of Natural Resources initiated a rulemaking effort
aimed at the control of mercury emissions. Coal-fired generation plants are the
primary targets of this effort. The proposed rule was open to comment in October
2001. A Technical Advisory Committee and a Citizen Advisory Committee are
reviewing the comments and the proposed rule. A final rule could become
effective in 2002. As proposed, the rule requires phased in mercury emission
reductions reaching 90% reduction in 15 years. Wisconsin Public Service
estimates that it could cost it $105 million per year to achieve the
proposed 90% reduction.

On November 3, 1999, the United States Environmental Protection Agency
announced that it was pursuing an enforcement initiative against seven
utilities, or their subsidiaries, located in the Midwest and South, as well as
the Tennessee Valley Authority. The enforcement initiative alleges that the
utilities may have undertaken projects at certain coal-fired generation plants
in violation of the Clean Air Act. The United States Environmental Protection
Agency is seeking penalties and the installation of additional pollution control
equipment at these plants.

As a continuation of this initiative, the United States Environmental
Protection Agency requested on December 14, 2000, that Wisconsin Public
Service provide information related to projects undertaken at its Pulliam and
Weston plants. Wisconsin Public Service submitted this information on January
16, 2001. Wisconsin Power and Light Company, the operator of the Columbia and
Edgewater units co-owned with Wisconsin Public Service, also submitted
information related to projects undertaken at the Columbia and Edgewater plants.
The United States Environmental Protection Agency requested additional
information on February 26, 2001, relating to the Columbia and Edgewater
plants. Wisconsin Power and Light Company submitted this information on
March 28, 2001, and April 27, 2001. To date, United States
Environmental Protection Agency has not requested any additional information for
the Pulliam or Weston plants.

Early compliance with the federal Clean Air Act has generated surplus sulfur
dioxide allowances at Wisconsin Public Service. Wisconsin Public Service has
sold and will continue to consider the sale of any allowances in excess of its
own needs. The Public Service Commission of Wisconsin has ordered that Wisconsin
Public Service pass on profits from the sale of allowances to its customers.

WPS Power Development acquired emission allowances as a
result of the purchase of the Sunbury plant in 1999 and the Westwood plant in
2000. The costs assigned to these allowances are charged to expense as the
allowances are used. The Sunbury plant also purchases incremental emission
allowances on the open market to comply with air regulations. WPS Power
Development is installing additional technology to comply with 2003 nitrogen
oxide standards. Expenditures for this technology could be significant.

Other matters pertaining to the environment regarding gas plant cleanup and
air quality issues are discussed in Legal Proceedings, MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, and to the
Financial Statements.

G. CAPITAL REQUIREMENTS

WPS Resources and Wisconsin Public Service will make large investments
in capital assets. Construction expenditures for Wisconsin Public Service are
expected to be approximately $565 million for the period 2002 through 2004.
This includes expenditures for investment in an automated meter reading system,
corporate software and systems, and beginning construction projects for new
generating facilities. Additional expenditures will be needed through 2007 to
complete these generating facilities. Other Wisconsin Public Service capital
requirements for the 2002-2004 period include Kewaunee decommissioning trust
fund contributions of $7.8 million.

WPS Resources expects to make capital contributions of up to $92 million
to fund construction of our portion of the Wausau to Duluth transmission line
which will be transferred to American Transmission Company in exchange for an
increase in our equity ownership in American Transmission Company.

Upper Peninsula Power will incur construction expenditures of
approximately $37 million for the period 2002 through 2004, primarily for
electric distribution improvements and repairs at hydroelectric facilities.

There are no commitments for additional acquisition expenditures for the
nonregulated subsidiaries at this time other than commitments made under the
stock purchase agreement to acquire CH Resources, which is expected to close in
the second quarter of 2002, and the asset purchase agreement to acquire the
Tracy/Pinon Power Station, which is currently subject to a legislative
moratorium and may be terminated before the moratorium expires.
WPS Resources expects to provide temporary financing for the CH Resources
transaction through short term debt. Future nonregulated projects will be
financed through nonrecourse project financings to the extent possible.

WPS Resources uses internally generated funds and short-term borrowing
to temporarily satisfy its capital requirements. WPS Resources may
periodically issue additional long-term debt and common stock to reduce
short-term debt and maintain desired capitalization ratios.

WPS Resources filed a shelf registration with the Securities and
Exchange Commission, which allows the issuance of an aggregate of
$400 million of long-term debt and common stock. Long-term debt of
$150 million was issued under the shelf registration in November 1999 to
reduce short-term debt and provide equity contributions to its subsidiaries. In
December 2001, WPS Resources issued 2.3 million shares of common stock
for $79 million under the shelf registration. In August 2001, Wisconsin
Public Service issued $150 million of notes at 6.125% due in 2011, the
proceeds of which were partially used to refund $53.1 million of 8.8%
bonds. In January 2001, WPS Resources began issuing new shares of its
common stock under its Stock Investment Plan. In 2001, approximately 545,000
shares were issued under the Stock Investment Plan for approximately
$18.6 million.

At this time, WPS Resources does not anticipate issuing
additional debt or equity financing in 2002, although the need for additional
financing may change due to the availability of projects, market conditions, or
other factors.

See NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, regarding "Future
Capital Expenditures."

H. EMPLOYEES

At December 31, 2001, WPS Resources and its subsidiaries employed
2,856 people. Of this number, 2,380 were employees of Wisconsin Public
Service, 156 were employed by Upper Peninsula Power, 175 were employed by
WPS Power Development, and 103 were employed by WPS Energy Services,
with the remainder employed by WPS Resources and its remaining
subsidiaries.

Of the Wisconsin Public Service employees, 1,832 were electric utility
employees and 548 were gas utility employees. Local 310 of the International
Union of Operating Engineers represents 1,306 of these employees. The current
collective bargaining agreement with Local 310 expires on October 25, 2003.

Local 510 of the International Brotherhood of Electrical Workers, AFL-CIO
represents 123 employees of Upper Peninsula Power. The current collective
bargaining agreement with Local 510 expires on April 30, 2002. A new
agreement has been reached extending the contract to April 30, 2005.

Local 1600 of the International Brotherhood of Electrical Workers, AFL-CIO
represents approximately 104 employees at the Sunbury generation station owned
and operated by a subsidiary of WPS Power Development. The current
collective bargaining agreement with Local 1600, which was to expire on May 12,
2002, has been extended to May 12, 2003.

> I. RISK FACTORS

You should carefully consider the following risk factors, as well as the
other information included or incorporated by reference in this document in
connection with any investment in the common stock of WPS Resources or
other securities of WPS Resources or Wisconsin Public Service. The risks
and uncertainties described below are not the only ones we face. Additional
risks and uncertainties not presently known or that we currently believe to be
immaterial may also adversely affect us.

We operate in an increasingly competitive industry, which may affect our
future earnings.

The energy industry has been undergoing dramatic structural change for
several years, resulting in increasing competitive pressure on electric and
natural gas utility companies. Increased competition may create greater risks to
the stability of utility earnings generally and may in the future reduce our
utility earnings from retail electric and natural gas sales. The future of
deregulation in the utility industry and its impact on our future is uncertain.
At the present time, Wisconsin has not adopted legislation or regulations that
would allow customers to choose their electric supplier. All Michigan electric
customers were able to choose their electric generation suppliers by January 1,
2002 as a result of the Customer Choice Act. The utility industry expects
increased competition for generation services in Michigan with the introduction
of retail direct access in that state.

To the extent competitive pressures increase and the pricing and sale of
electricity assumes more of the characteristics of a commodity business, the
economics of our business may come under increasing pressure. In addition,
regulatory changes may increase access to electricity transmission grids by
utility and nonutility purchasers and sellers of electricity, thus potentially
resulting in a significant number of additional competitors in wholesale power
generation.

Our ability to achieve growth in our nonregulated generation business depends
upon the availability of suitable projects for purchase or development.

Our strategy for the growth of our nonregulated generation business depends
upon our ability to identify and complete acquisitions and development projects
at appropriate prices. Our nonregulated electric generation segment has achieved
growth through acquisition and we expect that it will continue to grow through
acquisition. There can be no assurance that the projects we have acquired to
date or projects that we may acquire in the future will perform as expected or
that the returns from those projects will support the indebtedness incurred to
acquire them or the capital expenditures needed to maintain or develop them. In
addition, many of our competitors are seeking opportunities to acquire or
develop energy assets. This competition may adversely affect our ability to make
investments or acquisitions.

Changes in state regulatory policy and authorized retail rates of our utility
subsidiaries may have a material impact on our income.



If we are unable to sell electricity generated from our facilities at market
prices, our revenues and profit margins will be negatively affected.

The Federal Energy Regulatory Commission has authorized us to sell generation
from our nonregulated facilities at market prices. The Federal Energy Regulatory
Commission retains the authority to modify or withdraw our market based rate
authority. If the Federal Energy Regulatory Commission determines that the
market is not workably competitive, that we possess market power or that we are
not charging just and reasonable rates, then the Federal Energy Regulatory
Commission may require us to sell power at a price based upon the costs we incur
in producing the power. Our revenues and profit margins will be negatively
affected by any reduction by the Federal Energy Regulatory Commission of the
rates we may receive.

Significantly increased fuel and purchased power costs may have an adverse
effect on our nonregulated business.

Our nonregulated subsidiaries, WPS Power Development and WPS Energy
Services, may experience increased expenses, including interest costs and
uncollectibles, higher working capital requirements and possibly some level of
price sensitive reduction in volumes sold as a result of increases in the cost
of fuel or purchased power. Our regulated utilities, however, are able to pass
on higher natural gas costs, electric production fuel costs and purchased power
costs to their customers.

We remain liable for the safe operation, maintenance, and decommissioning of
our share of the Kewaunee plant and our share of the expenses of implementing
process improvements at the Kewaunee plant.

We remain liable for the safe operation, maintenance, and decommissioning of
our 59% share of the Kewaunee plant even though we transferred operation of the
plant to Nuclear Management Company. In addition, we will be liable for our 59%
share of the costs of implementing the process improvements currently underway
at the plant. The Kewaunee co-owners received approval from the Public Service
Commission of Wisconsin and the Michigan Public Utility Commission for deferral
of the 2001 and 2002 incremental costs associated with these improvements.
Wisconsin Public Service will include its 59% share of these costs in its future
rate requests.

We could incur material expenses as a result of our obligations to comply
with existing and new environmental laws and regulations.

We are subject to extensive environmental regulations in connection with the
ongoing conduct of our business and to civil and criminal liability for failure
to comply with these regulations. We are also generally responsible for all on
site liabilities associated with the environmental condition of our power
generation facilities, former manufactured gas plant sites and other facilities
which we have previously owned and/or operated or currently own and/or operate
regardless of when the liabilities arose and whether they are currently known or
unknown.

In addition, as part of an industry wide focus, capital expenditures at two
of our coal fired facilities have been the subject of a formal request for
information from the Environmental Protection Agency. If an enforcement
proceeding or litigation in connection with this request, or in connection with
any proceeding for noncompliance with environmental laws, were commenced and
resolved against us, we could be required to invest significantly in new
emission control equipment, accelerate the timing of other capital expenditures,
pay penalties and/or halt certain operations. Moreover, new environmental laws
and regulations, or new interpretations of existing laws and regulations,
affecting our operations or facilities may be adopted which may cause us to
incur additional material expenses.

We are a holding company and our ability to access the revenues and assets of
our subsidiaries is subject to a number of limitations.

In general, any claim of WPS Resources against the assets of its
subsidiaries is subject to the prior rights of the creditors of those
subsidiaries. In addition, the Wisconsin public utility holding company law
prohibits public utility subsidiaries from making loans to, or pledging their
credit for, nonutility members of a Wisconsin public utility holding company
system, including the holding company.

Orders of the Public Service Commission of Wisconsin limit the amount of
ordinary dividends that Wisconsin Public Service may pay to WPS Resources
and require that the debt-to-equity ratio of Wisconsin Public Service remain
within a specified range. The articles of incorporation of Wisconsin Public
Service also limit the amount of dividends it may pay on its common stock if its
common stock and common stock surplus account are less than 25% of its total
capitalization. Bond indenture provisions currently limit the amount of
dividends, which may be paid by Upper Peninsula Power to WPS Resources.

Substantially all of the physical assets of Wisconsin Public Service and
Upper Peninsula Power secure outstanding bond issues of Wisconsin Public Service
and Upper Peninsula Power. Substantially all of the generating assets of
WPS Power Development's subsidiaries have been mortgaged to secure
acquisition financing.

The Wisconsin Public Utility Holding Company Law requires that corporate
holding companies of Wisconsin Public Utilities be corporations organized under
the laws of Wisconsin and contains other provisions, which could delay or
prevent the acquisition of a Wisconsin Public Utility Holding Company and thus
adversely affect the value of our common stock.

Subject to an exception for certain holding companies organized or created
before November 28, 1985, the Wisconsin public utility holding company law
requires that any corporation that is a direct or indirect holding company of a
Wisconsin public utility be incorporated under the laws of Wisconsin, thereby
limiting the number of potential acquirers of WPS Resources. This provision
is currently being challenged by another Wisconsin holding company in the
federal courts. The Wisconsin public utility holding company law also precludes
the acquisition of 10% or more of the voting shares of a holding company of a
Wisconsin public utility unless the Public Service Commission of Wisconsin has
first determined that the acquisition is in the best interests of utility
consumers, investors and the public. Those interests may, to some extent, be
mutually exclusive. These provisions of the Wisconsin public utility holding
company law may delay, or reduce the likelihood of, a sale or change of control
of WPS Resources, thus reducing the likelihood that shareholders will
receive a takeover premium for their shares.

Provisions in our articles of incorporation, bylaws and the Wisconsin
Business Corporation Law and our shareholder rights plan may inhibit a takeover,
which could adversely affect the value of our common stock.

Our articles of incorporation, bylaws and shareholder rights plan, as well as
provisions of the Wisconsin Business Corporation Law, also contain provisions
that could delay or prevent a change of control or changes in our management
that a shareholder might consider favorable and may prevent you from receiving a
takeover premium for your shares.

Internal Revenue Service policies may materially limit the economic benefit
we can realize from our synthetic fuel production facility.

We have significantly reduced our consolidated federal income tax liability
for the past three 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. Our ability to further utilize these credits and maximize the value
of our synthetic fuel production facility is limited by Section 29. As a result,
we have sold a portion of our synthetic fuel facility to a third party, which
can utilize the additional credits available given the production capacity of
the facility. The IRS strictly enforces compliance with all of the technical
requirements of Section 29. The purchaser has the right to rescind the contract
if it is unable to obtain a new private letter ruling from the IRS confirming
the continuing availability of tax credits from the facility within a specified
time frame.  In addition, compliance with Section 29 is likely to be audited by
the IRS.

ITEM 2. PROPERTIES

A. UTILITY

Wisconsin Public Service Facilities

The following table summarizes information on the electric generation
facilities of Wisconsin Public Service, including jointly-owned facilities:

|Type                          | Name                   | Location      | Fuel                | Rated
      Capacity (a)(Megawatts)
|----------------------------- | ---------------------- | ------------- | ------------------- | -----------------------------------
|                              |                        |               |                     |                                    
|Steam                         | Pulliam                | Green Bay, WI | Coal                | 396.1 (b)                          
|                              | Weston                 | Wausau, WI    | Coal and Gas        | 490.3 (c)                          
|                              | Kewaunee               | Kewaunee, WI  | Nuclear             | 312.7 (d)                          
|                              | Columbia - Units 1 & 2 | Portage, WI   | Coal                | 345.1 (d)                          
|                              | Edgewater Unit 4       | Sheboygan, WI | Coal                | 107.5 (d)                          
|                              |                        |               |                     | _______                            
|Total Steam                   |                        |               |                     | 1,651.7                            
|                              |                        |               |                     |                                    
|Hydroelectric                 | Various (15 Plants)    |               |                     | 55.7 (e)                           
|Combustion Turbine and Diesel | Various (8 Plants)     |               | Gas, Oil, or Diesel | 386.1 (f)                          
|                              |                        |               |                     | _______                            
|Total System                  |                        |               |                     | 2,093.5                            

> 

(a) Based on July 2002 capacity ratings.

(b) This plant has six units.

(c) This plant has three units. Two units burn only coal and the other
    unit can burn coal or natural gas.

(d) These facilities are jointly-owned by Wisconsin Public Service and
    Wisconsin Power and Light. Nuclear Management Company operates the Kewaunee
    plant. Wisconsin Power and Light operate the Columbia and Edgewater units.
    The capacity indicated is our portion of total plant capacity based on the
    percent of ownership.

(e) Includes 12.4 megawatts purchased from Wisconsin River Power.

(f) Wisconsin Public Service and Marshfield Electric and Water Department
    jointly own 76.2 megawatts of combustion turbine summer peaking capacity.
    Wisconsin Public Service is the operator of these jointly-owned facilities.
    Included are 175.8 megawatts of summer rated capacity from the De Pere
    Energy Center natural gas turbine in De Pere. Wisconsin Public Service
    accounts for the De Pere Energy Center unit as a capital lease.

As of December 31, 2001, Wisconsin Public Service owned 110 distribution
substations and 20,701 miles of electric distribution lines. Effective January
1, 2001, all transmission property of Wisconsin Public Service was transferred
to American Transmission Company.

Gas properties include approximately 6,505 miles of main, 82 gate and city
regulator stations, and 268,763 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 Wisconsin Public Service'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 Upper Peninsula Power:

|Type               | Name                    | Location                         | Fuel          | Rated
      Capacity (a)(Megawatts)
|------------------ | ----------------------- | -------------------------------- | ------------- | -----------------------------------
|                   |                         |                                  |               |                                    
|Steam              | Warden                  | L'Anse, MI                       | Gas           | 17.7 (b)                           
|                   |                         |                                  |               |                                    
|Hydroelectric      | Various (9 plants)      |                                  | Hydro         | 37.9 (c)                           
|                   |                         |                                  |               |                                    
|Combustion Turbine | Portage
      Gladstone | Houghton, MI
      Gladstone, MI | Oil
      Oil | 23.8    
        23.8              
|                   |                         |                                  |               | _____                              
|Total System       |                         |                                  |               | 103.2                              

> (a) Based on summer 2002 rated capacity.
>         (b) The J. H. Warden station was taken out of service on January 1,
>         1994 and is in standby or inactive reserve status.
>         (c) Included in the nine hydroelectric plants are Escanaba 1,
>         Escanaba 3, and Boney Falls, which generate a total of 7.9 megawatts.
>         All energy produced at these facilities is sold directly to a paper
>         industry customer located in Escanaba, Michigan.

Upper Peninsula Power owns 2,826 miles of electric distribution
lines.

Effective June 28, 2001 all transmission property of Upper Peninsula
Power was transferred to American Transmission Company.

Substantially all of Upper Peninsula Power's utility plant is subject to
a first mortgage lien.

> B.  NONREGULATED

WPS Resources Corporation

Asset Management Strategy

In 2001 WPS Resources initiated a 5 to 7 year program involving the
assessment of all assets of its subsidiaries, primarily, Wisconsin Public
Service and Upper Peninsula Power, which are no longer needed for operations,
identifying alternative uses to maximize their value. The program began with an
initial agreement with the State of Wisconsin to ultimately transfer forest and
waterfront land along the Peshtigo River in northeastern Wisconsin to the State
over a 4-year period.

In December of 2001, we sold approximately
5,700 acres of land on the Peshtigo River in northeastern Wisconsin to the
Wisconsin Department of Natural Resources for $13.5 million. This sale was
the first transaction in our asset management strategy. The land, which was
owned by Wisconsin Public Service, was associated with several hydroelectric
projects but was deemed to no longer be necessary for the operation of those
facilities. The sale agreement with the Department of Natural Resources also
includes options for the Department to purchase, in 2003 and 2004, approximately
5,000 additional acres at less than fair market value, for $11.5 million if
all options are exercised. The value associated with the difference between the
option price and the fair market value will be treated as a charitable
contribution.

WPS Power Development Facilities

The following table summarizes information on the electric generation
facilities of WPS Power Development, including jointly-owned facilities:

|Type                          | Name                                                                   | Location                                                                                           | Fuel                                           | Nameplate
      Capacity (a)(Megawatts)                             
|----------------------------- | ---------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------- | ---------------------------------------------- | --------------------------------------------------------------------
|                              |                                                                        |                                                                                                    |                                                |                                                                     
|Steam                         | Stoneman
      Sunbury
      Westwood
      Wyman
      Combined Locks | Cassville, WI
      Shamokin Dam, PA
      Tremont, PA
      Yarmouth, ME
      Combined Locks, WI | Coal
      Coal
      Culm
      Oil
      Gas | 35.0 (a)
        425.0
         30.0
         21.0 (b)
         50.0
|                              |                                                                        |                                                                                                    |                                                |                                                                     
|Hydroelectric                 | Squa Pan
      Caribou
      Tinker                                    | Northern Maine
      Northern Maine
      New Brunswick,
      Canada                              | Hydro
      Hydro
      Hydro                  | 1.4
          0.9
         33.5                                     
|                              |                                                                        |                                                                                                    |                                                |                                                                     
|Combustion Turbine and Diesel | Various (6 Plants)                                                     |                                                                                                    | Gas, Oil, or Diesel                            | 59.7                                                                
|                              |                                                                        |                                                                                                    |                                                | _____                                                               
|Total System                  |                                                                        |                                                                                                    |                                                | 674.5                                                               

> (a) Mid-American Power, LLC, owns the Stoneman facility.
>         PDI Stoneman, Inc. (a wholly-owned subsidiary of WPS Power
>         Development, Inc.) and B. M. Stoneman, Inc., (a wholly-owned
>         subsidiary of Burns and McDonnell) own 66-2/3% and 33-1/3%,
>         respectively, of Mid-American Power, LLC. The amount reported in the
>         above table represents our two-thirds interest in the plant.
>         (b) WPS Power Development owns a 3.3455% interest in the Wyman
>         plant. The plant is a 619-megawatt oil-fired facility.



ITEM 3. LEGAL PROCEEDINGS

Spent Nuclear Fuel Disposal

See the section titled Spent Nuclear Fuel Disposal under Part I,
Item 1B, ELECTRIC UTILITY MATTERS, Fuel Supply, for a description of
various proceedings relating to spent nuclear fuel.

Funding Decontamination and Decommissioning of Federal Facilities

See the section titled Funding Decontamination and Decommissioning of Federal
Facilities under Part I, Item 1B, ELECTRIC UTILITY MATTERS, Fuel Supply, for a
description of various proceedings relating to decontamination and
decommissioning liabilities.

WPS Energy Services, Inc.





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 Wisconsin Public Service during the fourth quarter of the
fiscal year.



ITEM 4A. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information about outside directors is included in our proxy
statement for the Annual Meeting of Shareholders of WPS Resources, which is
scheduled to be held on May 9, 2002.



|A. Executive Officers Of WPS Resources Corporation
      as of January 1, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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|Larry L. Weyers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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|Patrick D. Schrickel**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
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|Ralph G. Baeten**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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|Thomas P. Meinz                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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|Phillip M. Mikulsky                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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|Joseph P. O'Leary***                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
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|Bradley W. Andress                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
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|Diane L. Ford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|Richard E. James                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Bernard J. Treml                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
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|Barth J. Wolf                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Barbara A. Nick                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|All officers listed above are also officers of Wisconsin Public Service
      with the exception of Bradley W. Andress, Phillip M. Mikulsky,
      Richard E. James, and Barbara Nick.
      * Identifies experience with Wisconsin Public Service Corporation.
      ** Ralph G. Baeten and Patrick D. Schrickel are retiring in the first
      quarter of 2002.
          *** Prior to joining WPS Resources, Joseph P. O'Leary's
          responsibilities at United Stationers, included leading the finance,
          treasury, and accounting functions. United Stationers is the largest
          provider of wholesale business products in North America. At 360 Degree
          Communications, Mr. O'Leary led the start-up of a new business to
          launch tower space to wireless communications service providers. Prior
          to that he led the accounting, purchasing, and cellular fraud control
          functions for 360 Degree Communications. 360 Degree
           Communications was a provider of cellular, long distance, and
          paying services/products to over 2.6 million customers in 15
          states.



|B. Executive Officers Of Wisconsin Public Service
      Corporation
      as of January 1, 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Name and Age                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Larry L. Weyers                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Patrick D. Schrickel*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Ralph G. Baeten*                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Thomas P. Meinz                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Joseph P. O'Leary**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Lawrence T. Borgard                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Diane L. Ford                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Bernard J. Treml                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|Barth J. Wolf                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|* Ralph G. Baeten and Patrick D. Schrickel are retiring in the
            first quarter of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|** Prior to joining WPS Resources, Joseph P. O'Leary's
            responsibilities at United Stationers, included leading the finance,
            treasury, and accounting functions. United Stationers is the largest
            provider of wholesale business products in North America. At 360 Degree
            Communications, Mr. O'Leary led the start-up of a new business to
            launch tower space to wireless communications service providers.
            Prior to that he led the accounting, purchasing, and cellular fraud
            control functions for 360 Degree
            Communications. 360 Degree
             Communications was a provider of cellular, long distance, and
            paying services/products to over 2.6 million customers in 15
            states.
|NOTE: All ages are as of December 31, 2001. 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
            Registrant. Each officer shall hold office until his or her
            successor has been duly elected and qualified, or until his or her
            death, resignation, disqualification, or removal.                                                                                                                                                                                                                                                                                                                                                                             



PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
        RELATED STOCKHOLDER MATTERS

WPS Resources Corporation Common Stock Two-Year
Comparison



|                 |                    | Price
      Range
|---------------- | ------------------ | -----------------
|Share
      Data | DividendsPer Share | High             
|                 |                    |                  
|2001             |                    |                  
|1st Quarter      | $ .515             | 36.625           
|2nd Quarter      | .515               | 35.250           
|3rd Quarter      | .525               | 35.400           
|4th Quarter      | .525               | 36.800           
|Total            | $2.08              |                  
|                 |                    |                  
|2000             |                    |                  
|1st Quarter      | $ .505             | 26.6875          
|2nd Quarter      | .505               | 32.250           
|3rd Quarter      | .515               | 33.250           
|4th Quarter      | .515               | 39.000           
|Total            | $2.04              |                  



Dividend Restrictions

WPS Resources' principal subsidiary, Wisconsin Public Service, is
restricted by a Public Service Commission of Wisconsin order limiting the
payment of normal common stock dividends to no more than 109% of the previous
year's common stock dividend, without prior notice to the Public Service
Commission of Wisconsin. Return of capital payments may be declared in order to
maintain Wisconsin Public Service's common equity levels consistent with those
allowed by the Public Service Commission of Wisconsin. Wisconsin law prohibits
Wisconsin Public Service from making loans to WPS Resources and its
nonregulated subsidiaries and guaranteeing their obligations.

Wisconsin Public Service's Articles of Incorporation contain certain
limitations on the payment of cash dividends. These limitations are not expected
to limit any dividend payments in the foreseeable future.

At December 31, 2001, WPS Resources had $365.8 million of retained
earnings available for dividends.

Upper Peninsula Power's indentures relating to first mortgage bonds
contain certain limitations on the payment of cash dividends on common stock.
Under the most restrictive of these provisions, approximately $4.5 million
of consolidated retained earnings were available at December 31, 2001, for the
payment of common stock cash dividends by Upper Peninsula Power.

Investment Index

Effective with the close of trading on February 8, 2002, WPS Resources
was added to the Standard & Poor's MidCap 400 Index.

Common Stock

|Listed: New York Stock Exchange |                                                                                          
|------------------------------- | -----------------------------------------------------------------------------------------
|                                |                                                                                          
|Ticker Symbol: WPS              |                                                                                          
|                                |                                                                                          
|Transfer Agent and Registrar:   | U.S. Bank National Association
      P. O. Box 2077
      Milwaukee, Wisconsin 53201-2077

As of December 31, 2001, there were 23,478 common stock shareholders of
record.



|ITEM 6. SELECTED FINANCIAL DATA                                    |          |          |          |          |         
|------------------------------------------------------------------ | -------- | -------- | -------- | -------- | --------
|                                                                   |          |          |          |          |         
|WPS RESOURCES CORPORATION                                          |          |          |          |          |         
|COMPARATIVE FINANCIAL STATEMENTS AND                               |          |          |          |          |         
|FINANCIAL STATISTICS (1997 TO 2001)                                |          |          |          |          |         
|                                                                   |          |          |          |          |         
|                                                                   |          |          |          |          |         
|Year Ended December 31                                             |          |          |          |          |         
|(Millions, except per share amounts
      and number of employees) | 2001     | 2000     | 1999     | 1998     | 1997    
|                                                                   |          |          |          |          |         
|Total operating revenues                                           | $2,675.5 | $1,949.0 | $1,098.5 | $1,063.7 | $  935.8
|                                                                   |          |          |          |          |         
|Net income                                                         | 77.6     | 67.0     | 59.6     | 46.6     | 55.8    
|                                                                   |          |          |          |          |         
|Total assets                                                       | 2,870.0  | 2,816.1  | 1,816.5  | 1,510.4  | 1,435.8 
|                                                                   |          |          |          |          |         
|Preferred stock of subsidiaries                                    | 51.1     | 51.1     | 51.2     | 51.2     | 51.6    
|                                                                   |          |          |          |          |         
|Long-term debt and capital lease
      obligation                  | 727.8    | 660.0    | 584.5    | 343.0    | 347.0   
|                                                                   |          |          |          |          |         
|Shares of common stock less treasury
      stock                   |          |          |          |          |         
|and shares in deferred
      compensation trust                    |          |          |          |          |         
|Outstanding at December 31                                         | 31.1     | 26.4     | 26.8     | 26.5     | 26.5    
|Average                                                            | 28.2     | 26.5     | 26.6     | 26.5     | 26.5    
|                                                                   |          |          |          |          |         
|Basic earnings per average share of
      common stock             | $2.75    | $2.53    | $2.24    | $1.76    | $2.10   
|Diluted earnings per average share of
      common stock           | 2.74     | 2.53     | 2.24     | 1.76     | 2.10    
|Dividend per share of common stock                                 | 2.08     | 2.04     | 2.00     | 1.96     | 1.92    
|                                                                   |          |          |          |          |         
|Stock price                                                        | $36.55   | $36.8125 | $25.125  | $35.25   | $33.8125
|Book value per share                                               | $23.06   | $20.75   | $20.16   | $19.61   | $19.56  
|Return on average equity                                           | 12.8%    | 12.3%    | 11.3%    | 9.0%     | 10.8%   
|Number of common stock shareholders                                | 23,478   | 24,029   | 25,020   | 26,319   | 27,369  
|Number of employees                                                | 2,856    | 3,030    | 2,900    | 2,673    | 2,902   
|                                                                   |          |          |          |          |         



|ITEM 6. SELECTED FINANCIAL DATA                     |         |         |        
|--------------------------------------------------- | ------- | ------- | -------
|                                                    |         |         |        
|WISCONSIN PUBLIC SERVICE CORPORATION                |         |         |        
|COMPARATIVE FINANCIAL STATEMENTS AND                |         |         |        
|FINANCIAL STATISTICS (1999 TO 2001)                 |         |         |        
|                                                    |         |         |        
|                                                    |         |         |        
|(Millions, except coverage and weather information) | 2001    | 2000    | 1999   
|                                                    |         |         |        
|Operating revenues                                  | $932.3  | $840.5  | $719.4 
|Earnings on common stock                            | 80.6    | 70.4    | 67.1   
|Total assets (at December 31)                       | 1,716.4 | 1,503.2 | 1,409.9
|Long-term debt, net (at December 31)                | 415.6   | 370.1   | 373.1  
|                                                    |         |         |        
|Coverage                                            |         |         |        
|Times interest earned before income taxes           | 4.64    | 4.40    | 4.71   
|Times interest earned after income taxes            | 3.39    | 3.20    | 3.41   
|Times interest and preferred dividends              |         |         |        
|earned after income taxes                           | 3.11    | 2.93    | 3.08   
|                                                    |         |         |        
|Weather information                                 |         |         |        
|Cooling degree days                                 | 546     | 330     | 481    
|Cooling degree days as a percent of normal          | 116.9%  | 70.7%   | 103.0% 
|Heating degree days                                 | 7,139   | 7,841   | 7,273  
|Heating degree days as a percent of normal          | 91.9%   | 98.2%   | 91.7%  
|                                                    |         |         |        



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



RESULTS OF OPERATIONS - WPS RESOURCES CORPORATION

WPS Resources Corporation is a holding company. Our
wholly-owned subsidiaries include two regulated utilities, Wisconsin Public
Service Corporation and Upper Peninsula Power Company. Another wholly-owned
subsidiary, WPS Resources Capital Corporation, is a holding company for our
nonregulated businesses including WPS Energy Services, Inc. and
WPS Power Development, Inc.

2001 Compared with 2000

WPS Resources Corporation Overview

WPS Resources' 2001 and 2000 results of operations
are shown in the following chart:

|WPS Resources' Results(Millions, except share amounts) | 2001     | 2000     | Change
|------------------------------------------------------ | -------- | -------- | ------
|                                                       |          |          |       
|Consolidated operating revenues                        | $2,675.5 | $1,949.0 | 37%   
|Income available for common shareholders               | $77.6    | $67.0    | 16%   
|Basic earnings per share                               | $2.75    | $2.53    | 9%    
|Diluted earnings per share                             | $2.74    | $2.53    | 8%    

Consolidated operating revenues increased due to sales
volume growth for all business segments and higher natural gas prices in the
first part of 2001. In addition, rate increases at Wisconsin Public Service
contributed to increased revenues in 2001. The Public Service Commission of
Wisconsin authorized a 5.4% increase in Wisconsin retail electric rates and a
1.5% increase in Wisconsin retail natural gas rates effective January 1,
2001.

Increased profitability at our nonregulated segments
offset a decrease in earnings at our electric and natural gas utility segments
resulting in improved earnings in 2001. A gain on the sale of hydro lands as
part of our asset management strategy, increased natural gas and electric
utility margins, increased electric and natural gas margins at WPS Energy
Services, additional tax credits at WPS Power Development and a gain on the
sale of a portion of WPS Power Development's investment in its synthetic
fuel operation contributed to higher earnings. Partially offsetting these
factors were increased operating expenses at all segments and a lower margin at
WPS Power Development.

Overview of Utility Operations

Utility operations include the electric utility operations
at Wisconsin Public Service and Upper Peninsula Power and the natural gas
utility operations at Wisconsin Public Service. Income from electric utility
operations was $58.8 million in 2001 compared with $60.7 million in
2000. Income from gas utility operations was $8.9 million in 2001 and
$11.6 million in 2000.

Electric Utility Operations

The consolidated electric utility margin represents
electric revenue less cost of sales exclusive of intercompany transactions. Our
consolidated electric utility margin increased $11.4 million, or 3%,
primarily due to a 5.4% Wisconsin retail electric rate increase at
Wisconsin Public Service which became effective on January 1, 2001.

|Electric Utility Results (Millions) | 2001       | 2000       | 1999      
|----------------------------------- | ---------- | ---------- | ----------
|                                    |            |            |           
|Revenues                            | $654.4     | $623.8     | $582.5    
|Fuel and purchased power            | 218.2      | 199.0      | 187.4     
|Margin                              | $436.2     | $424.8     | $395.1    
|                                    |            |            |           
|Sales in kilowatt-hours             | 12,741,024 | 12,565,011 | 12,503,487



Affecting the electric utility margin was a change in the
customer mix at Wisconsin Public Service. Sales to lower margin, non-firm
customers increased more than sales to higher margin customers. The lack of new
retail electric rates at Upper Peninsula Power also affected the margin
negatively. Upper Peninsula Power's application for a $5.7 million rate
increase which had been pending before the Michigan Public Service Commission
since October 2000 was dismissed in August 2001 at Upper Peninsula Power's
request. Upper Peninsula Power requested a dismissal because the information
filed in the case was outdated. Upper Peninsula Power intends to submit a new
application for rate increases in 2002.

Our consolidated fuel expense for production plants
decreased $5.2 million, or 4%, largely due to decreased production at
Wisconsin Public Service's combustion turbine generation plants. Our
consolidated purchased power expense, however, increased $24.4 million due
to an increase in power purchases and a 19% increase in the cost per
kilowatt-hour of power purchases made by Wisconsin Public Service in 2001
compared with 2000. Power purchases were 21% higher in 2001 due to warmer summer
weather and the availability of economically priced energy. Also contributing to
increased power purchases were a scheduled outage at Wisconsin Public Service's
nuclear plant and an unscheduled outage at one of its fossil-fueled generation
plants.

Wisconsin Public Service's Kewaunee Nuclear Power Plant
was off-line for a scheduled refueling and replacement of its steam generators
which began in late September of 2001. The Kewaunee plant returned to service in
early December as scheduled. Wisconsin Public Service is currently a 59% owner
of the Kewaunee plant. Wisconsin Public Service's Pulliam Unit 7 was
off-line for unscheduled repairs in the fourth quarter of 2001 and returned to
service on February 3, 2002. Wisconsin Public Service chose to take
advantage of purchased power during these outages because of economically
favorable pricing.

The Public Service Commission of Wisconsin allows
Wisconsin Public Service the opportunity to adjust prospectively the amount
billed to Wisconsin retail customers for fuel and purchased power if costs fall
outside a specified range. Wisconsin Public Service is required to file an
application to adjust rates either higher or lower when costs are plus or minus
2% from forecasted costs on an annualized basis. In the third quarter of 2001,
Wisconsin Public Service submitted a fuel filing with the Public Service
Commission of Wisconsin requesting a $1.9 million retail electric rate
reduction. The rate reduction was approved and implemented on September 3,
2001. Wisconsin Public Service submitted an additional fuel filing in November
2001, and a rate reduction of $0.3 million was approved and implemented on
December 8, 2001.

Gas Utility Operations

The consolidated gas utility margin represents natural gas
revenues less purchases exclusive of intercompany transactions. Effective
April 1, 2001, the gas utility margin at Wisconsin Public Service
includes the merged Wisconsin Fuel and Light Company operations.

|Wisconsin Public Service Corporation'sGas Utility Results (Millions) | 2001    | 2000    | 1999   
|-------------------------------------------------------------------- | ------- | ------- | -------
|                                                                     |         |         |        
|Revenues                                                             | $321.6  | $264.5  | $191.5 
|Purchase costs                                                       | 230.2   | 185.1   | 117.6  
|Margin                                                               | $ 91.4  | $ 79.4  | $ 73.9 
|                                                                     |         |         |        
|Throughput in therms                                                 | 742,722 | 701,094 | 662,615

The gas utility margin at Wisconsin Public Service
increased $12.0 million, or 15%, in 2001. This increase was due to a 1.5%
increase in Wisconsin retail natural gas rates effective January 1, 2001,
and higher overall natural gas throughput volumes of 6%. Increased gas
throughput volumes were largely the result of Wisconsin Public Service's
acquisition of Wisconsin Fuel and Light in the second quarter of 2001. Gas
throughput volumes to large commercial and industrial customers, however,
decreased 9% as a result of customers switching to the gas transport customer
class and declining economic conditions. Gas throughput volumes to gas transport
customers increased 15%. In addition, gas throughput volumes to interruptible
customers decreased 6%. Gas throughput volumes were negatively affected by
winter weather which was 9% milder in 2001 than in 2000, and 8% milder than
normal.

Wisconsin Public Service's natural gas revenues increased
$57.1 million, or 22%, as the result of an increase in the average unit
cost of natural gas in the first half of 2001, increased throughput, and the
1.5% increase in Wisconsin retail gas rates.

Wisconsin Public Service's natural gas purchase costs
increased $45.1 million, or 24%, largely due to a higher average unit cost
of natural gas in the first half of 2001. The higher natural gas prices
experienced earlier in 2001 were passed on to customers and are reflected in
both revenues and gas purchases, thus having little impact on margin.

Under current regulatory practice, the Public Service
Commission of Wisconsin and the Michigan Public Service Commission allow
Wisconsin Public Service to pass changes in the cost of natural gas on to
customers through a purchased gas adjustment clause.

Other Utility Expenses/Income

Utility operating expenses increased $36.3 million
largely due to increased transmission expenses associated with the transfer of
assets to American Transmission Company, increased payments to the Wisconsin
Department of Administration for demand-side management (energy conservation)
activities, increased maintenance costs at the Kewaunee plant during its
refueling outage, and higher write-offs of uncollectible accounts.

The Public Service Commission of Wisconsin has allowed a
portion of the higher transmission costs to be deferred. The deferred
transmission costs, $4.4 million for 2001, are expected to be recovered in
future regulatory proceedings.

Lower earnings on the nuclear decommissioning fund
contributed to a decrease in other income from utility operations. Due to
regulatory practice, lower earnings on the nuclear decommissioning fund were
offset by decreased depreciation expense. Also contributing to decreased
depreciation expense were an extension in the Kewaunee plant's assumed
depreciable life and a reduction in the nuclear decommissioning fund
contribution.

Interest expense increased due to the issuance of
additional long-term debt by Wisconsin Public Service in August of 2001.

Overview of Nonregulated Operations

Nonregulated operations consist of the natural gas,
electric, and other sales at WPS Energy Services, a diversified energy
supply and services company and the operations of WPS Power Development, an
electric generation asset development company.

WPS Energy Services' net income increased to
$6.4 million in 2001 compared with $1.7 million in 2000.
WPS Power Development's net income increased to $2.3 million in 2001
compared with $0.9 million in 2000.

Overview of WPS Energy Services

WPS Energy Services' principal business involves
nonregulated gas sales. In addition, nonregulated electric sales have become an
important factor in the growth of WPS Energy Services. Revenues at
WPS Energy Services grew to $1,575.1 million in 2001 compared with
$955.6 million in 2000, an increase of 65%. This increase was the result of
additional natural gas and electric sales volumes coupled with a higher unit
cost of natural gas in the first half of 2001. The higher unit cost of natural
gas is also reflected in cost of sales, thus having little impact on margin.
Income increased $4.7 million in 2001 due to increased sales and improved
operations.

WPS Energy Services' Margins

|WPS Energy Services Gas Results (Millions) | 2001     | 2000   | 1999  
|------------------------------------------ | -------- | ------ | ------
|                                           |          |        |       
|Nonregulated natural gas revenues          | $1,406.3 | $919.5 | $288.0
|Nonregulated natural gas cost of sales     | 1,390.4  | 908.2  | 283.4 
|Margin                                     | $   15.9 | $ 11.3 | $  4.6

Nonregulated gas revenues at WPS Energy Services
increased $486.8 million, or 53%, primarily as the result of sales volume
growth and higher natural gas prices in the first half of 2001. The nonregulated
gas margin increased $4.6 million, or 41%, due to increased sales volumes
and exiting from unprofitable market segments.

|WPS Energy Services Electric Results (Millions) | 2001   | 2000  | 1999
|----------------------------------------------- | ------ | ----- | ----
|                                                |        |       |     
|Nonregulated electric revenues                  | $165.0 | $33.8 | $3.4
|Nonregulated electric cost of sales             | 150.3  | 29.4  | 3.2 
|Margin                                          | $ 14.7 | $ 4.4 | $ .2

Nonregulated electric revenues at WPS Energy Services
increased $131.2 million, or 388%. The nonregulated electric margin
increased $10.3 million, or 234%. Higher electric sales volumes in existing
and newly-entered retail electric markets, increased electric wholesale
activities, as well as impacts from marketing energy from WPS Power
Development's Sunbury plant, contributed to these increases.

WPS Energy Services' Other Expenses

Other operating expenses at WPS Energy Services
increased $8.5 million largely due to costs associated with business
expansion and higher write-offs of uncollectible accounts.

Impact of Enron

Although WPS Energy Services is an energy marketer, it has
experienced little impact on day-to-day operations as a result of the bankruptcy
of Enron Corporation, and is in a net payable position with Enron affiliates.
WPS Energy Services has liquidated all open positions with the Enron
affiliates and replaced them with other suppliers. The forward contracts with
the Enron affiliates provided for payments representing the net liquidation
value of the contracts at the time of liquidation, and this net liquidation
amount is reflected on the balance sheet as a current accounts payable,
contingent upon the outcome of Enron's bankruptcy proceedings. Management
believes these liabilities are properly recorded. The Enron bankruptcy is
expected to have an effect on other companies throughout the industry. As a
result, WPS Energy Services is more closely monitoring its credit exposure with
other trading partners.

Overview of WPS Power Development

Revenues at WPS Power Development increased
$13.4 million, or 10%, primarily due to higher revenues at its Sunbury
generation plant of $7.0 million and higher revenues from its steam
operations of $7.1 million. WPS Power Development's income was
$2.3 million in 2001 compared with $0.9 million in 2000. Additional
tax credits of approximately $4 million from its synthetic fuel operation
was the primary factor in WPS Power Development's increased income in 2001.

WPS Power Development's Margin

|WPS Power Development'sProduction Results (Millions) | 2001   | 2000   | 1999 
|---------------------------------------------------- | ------ | ------ | -----
|                                                     |        |        |      
|Nonregulated other revenues                          | $141.5 | $128.1 | $35.4
|Nonregulated other cost of sales                     | 110.2  | 94.8   | 18.6 
|Margin                                               | $ 31.3 | $ 33.3 | $16.8

WPS Power Development experienced a decrease of
$2.0 million in its margin in 2001 from 2000. The primary factors in this
decrease were a $2.8 million margin decrease at Sunbury due to higher fuel
costs as a result of purchasing coal at current market prices and higher costs
of replacement power during outages. WPS Power Development is attempting to
recover a portion of the fuel cost increase through a lawsuit which it filed
against a coal supplier for failure to deliver under the terms of a coal supply
agreement. The Sunbury margin decrease was partially offset by higher margins at
the Westwood generation plant, which was acquired in September of 2000.

WPS Power Development's Other Expenses/Income

Other operating expenses at WPS Power Development
increased by $4.5 million in 2001 compared with 2000, primarily due to
costs associated with operations at the Westwood plant, higher payroll expenses,
and increased development costs for potential new projects.

Other income increased $1.8 million, primarily from a
portion of the gain that was recognized in the sale of a partial interest in
WPS Power Development's synthetic fuel facility.

Tax Credits

WPS Power Development recorded synthetic fuel tax
credits of $21.5 million in 2001, an increase of approximately
$4 million over 2000. We used these credits to the extent the tax law
permits to reduce our current federal tax liability, and the remainder increased
our alternative minimum tax credit available for future years. Approximately
$10 million of tax credits where carried over from 2001, which brings the
cumulative credits being carried forward to approximately $21 million.
Alternative minimum tax credits can be used in future years to reduce our
regular tax liability, subject to various limitations. Based on a review of all
known facts and circumstances, management has concluded that it is more likely
than not that we will be able to use these credits in the future to reduce our
federal tax liability.

Overview of Holding Company and Other Operations

Holding Company and Other operations include the
operations of WPS Resources and WPS Resources Capital as holding
companies and the nonutility activities at Wisconsin Public Service and Upper
Peninsula Power. Holding Company and Other operations experienced income of
$1.3 million in 2001 compared with a loss of $7.9 million in 2000.

Other nonutility income at Wisconsin Public Service
included a pre-tax gain of $13.1 million on the sale of hydro lands in
December of 2001. The sale of these hydro lands was the first significant
transaction in our five to seven-year asset management strategy to increase
shareholder return from the sale, development, or use of certain real estate
assets deemed to be no longer essential to operations. In addition, earnings on
equity investments were higher in 2001 compared with 2000 primarily due to our
investment in American Transmission Company.

Interest expense increased due to additional short-term
borrowing at WPS Resources for working capital needs in the first half of
2001.

2000 Compared with 1999

WPS Resources Corporation Overview

WPS Resources' 2000 and 1999 results of operations
are shown in the following chart:

|WPS Resources' Results(Millions, except share amounts) | 2000     | 1999     | Change
|------------------------------------------------------ | -------- | -------- | ------
|                                                       |          |          |       
|Consolidated operating revenues                        | $1,949.0 | $1,098.5 | 77%   
|Income available for common shareholders               | 67.0     | 59.6     | 12%   
|Basic and diluted earnings per share                   | $2.53    | $2.24    | 13%   

The substantial revenue growth was largely due to
increased natural gas and electric sales at WPS Energy Services and
increased sales at WPS Power Development as we acquired additional
customers and expanded into new markets. Part of the increase in revenues was a
result of the record high unit cost of natural gas experienced in 2000. Gas cost
per therm was 43% higher in 2000 than in 1999. The high unit cost of natural gas
was reflected in both revenues and cost of sales, thus having little impact on
margin.

The increase in income and earnings per share was the
result of higher electric and natural gas utility margins and increases in
WPS Energy Services' electric and natural gas margins. Additionally, a
higher margin along with additional tax credits at WPS Power Development
contributed to higher income. Partially offsetting these factors were increases
in operating and interest expenses, coupled with costs associated with an
electric energy contract entered into by WPS Resources as a hedge against
potential summer energy price spikes.

Overview of Utility Operations

Income from electric utility operations was
$60.7 million in 2000 compared with $56.1 million in 1999. Income from
natural gas utility operations was $11.6 million in 2000 and
$11.2 million in 1999. The primary reasons for higher utility net income
were a Wisconsin retail electric rate increase and increased natural gas sales
volumes as the result of winter weather that was 8% colder in 2000 than in 1999.

Electric Utility Operations

Our consolidated electric utility margin increased
$29.7 million, or 8%, primarily due to a 4.6% Wisconsin retail electric
rate increase at Wisconsin Public Service which became effective on January
1, 2000. This rate increase was primarily intended to recover additional fuel
and purchased power costs for the year. The 2000 electric rate increase also
took into account the expected gain on the sale of utility assets which is
discussed under "Other Electric and Gas Utility Expenses/Income."

Although our consolidated kilowatt-hour sales were only
slightly higher, partially due to a 31% cooler summer in 2000 than in 1999,
consolidated revenues increased 7% due to the Wisconsin retail electric rate
increase at Wisconsin Public Service.

Our consolidated fuel expense increased
$15.7 million, or 14%, due to increased production at Wisconsin Public
Service's fossil-fueled and combustion turbine generation plants. In addition,
the average cost of generation at the combustion turbine plants increased 90%
largely as a result of a higher unit cost of natural gas. Generation costs at
the Kewaunee plant decreased 14% in 2000 due to its scheduled outage for
refueling and maintenance in the second quarter of 2000. A similar outage did
not occur in 1999. The Kewaunee plant was off-line beginning April 22, 2000
and returned to full power on June 2, 2000. During the scheduled outage,
nuclear generation was replaced with additional fossil fuel and combustion
turbine generation and additional purchased power. Wisconsin Public Service was
the operator and 41.2% owner of the Kewaunee plant in 2000. Our consolidated
purchased power expense decreased $4.1 million, however, largely due to a
5% decrease in the cost per kilowatt-hour of power purchases made by
Wisconsin Public Service in 2000 compared with 1999.

Annual fuel costs at December 31, 2000 were within the 2%
fuel window authorized by the Public Service Commission of Wisconsin and,
accordingly, no adjustment was made to electric rates for 2000 fuel costs.

Gas Utility Operations

The gas utility margin at Wisconsin Public Service
increased $5.4 million, or 7%, in 2000 due to an increase in throughput
volumes.

Winter weather was a factor for Wisconsin Public Service's
natural gas operations in 2000. Weather was 8% colder in 2000 than in 1999;
however, weather was 2% warmer than normal in 2000. Wisconsin Public Service's
natural gas revenues increased $73.0 million, or 38%, as the result of a
43% increase in the average unit cost of natural gas coupled with a 6% increase
in overall throughput volumes.

Wisconsin Public Service's natural gas purchase costs
increased $67.6 million, or 57%. This increase resulted from a higher
average unit cost of natural gas and higher gas volumes purchased of 10%. The
higher unit cost of natural gas was reflected in both revenues and gas
purchases, thus having little impact on margin.

Other Electric and Gas Utility Expenses/Income

Utility operating expenses increased $22.3 million.
Electric utility operating expenses increased $18.4 million primarily due
to costs associated with the scheduled outage and other maintenance activities
at the Kewaunee plant.

Higher earnings of $6.2 million on the Kewaunee
plant's nuclear decommissioning fund resulted in increased other income at
Wisconsin Public Service in 2000. Due to regulatory practices, this higher
income was offset by increased depreciation and decommissioning expense. Other
income at Wisconsin Public Service also included a gain of $3.8 million on
the sale of a combustion turbine which Wisconsin Public Service constructed for
another Wisconsin utility. The Public Service Commission of Wisconsin considered
this gain in the Wisconsin retail electric rate adjustment which was effective
January 1, 2000.

Nonregulated Operations

WPS Energy Services' net income improved to
$1.7 million in 2000 compared with a loss of $3.5 million in 1999.
Income at WPS Power Development also improved. WPS Power Development's
net income was $0.9 million in 2000 compared with a loss of
$3.8 million in 1999.

Overview of WPS Energy Services

Revenues at WPS Energy Services grew to
$955.6 million in 2000 compared with $292.2 million in 1999, an
increase of 227%. This increase was the result of additional natural gas and
electric sales volumes coupled with a higher unit cost of natural gas. The
higher unit cost of gas was also reflected in the cost of sales, thus having
little impact on margin. Income increased $5.2 million in 2000 due to a
larger increase in electric and gas margins than in the related other operating
expenses.

WPS Energy Services' Margins

The nonregulated gas margin at WPS Energy Services
increased $6.7 million largely due to increased sales volumes.

Natural gas revenues at WPS Energy Services more than
tripled in 2000 compared with 1999. This increase was due to sales volumes that
doubled as the result of additional sales in the wholesale market and general
business growth. In addition, a large portion of the increase was due to a
higher unit cost of natural gas in 2000.

WPS Energy Services' gas cost of sales tripled due to
additional natural gas purchases coupled with a higher unit cost of natural gas.

Electric margins at WPS Energy Services increased
$4.2 million in 2000. Electric revenues at WPS Energy Services were
$33.8 million in 2000 and $3.4 million in 1999. This increase in
revenue resulted from additional electric sales in Pennsylvania and Maine
associated with WPS Power Development's assets that were acquired in the
second and fourth quarters of 1999. Electric purchases increased
$26.2 million due to additional sales volumes.

WPS Energy Services' Other Expenses

Other operating expenses at WPS Energy Services
increased $4.2 million, or 42%, primarily due to greater payroll and other
operational costs associated with business expansion.

Overview of WPS Power Development

Income at WPS Power Development was $0.9 million
in 2000 compared with a loss of $3.8 million in 1999. The increase in
income was primarily due to a higher margin on operating activities and
additional tax credits. Partially offsetting these factors were higher operating
and interest expenses.

Tax credits at WPS Power Development increased
approximately $16.7 million in 2000. We used these tax credits to the
extent the tax law permits to reduce our current federal income tax liability.
Approximately $11 million of these tax credits were carried forward from
2000 to reduce our tax liability in subsequent years.

A large portion of the tax credits at WPS Power
Development relate to the operations of its synthetic fuel facilities.
Production at the synthetic fuel facility was higher than anticipated in 2000,
despite the physical relocation of the project from Alabama to Kentucky during
2000. The facility was taken out of operation in April 2000 to prepare for
relocation, and WPS Power Development began operation of the facilities in
the new location on September 1, 2000.

In addition, WPS Power Development reversed
$0.9 million of previously recorded losses in the first quarter of 2000 as
a result of an equity contribution to its synthetic fuel project by the minority
owner. Prior to this transaction, WPS Power Development had been recording
100% of the operating losses of this project because the minority owner's equity
had been reduced to zero; however, it had been allocated only 66.7% of the tax
credits. Through an agreement with the minority owner, WPS Power
Development received 100% of the tax credits and operating results from the
project until the minority owner was able to contribute further capital to fund
its share of the operating costs.

WPS Power Development's Margin

WPS Power Development experienced an increase of
$16.5 million in its margin in 2000. This increase was largely due to the
operation of the electric generation facilities acquired in Maine and Canada in
the second quarter of 1999 and in Pennsylvania in the fourth quarter of 1999.

WPS Power Development's Other Expenses

Other operating expenses at WPS Power Development
increased $27.2 million in 2000 due to maintenance and higher production
costs at its generation plants in Pennsylvania. Costs associated with the
investigation and start-up of new projects at WPS Power Development also
increased in 2000. Higher interest expense of $6.3 million in 2000 was
largely due to nonrecourse debt put in place to finance the plant acquisitions.

Additional costs at the Sunbury generation plant in
Pennsylvania lowered results at WPS Power Development, particularly in the
fourth quarter of 2000. This included higher production costs, higher
maintenance costs (both planned and accelerated) and increased costs of
replacement power while the plant was undergoing maintenance. The decision was
made to move some maintenance scheduled in future years into 2000 to coincide
with other plant downtime. The accelerated maintenance at the Sunbury plant was
intended to enhance availability in 2001 and future years.

Overview of Holding Company and Other Operations

Holding Company and Other Operations experienced a loss of
$7.9 million in 2000 compared with a loss of $0.4 million in 1999. The
increased loss was primarily due to additional interest expense, increased
operating expenses, and a cost of $3.8 million for an electric energy
contract entered into by WPS Resources in 2000 as a hedge against potential
summer energy price spikes.



BALANCE SHEET - WPS RESOURCES CORPORATION

2001 Compared With 2000

Customer and other receivables decreased
$69.8 million and accrued unbilled revenues decreased $27.4 million as
the result of milder weather and a substantially lower unit cost of natural gas
experienced in December of 2001 compared with December of 2000.

Regulatory assets increased $16.5 million as the
result of deferred costs related to compliance with certain Nuclear Regulatory
Commission requirements and additional regulatory assets acquired as a result of
the Wisconsin Fuel and Light merger, largely related to future environmental
remediation costs. Other assets increased $104.7 million largely as a
result of the investment in American Transmission Company, goodwill associated
with the Wisconsin Fuel and Light merger, and an increase in pension assets.

Assets from risk management activities decreased
$155.1 million and liabilities from risk management activities decreased
$219.6 million largely due to changes in forward prices.

Short-term debt decreased $83.4 million as the result
of replacing short-term debt with additional long-term debt at Wisconsin Public
Service and common stock equity at WPS Resources. The current portion of
long-term debt includes $50.0 million of 7.30% first mortgage bonds at
Wisconsin Public Service which mature on October 1, 2002. We currently have
no plans to refinance these bonds with long-term debt. Long-term debt increased
$67.8 million as the result of additional senior notes issued at Wisconsin
Public Service in the third quarter of 2001 and obtaining financing through tax
exempt bonds for WPS Power Development's Westwood plant in the second
quarter of 2001.

Regulatory liabilities increased $27.8 million
primarily due to the deferral of $11.8 million in pension settlement gains
resulting from employees transferring from Wisconsin Public Service to Nuclear
Management Company, LLC. Other long-term liabilities increased
$47.9 million primarily due to the deferred gain of $38.0 million on
the sale of a portion of WPS Power Development's ownership interest in its
synthetic fuel operation.



FINANCIAL CONDITION - WPS RESOURCES CORPORATION

Investments and Financing

Payments for return of capital of $35.0 million were
paid by Wisconsin Public Service to WPS Resources in 2001.
WPS Resources made equity contributions of $95.0 million to
Wisconsin Public Service in 2001. These payments and equity contributions
allowed Wisconsin Public Service's average equity capitalization and its
capitalization ratio for ratemaking to remain near target levels as established
by the Public Service Commission of Wisconsin in its most recent rate order.
WPS Resources also contributed $54.8 million of equity to Wisconsin
Public Service for the Wisconsin Fuel and Light acquisition.

WPS Resources also made equity contributions of
$12.0 million to Upper Peninsula Power Company in 2001. These equity
contributions were made to maintain appropriate average common equity ratios.
WPS Resources and WPS Power Development made equity contributions of
$15.5 million and $9.0 million, respectively, to Sunbury Generation,
LLC for expenditures at the Sunbury generation plant.

Cash requirements exceeded internally generated funds by
$112.8 million in 2001. Short-term borrowings through commercial paper
decreased $104.6 million as the result of issuing additional long-term debt
at Wisconsin Public Service and the sale of common stock at WPS Resources
in 2001. Our pretax interest coverage, including nonrecourse debt, was 2.33
times for the 12 months ended December 31, 2001.

In October 1999, WPS Resources filed a shelf
registration with the Securities and Exchange Commission, which allowed the
issuance of $400.0 million in the aggregate of public long-term debt and
common stock. Long-term debt of $150.0 million was issued in 2000 and
common stock of $79.0 million was issued in 2001 under the shelf
registration.

Effective January 2001, we began issuing new shares of
common stock for our Stock Investment Plan and for certain of our stock-based
employee benefit plans. Equity increased by $18.6 million in 2001 as a
result of these plans. WPS Resources also repurchased $1.1 million of
existing common stock for stock-based compensation plans.

Wisconsin Public Service issued $150.0 million of
6.125% senior notes in the third quarter of 2001, with part of the proceeds used
to retire $53.1 million of 8.8% first mortgage bonds. The remainder of the
proceeds was used to reduce short-term debt and support working capital
requirements. The senior notes are secured by a pledge of first mortgage bonds
but become unsecured if Wisconsin Public Service retires all of its outstanding
first mortgage bonds.

WPS Resources sold $79.0 million of common stock
in the fourth quarter of 2001 resulting in a net increase in common equity of
$76.0 million after issuance costs.

In April 2001, the Schuylkill County Industrial
Development Authority issued $27.0 million of refunding tax-exempt bonds.
WPS Westwood Generation is obligated to repay the refunding bonds.
WPS Resources agreed to guaranty WPS Westwood Generation's obligation
to provide sufficient funds to pay the refunding bonds and the related
obligations and indemnities.

Wisconsin Public Service makes large investments in
capital assets. Net construction expenditures, including nuclear fuel, for
Wisconsin Public Service are expected to be approximately $565 million in
the aggregate for the 2002 through 2004 period. Larger projects include
$60 million for automated meter reading, $27 million for computer
software and systems, and $68 million for the start of construction of
generation facilities that will continue to be constructed through 2007.

Other capital requirements for Wisconsin Public Service
for the three-year period include contributions of $7.8 million to the
Kewaunee plant's decommissioning trust fund.

In 2004, the second phase of Wisconsin Public Service's
agreement to purchase electricity from the De Pere Energy Center, a gas-fired
cogeneration facility, will be accounted for as a capital lease. The De Pere
Energy Center lease will be capitalized at approximately $80 million.

Upper Peninsula Power is expected to incur net
construction expenditures of about $37 million in the aggregate for the
period 2002 through 2004, primarily for electric distribution improvements and
repairs at hydro facilities. In addition, Upper Peninsula Power is considering
the potential need for construction of a combustion turbine at an estimated cost
of $41 million during the 2002 through 2003 timeframe.

Identified capital expenditures for WPS Power
Development for 2002-2004 include the acquisition of the CH Resources
generating facilities for approximately $62 million in 2002,
$13 million for handling NOx emissions at the Sunbury facility, and
$4.7 million for generation facilities at the Combined Locks Energy Center.
Other capital expenditures for WPS Power Development for 2002-2004 could be
significant depending on its success in pursuing development and acquisition
opportunities. When applicable, non-recourse financing will be sought for
funding significant portions of these acquisitions.

WPS Resources expects to make capital contributions of
up to $92 million to fund construction of our portion of the Wausau to
Duluth transmission line which will be transferred to American Transmission
Company in exchange for an increase in our equity ownership in American
Transmission Company.

Regulatory

On December 21, 2000, Wisconsin Public Service
received an order from the Public Service Commission of Wisconsin authorizing a
5.4% increase in retail electric rates and a 1.5% increase in retail natural gas
rates for 2001 and 2002. A 12.1% return on equity was approved. The new rates
were implemented on January 1, 2001.

On April 12, 2001, Wisconsin Public Service filed an
application with the Public Service Commission of Wisconsin for additional
rate relief in 2002. Wisconsin Public Service requested an
$86.8 million, or 16.1%, increase in retail electric rates and a
$13.5 million, or 4.5%, increase in retail natural gas rates for 2002.
Wisconsin Public Service requested a 12.6% return on equity, with equity
constituting 55% of the capital structure. The Public Service Commission of
Wisconsin's order, originally expected to be issued in January 2002, has now
been delayed until April 2002.

Wisconsin Public Service received an interim rate order on
December 19, 2001 and implemented interim rates on January 1, 2002.
The order authorized a $55.5 million, or 10.3%, retail electric rate
increase and a $11.2 million, or 4.7% retail natural gas rate increase.
Interim rates are based on a 12.1% return on equity, with equity constituting
55% of the capital structure, are subject to refund to the extent interim
revenues exceed revenue authorized in the final rate order, and will be in
effect until superseded by the final rate order establishing new rates.
Wisconsin Public Service anticipates that it will not be required to refund
revenues collected under the interim rates.

Upper Peninsula Power intends to submit an application
with the Michigan Public Service Commission for rate increases sometime in 2002
and anticipates new rates will be effective in 2003.

Merger with Wisconsin Fuel and Light Company

The merger of Wisconsin Fuel and Light Company into
Wisconsin Public Service was completed on April 1, 2001. Wisconsin Fuel and
Light shareholders received 1.73 shares of WPS Resources' common stock for
each share of Wisconsin Fuel and Light's common stock. A total of 1,763,943
shares were issued resulting in a purchase price of $54.8 million based on
an average price of $31.0625, the prevailing price at the time of the merger
announcement.

Wisconsin Public Service used the purchase method of
accounting and recorded $41.9 million of total premium associated with the
purchase. Of that total, $36.1 million was recorded as goodwill and
$5.8 million after-tax was recorded as an acquisition adjustment included
in plant. The acquisition adjustment is expected to be recovered in Wisconsin
retail rates over the period 2003-2005 as approved by the Public Service
Commission of Wisconsin.

American Transmission Company, LLC

In the first and second quarters of 2001, Wisconsin Public
Service and Upper Peninsula Power transferred transmission assets at their net
book value to American Transmission Company in exchange for cash and an
approximate 15% ownership interest in American Transmission Company.

The Public Service Commission of Wisconsin initiated a
generic docket to address the potential recovery of deferred 2000 and 2001
start-up costs and increased transmission operating costs of American
Transmission Company by the member Wisconsin utilities including Wisconsin
Public Service. Completion of the docket is anticipated in the spring of 2002
and should identify the costs to be recovered and the method for recovery.
Wisconsin Public Service began recovering some of these costs, as a result of
its interim rate case order, which was implemented January 1, 2002. The
interim recovery of these costs is subject to refund should the costs in the
final generic docket be less than the costs included in the interim rates.

American Transmission Company implemented new Federal
Energy Regulatory Commission tariffs, subject to refund, on January 1,
2001. Settlements related to issues surrounding these tariffs were approved in
late 2001. The settlement reduced transmission rates for Wisconsin Public
Service by approximately $8 million during the 2001-2005 phase-in period.

On August 17, 2001, the Public Service Commission of
Wisconsin approved the construction of a 220-mile 345 kV transmission line
from Wausau, Wisconsin to Duluth, Minnesota. The joint project of Wisconsin
Public Service and Minnesota Power had received the approval of the Minnesota
Public Service Commission in March of 2001. Construction of the line is expected
to begin in 2002 with completion in 2005. Our funding obligation of the
construction costs is estimated to be between $46 million and
$92 million. Our interest in the line will eventually be contributed to
American Transmission Company for an increased equity interest in American
Transmission Company. We anticipate that our equity interest in American
Transmission Company may increase to approximately 25% after completion and
contribution of the line.

Kewaunee Nuclear Plant

On January 1, 2001, Wisconsin Public Service's
administrative employees at the Kewaunee plant transferred to Nuclear Management
Company, LLC. As a result of these employees leaving the Wisconsin Public
Service benefit plans, a curtailment loss of $8.8 million was experienced.
Most of the curtailment loss was deferred as a regulatory asset. We recognized
settlement gains of $12.8 million in 2001 as a result of these employees
and other former employees taking withdrawals from the pension plan during the
year. The majority of the settlement gains were recorded as a regulatory
liability. Wisconsin Public Service will return the net of settlement gains and
curtailment losses to ratepayers in future rates.

The Kewaunee plant's co-owners received approval from the
Public Service Commission of Wisconsin to apply deferred accounting treatment
beginning March 27, 2001 to the incremental costs associated with
compliance with certain Nuclear Regulatory Commission requirements mandating
improvements to plant procedures. Wisconsin Public Service received an order to
recover the deferred costs subject to review by the Public Service Commission of
Wisconsin in a future rate proceeding. Wisconsin Public Service has deferred
approximately $10 million as a regulatory asset through December 31,
2001.

On September 24, 2001, Wisconsin Public Service
acquired Madison Gas and Electric's 17.8% interest in the Kewaunee plant for
$17.5 million. This acquisition increased Wisconsin Public Service's
ownership interest in the Kewaunee plant to 59%.

Security

On December 19, 2001, the Public Service Commission
of Wisconsin authorized Wisconsin Public Service to defer additional costs
incurred with regard to increased security measures at Kewaunee and other
facilities. The deferred security costs will be addressed in Wisconsin Public
Service's rate proceeding to be filed in 2002 for 2003 rate relief.

Wisconsin River Power Company

Wisconsin Public Service's ownership interest in Wisconsin
River Power Company decreased to 50% effective December 31, 2001 as the
result of the sale of a portion of its ownership interest to Wisconsin Power and
Light Company.

Acquisition of Generation Facilities

On September 10, 2001, Mid-American Power, LLC, a
joint venture of WPS Power Development and Burns & McDonnell, announced
a plan for construction of an additional 200 megawatts of electrical
capacity at the existing 53-megawatt Stoneman power plant in Cassville,
Wisconsin. Construction is expected to begin in 2003 with completion by the
first quarter of 2006.

We expect the Combined Locks Energy Center, a cogeneration
project owned by WPS Power Development and located at the Appleton Coated
paper mill in Combined Locks, Wisconsin, to begin full operation by May 1,
2002. WPS Energy Services will market the electric energy produced by the
facility in the wholesale electric marketplace. Construction is underway to
install a heat recovery steam generator which will complete the cogeneration
aspect of the project.

In December 2001, WPS Power Development reached an
agreement to purchase the stock of CH Resources, Inc. which owns three
power plants and other assets. The $62 million transaction is subject to
regulatory approvals and is expected to close in the second quarter of 2002.
WPS Resources is expected to issue short-term debt in order to provide
equity funding to WPS Power Development for this acquisition.

ECO Coal Pelletization #12 LLC Operations

In November 2001, WPS Power Development, through its
subsidiary ECO Coal Pelletization #12 LLC, entered into a transaction with a
subsidiary of a public company resulting in ECO #12 contributing 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.

The transaction generated a pre-tax gain of
$40.1 million of which $38.0 million has been deferred as of
December 31, 2001 as a result of certain rights of rescission and written
puts being granted to the buyer. As these rights of rescission expire and the
amount of the put options granted to the buyer diminishes, WPS Power
Development will recognize the deferred gain on the transaction.

Concurrent with the partial sale of this project,
WPS Power Development bought out the interest of its previous partner in
the ECO #12 project. The actual payments to this former partner are contingent
upon the same provisions referred to above. As a result, on December 31,
2001, $21.3 million was held in escrow, which will be released
proportionally as the respective rescission rights and put options expire.

Sunbury Generation, LLC

WPS Power Development acquired the Sunbury generation
plant in November of 1999. As a result of both market conditions and issues
related to the physical performance of the plant, the project to date has not
met management's projected near-term financial performance levels. Due to this
lower level of performance, WPS Resources and WPS Power Development
contributed additional capital into the project to fund operating expenses and
capital expenditures and to ensure that the project complies with its project
financing debt covenants. In 2001, capital contributions amounted to
$24.5 million. Projections going forward indicate that Sunbury will produce
adequate cash flows for its operations, with capital contributions being
required for capital expenditures. In 2002, capital contributions will be
required primarily to fund a project to reduce NOx emissions from the plant.
Those expenditures are estimated to be approximately $13 million and were
anticipated when the plant was acquired.



TRENDS - WPS RESOURCES CORPORATION

Critical Accounting Policies

We prepare our financial statements in conformity with
accounting principles generally accepted in the United States. Judgments
and uncertainties about the application of these accounting policies along with
estimates and other assumptions may affect reported results. We consolidate the
financial statements of all majority-owned subsidiaries. All significant
intercompany transactions are eliminated.

Wisconsin Public Service and Upper Peninsula Power follow
Statement of Financial Accounting Standards No. 71, "Accounting for the
Effects of Certain Types of Regulation," and their financial statements
reflect the effects of the different ratemaking principles followed by the
various jurisdictions regulating each utility. For Wisconsin Public Service,
these include the Public Service Commission of Wisconsin, 90% of revenues; the
Michigan Public Service Commission, 2% of revenues; and the Federal Energy
Regulatory Commission, 8% of revenues.

Although unlikely, should Wisconsin Public Service or
Upper Peninsula Power no longer meet the criteria for applying Statement
No. 71, we would discontinue its application as defined under Statement No.
101, "Regulated Enterprises - Accounting for the Discontinuation of
Application of FASB Statement 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 occurs.

We accrue estimated amounts for services rendered but not
yet billed. We reserve an estimate for potential uncollectible customer accounts
based on historical uncollectible experience and specific customer
identification where practical.

WPS Energy Services follows the requirements of
Emerging Issues Task Force Issue No. 98-10, "Accounting for Contracts
Involved in Energy Trading and Risk Management Activities." WPS Energy
Services uses derivative financial and commodity instruments to reduce market
risk associated with changing prices of natural gas and electricity sold at firm
prices to its customers. WPS Energy Services also uses derivatives to
manage market risk associated with anticipated energy purchases as well as
trading activities. Derivatives may include futures and forward contracts, price
swap agreements, and call and put options. Accordingly under Issue No. 98-10,
WPS Energy Services marks its energy trading contracts to fair value on the
balance sheet, and recognizes changes in market value in earnings.

Impact of New Accounting Standards

We adopted Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities,"
on

January 1, 2001. This statement requires derivative
instruments to be recorded at their fair value as assets or liabilities on the
balance sheet. Changes in the derivative's fair value are to be recognized
currently in earnings unless specific hedge accounting criteria are met.

We concluded that the majority of contracts at our utility
subsidiaries and at WPS Power Development for the purchase, sale, and
storage of natural gas, electricity, coal, and nuclear fuel do not meet the
definition of a derivative as defined under Statement No. 133 and, therefore,
are not subject to the accounting requirements of Statement No. 133. Wisconsin
Public Service entered into a limited number of commodity contracts that meet
the definition of a derivative. We believe that any gains or losses resulting
from the settlement of these contracts will be collected from, or refunded to,
retail customers. Derivative assets and liabilities that are recorded as a
result of these derivative contracts are offset with corresponding regulatory
assets and liabilities. At January 1, 2001, Wisconsin Public Service recorded a
derivative asset and an offsetting regulatory liability of approximately
$17 million. The cumulative effect on income was not significant.

WPS Energy Services uses derivative financial and
commodity instruments to reduce market risk associated with changing prices of
natural gas and electricity sold to customers at firm prices. WPS Energy
Services also uses derivatives to manage market risk associated with anticipated
energy purchases as well as trading activities. WPS Energy Services
concluded that its energy contracts were trading contracts and, therefore,
applies Emerging Issues Task Force Issue No. 98-10, "Accounting for
Contracts Involved in Energy Trading and Risk Management Activities."
Accordingly, WPS Energy Services recorded its energy contracts at fair
value on the balance sheet, with changes in fair value recognized in earnings.
Because WPS Energy Services marks its energy trading contracts to market in
accordance with Issue 98-10 and does not anticipate designating any derivative
contracts as hedges for accounting purposes, the adoption of Statement No. 133
did not have a material impact at WPS Energy Services.

We adopted Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets," on January 1, 2002. The
financial statement impact of adapting Standard No. 142 was immaterial. In
accordance with the requirements of this statement, we ceased amortizing the
goodwill associated with the Wisconsin Fuel and Light merger at January 1,
2002, and prepared a preliminary evaluation of the fair market value of the gas
utility business segment to assess the potential impairment of the goodwill
balance. Based on the estimated fair value, an impairment charge was not
required.

Liquidity

WPS Resources normally uses internally generated
funds and commercial paper borrowing to satisfy most of its capital
requirements. We may periodically issue long-term debt and common stock to
reduce short-term debt, maintain desired capitalization ratios, and fund future
growth. We seek non-recourse financing for funding some nonregulated
acquisitions. WPS Resources' commercial paper borrowing program provides
for working capital requirements of the nonregulated businesses and Upper
Peninsula Power. The specific forms of financing, amounts, and timing depend on
the availability of projects, market conditions, and other factors.

The current credit ratings for WPS Resources and
Wisconsin Public Service are listed in the table below.

|Credit Ratings                                                                                                      | Standard & Poor's      | Moody's               
|------------------------------------------------------------------------------------------------------------------- | ---------------------- | ----------------------
|                                                                                                                    |                        |                       
|WPS Resources Corporation
        Senior unsecured debt
        Commercial paper
        Trust preferred securities | A+
      A-1
      A-  | Aa3
      P-1
      A1
|Wisconsin Public Service Corporation
        Bonds
        Preferred stock
        Commercial paper                 | AA-
      A
      A-1+ | Aa1
      A1
      P-1

These ratings are among the best in the energy industry
and have allowed us to access commercial paper and long-term debt markets on
favorable terms.

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.

The recapture of its operating and capital costs through
ratemaking mechanisms such as the electric fuel window, purchased gas adjustment
clause, and frequent rate adjustments based on projected test years have a
positive impact on Wisconsin Public Service's liquidity.

WPS Resources and Wisconsin Public Service maintain
separate commercial paper borrowing programs in compliance with the Public
Service Commission of Wisconsin's directives. Factors affecting the commercial
paper credit ratings at both WPS Resources and Wisconsin Public Service
include the overall credit strength for the company, the ratings on its
long-term debt, the amount of its short-term debt, and the amount and quality of
the bank facilities backing up its commercial paper borrowing. If the company's
long-term debt rating were to fall below a rating of A+/A-1, the potential
exists for a downgrade in its commercial paper rating.

WPS Resources holds credit lines to back 100% of its
commercial paper borrowing and letters of credit. Included in the credit lines
of WPS Resources, and also of Wisconsin Public Service, are credit lines of
$10 million and $15 million, respectively, that require both companies
to maintain a commercial paper rating of A-1/P-1. A decrease in ratings below
that level could adversely affect the company by increasing the interest rates
at which it can borrow, restricting its ability to obtain lines and letters of
credit, and potentially limiting the availability of funds to the company in the
commercial paper market. A restriction in the company's ability to use
commercial paper borrowing for its working capital needs could require it to
secure funds through bank loans resulting in higher interest expense and delayed
availability of funds.

WPS Energy Services maintains underlying agreements
to support its electric and gas trading operations. In the event of a
deterioration of WPS Resources' credit rating, most of these agreements
allow the counter-party to demand additional assurance of payment. This
provision could pertain to existing business, new business, or both with the
counter-party. 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,
incur additional expenses, and could restrict the amount of business
WPS Energy Services can conduct.

WPS Energy Services 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 counter-party to require additional collateral
to cover the increased obligation. Market price changes could cause significant
near term cash requirements to support the business. Increased requirements
related to market price changes should only result in a temporary liquidity need
that will unwind as the sales contracts are fulfilled.

WPS Power Development has some projects which are
partially funded by non-recourse debt. These debt obligations have certain debt
coverage covenants related to liquidity that must be met. Factors that can
impact liquidity at these projects are overall electric market conditions, the
physical availability of the project to meet contractual requirements, the cost
and availability of required inputs to production, and the level of operating
and maintenance costs. If any of these projects should fall below the required
debt coverage levels, WPS Resources can either contribute additional equity
or, if market conditions are such that the project is no longer considered
viable, abandon the project.

Contractual Obligations and Commercial Commitments

The following tables summarize the contractual obligations
and commercial commitments of WPS Resources, including its subsidiaries.

|                                                       |          | Payments due by period
|------------------------------------------------------ | -------- | ----------------------
|Contractual Obligations(Millions)                      | Total    | Less than 1 year      
|Long-term debt principal and
        interest payments | $1,173.2 | $102.7                
|Minimum capital lease obligations                      | 124.7    | 5.2                   
|Operating leases                                       | 4.9      | 2.7                   
|Unconditional purchase obligations                     | 1,228.2  | 694.9                 
|Total contractual cash obligations                     | $2,531.0 | $805.5                

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

Wisconsin Public Service records minimum capital lease
obligations on its balance sheet at net present value. The above table
represents the total future obligation.

Unconditional purchase obligations represent energy supply
contracts at WPS Energy Services and certain commodity purchase contracts
at Wisconsin Public Service and WPS Power Development. The energy supply
contracts at WPS Energy Services have offsetting energy sale contracts.
Wisconsin Public Service expects to recover the costs of its contracts in future
customer rates.

|                                             |                              | Amount of Commitment
      Expiration Per Period
|-------------------------------------------- | ---------------------------- | ------------------------------------------------
|Other
      Commercial Commitments(Millions) | Total
      AmountsCommitted | Less
      than1 year                           
|Lines of credit                              | $133.3                       | $60.0                                           
|Standby letters of credit                    | 18.4                         | 18.3                                            
|Guaranties                                   | 4.5                          | 4.5                                             
|Total commercial commitments                 | $156.2                       | $82.8                                           

The WPS Resources Board of Directors has authorized
management to issue corporate guaranties in the aggregate amount of up to $500
million to support the business operations of WPS Energy Services which are
not reflected in the table above. WPS Resources primarily issues the
guaranties to counter-parties in the wholesale electric and natural gas
marketplace to meet the counter-parties' requirements and permit WPS Energy
Services to operate within these markets. The authorized amount of the
guaranties is in excess of the amount of obligations actually backed by the
WPS Resources guaranties. The amount supported is dependent on the amount
of outstanding business WPS Energy Services has with the counter-parties
holding the guaranties at any point in time. WPS Resources reflects
WPS Energy Services' obligations supported by these parental guaranties on
its consolidated balance sheet either as accounts payable or liabilities from
risk management activities.

The WPS Resources Board of Directors has authorized
corporate guaranties as needed to support certain specific business operations
of WPS Power Development. WPS Resources has issued approximately
$130 million in guaranties which are not reflected in the table above.
WPS Resources issues the guaranties for indemnification obligations related
to business purchase agreements, borrowings, and counter-parties in the
wholesale electric marketplace to meet their credit requirements and permit
WPS Power Development to operate within these markets. The authorized
amount of the guaranties is in excess of the amount of obligations actually
backed by WPS Resources' guaranties. The amount supported is dependent on
the amount of the outstanding obligation that WPS Power Development has
with the parties holding the guaranties at any point in time. The guaranties are
required to support WPS Power Development in its normal operations of
energy production and the sale of electricity. WPS Resources reflects
WPS Power Development's obligations supported by these parental guaranties
on its consolidated balance sheets or in the footnotes to its financial
statements.

Since May 2000, WPS Resources has provided limited
financial support and energy supply services to a third party, Quest Energy,
LLC, a Michigan limited liability company. Quest is a retail electricity
marketing entity, doing business as a registered Alternative Electric Supplier
in the state of Michigan. Financial support is in the form of an
interest-bearing note with an initial maturity date of May 2005, secured by
the assets of Quest. On December 31, 2001, the loan amount remaining was
$1.0 million. The note contains certain restrictions on Quest's ability to
enter into additional debt instruments. WPS Resources also provides
corporate guaranties on behalf of Quest that are not included in its
consolidated financial statements. Guaranties have been made to Quest's
transmission providers in the amount of $4.5 million. These guaranties
assure Quest's ability to pay for the transmission services it purchases from
these entities. These guaranties are reflected in the table above.

WPS Energy Services provides substantially all of the
electric energy supply to Quest on a wholesale basis without requiring the
credit assurances required of other wholesale customers. WPS Energy
Services exercises its right to evaluate Quest's sales portfolio to verify the
portfolio's ability to generate the revenues necessary to pay for purchased
wholesale supply. WPS Energy Services further provides computational
infrastructure and support services related to the daily operational activities
of Quest. At year-end, Quest was current in its payables to WPS Energy
Services. On occasion, however, payments from Quest have been late and
WPS Energy Services imposes payment penalties on these late payments.

Trading Activities

WPS Energy Services measures the fair value of
contracts, 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 using
risk management systems. The primary input for natural gas pricing is the
settled forward price curve of the NYMEX exchange which includes spreads,
contracts, and options. Basis pricing is derived from published indices (Gas
Daily, Natural Gas Intelligence, and Inside FERC) and
well-documented broker quotes. WPS Energy Services bases electric prices on
published indices and well-documented broker quotes. Because the majority of the
contracts have a term of less than 36 months, the forward curves have a
reasonable degree of liquidity and WPS Energy Services does not determine any
forward price curves internally. Low tolerance for price risk causes
WPS Energy Services to use financial instruments to hedge substantially all
its positions and, therefore, changes in the primary variable, which is the
forward price curves, has little impact on the net fair value of the contracts
as marked-to-market. An outside company with an established practice in energy
risk evaluation verified the electric mark-to-market position at
December 31, 2001 due to the large increase in new business and the
introduction of new electric risk management software. The results of its
independent calculation were consistent with those generated by WPS Energy
Services.

|WPS Energy Services, Inc.Mark-to-Market Roll Forward (Millions)                                      | NaturalGas | Electric | Total
|---------------------------------------------------------------------------------------------------- | ---------- | -------- | -----
|                                                                                                     |            |          |      
|Fair value of contracts January 1, 2001                                                              | $ 7.3      | $0.3     | $ 7.6
|Less contracts realized or settled during period                                                     | 2.2        | 0.3      | 2.5  
|Plus fair value of new contracts entered into during 
        period and other changes in fair value | 8.7        | 6.3      | 15.0 
|Fair value of contracts outstanding at December 31, 2001                                             | $13.8      | $6.3     | $20.1

The fair value of contracts at January 1, 2001 and
December 31, 2001, reflect the values reported on the balance sheet for net
mark-to-market assets as of those dates. Contracts realized or settled include
the value of contracts in existence at January 1, 2001 that were no longer
in the net mark-to-market assets as of December 31, 2001. Mark-to-market
gains and losses related to contracts that are still included in WPS Energy
Services portfolio at December 31, 2001, are included in the fair value of
new contracts entered into during the period. These amounts represent the
mark-to-market gain or loss at the inception of these contracts. There were, in
many cases, offsetting positions entered into and settled during the period
resulting in gains or losses being realized during the current year. The gains
or losses from these offsetting positions are not reflected in the table above.
Although WPS Energy Services strives to maintain a balanced book of
back-to-back transactions, due to systems limitations, any ineffectiveness in
hedging activity for 2001 has been included under "fair value of new
contracts entered into during period" in the table above.

|WPS Energy Services, Inc.Contract Aging at Fair Value      |                                |                   |                   |                                    |                      
|---------------------------------------------------------- | ------------------------------ | ----------------- | ----------------- | ---------------------------------- | ---------------------
|Source of Fair Value (Millions)                            | Maturity
      less than1 year | Maturity1-3 years | Maturity4-5 years | Maturity
      in excessof 5 years | Total
      fairvalue
|Prices actively quoted                                     | $12.0                          | $(0.8)            | -                 | -                                  | $11.2                
|Prices provided by external sources                        | 0.2                            | (0.1)             | -                 | -                                  | 0.1                  
|Prices based on models and other
        valuation methods | 3.0                            | 4.5               | 1.3               | -                                  | 8.8                  
|Total fair value                                           | $15.2                          | $ 3.6             | $1.3              | -                                  | $20.1                

Prices actively quoted includes NYMEX and over-the-counter
contracts. Prices provided by external sources includes basis swaps. Prices
based on models and other valuation methods include retail natural gas and
electric contracts due to the volume optionality that exists in those contracts.
We derive from active quotes, or external sources provide, pricing, the most
significant variable in the mark-to-market calculation, for all contracts in the
above table.

Related Party Transactions

We do not have material related party transactions nor
other relationships which would allow us to negotiate terms of material
transactions on less than an arm's-length basis.

Electric Utility Restructuring - Wisconsin

Electric reliability continues to be the primary issue for
the Public Service Commission of Wisconsin. Industry restructuring and retail
generation open access remain secondary issues in the state.

The Public Service Commission of Wisconsin is evaluating
proposals regarding future construction and ownership of generation facilities
in the state. The Public Service Commission of Wisconsin authorized Wisconsin
Electric Power Company to proceed with its planning for generation construction.
On February 1, 2002, Wisconsin Electric Power applied for Certificates of Public
Convenience and Necessity for its generation construction proposals. This
application is being reviewed, however, and further approval is required in
order for Wisconsin Electric Power to proceed.

Electric Utility Restructuring - Michigan

In June 2000, a law was enacted which provides Michigan
retail electric customers the right to choose their generation supplier by
January 1, 2002. Wisconsin Public Service and Upper Peninsula Power, along
with other Michigan Electric and Gas Association members, jointly developed and
filed open access tariffs and business practices with the Michigan Public
Service Commission prior to January 1, 2002.

Gas Utility Restructuring - Wisconsin

In its 2001-2002 Wisconsin retail rate application,
Wisconsin Public Service proposed to facilitate customer choice of natural gas
suppliers through the use of its new automated meter reading system. The
proposal was approved by the Public Service Commission of Wisconsin and provided
customer choice of gas suppliers for large commercial customers beginning on
November 1, 2001. Customer choice will be offered to additional commercial
customers beginning on November 1, 2002. This program will be expanded to
all customers as the automated meter reading system is installed system-wide.

Gas Utility Restructuring - Michigan

Most of Michigan's largest gas customers are allowed to
choose their natural gas commodity supplier. The smaller Michigan natural gas
utilities, including Wisconsin Public Service, are to propose a customer choice
program for all customer classes when it is in the best interests of each
utility and its customers. Wisconsin Public Service intends to provide customer
choice to its Michigan customers following the implementation of its automated
meter reading system in that state.

Environmental

Wisconsin Public Service estimates future undiscounted
investigation and cleanup costs of 10 former manufactured gas sites to be in the
range of $43 million to $50 million. We may adjust these estimates in
the future contingent upon remedial technology, regulatory requirements, and the
assessment of environmental damages.

Wisconsin Public Service currently has a
$43.4 million liability recorded for gas plant cleanup with an offsetting
regulatory asset (deferred charge). We expect to recover cleanup costs net of
insurance recoveries in future customer rates. We will not recover carrying
costs associated with the cleanup expenditures. Wisconsin Public Service
has received $12.7 million in insurance recoveries which have been recorded
as a reduction in the regulatory asset.

The state of Wisconsin developed a nitrogen oxide
reduction plan for all utilities in the ozone non-attainment area established by
the United States Environmental Protection Agency in southern Wisconsin.
The nitrogen oxide reductions begin in 2003, and the requirements are gradually
increased through 2007. This reduction plan affects Edgewater Unit 4. Wisconsin
Public Service owns 31.8% of this unit. A compliance plan for Edgewater Unit 4
was initiated in 2000. The plan includes a combination of combustion
optimization and emission trading at a potential cost to Wisconsin Public
Service of approximately $5 million. The State of Wisconsin is also seeking
voluntary reductions from units outside the ozone non-attainment area which may
lead to additional expenditures for nitrogen oxide reductions at other units.
Wisconsin Public Service is participating in voluntary efforts to reduce
nitrogen oxide levels at the Columbia Energy Center. Wisconsin Public Service
owns 31.8% of Columbia. The Public Service Commission of Wisconsin has approved
recovery of the costs associated with nitrogen oxide compliance.

The Wisconsin Department of Natural Resources initiated a
rulemaking effort aimed at the control of mercury emissions. Coal-fired
generation plants are the primary target of this effort. The proposed rule was
open to comment in October 2001. A final rule could be issued in the spring of
2002. As proposed, the rule requires phased in mercury emission reductions
reaching 90% reduction in 15 years. Wisconsin Public Service estimates that
it could cost $105 million per year for it to achieve the 90% reduction.

Early compliance with the Federal Clean Air Act has
generated surplus sulfur dioxide allowances at Wisconsin Public Service.
Wisconsin Public Service has sold and will continue to consider the sale of any
allowances in excess of its own needs. The Public Service Commission of
Wisconsin has ordered that profits from the sale of allowances be passed on to
Wisconsin Public Service's customers.

WPS Power Development acquired emission allowances as
a result of the purchase of the Sunbury plant in 1999 and the Westwood plant in
2000. The costs assigned to these allowances are charged to expense as the
allowances are used. The Sunbury plant also purchases incremental emission
allowances on the open market to comply with air regulations. WPS Power
Development is installing additional technology in order to comply with the 2003
nitrogen oxide standards. Expenditures for this technology could be significant.

Asset Management Strategy

In December 2001 Wisconsin Public Service sold
5,740 acres of land on the Peshtigo River in northeastern Wisconsin to the
Wisconsin Department of Natural Resources for $13.5 million. This sale was
the first significant transaction in a five to seven-year asset management
strategy we adopted in 2001. The agreement with the Department of Natural
Resources includes two options, one exercisable in 2003 and the other in 2004,
whereby the Department may acquire, at less than fair value, approximately
5,000 additional acres for $11.5 million if both options are
exercised. The value associated with the difference between the option price and
the fair value will be treated as a charitable contribution.

IMPACT OF INFLATION

Our financial statements are prepared in accordance with
accounting principles generally accepted in the United States 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, Wisconsin Public Service's and Upper Peninsula
Power'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, Wisconsin
Public Service and Upper Peninsula Power are only allowed to recover the
historic cost of plant via depreciation.



RESULTS OF OPERATIONS - WISCONSIN PUBLIC SERVICE CORPORATION

Wisconsin Public Service Corporation is a regulated
electric and natural gas utility. Electric operations accounted for
approximately 66% of 2001 revenues, while gas operations contributed 34% to 2001
revenues.

2001 Compared with 2000

Wisconsin Public Service Corporation Overview

Wisconsin Public Service's 2001 and 2000 results of
operations are shown in the following chart:

|Wisconsin Public Service's Results(Millions) | 2001   | 2000   | Change
|-------------------------------------------- | ------ | ------ | ------
|                                             |        |        |       
|Operating revenues                           | $932.3 | $840.5 | 11%   
|Earnings on common stock                     | 80.6   | 70.4   | 14%   

Sales volume growth, rate increases, and higher natural
gas prices in the first part of 2001 contributed to increased revenues. The
Public Service Commission of Wisconsin authorized a 5.4% increase in Wisconsin
retail electric rates and a 1.5% increase in Wisconsin retail natural gas rates
effective January 1, 2001.

Earnings from electric utility operations were
$57.8 million in 2001 compared with $58.2 million in 2000. Earnings
from gas utility operations were $5.9 million in 2001 and
$11.6 million in 2000. Other nonutility income from the gain on the sale of
hydro lands as part of our asset management strategy and increased utility
margins contributed to higher overall earnings. Partially offsetting these
factors were increased operating expenses.

Electric Utility Operations

Wisconsin Public Service's electric utility margin
increased $13.0 million, or 3%, primarily due to a 5.4% Wisconsin retail
electric rate increase which became effective on January 1, 2001.

|Electric Utility Results (Millions) | 2001       | 2000       | 1999      
|----------------------------------- | ---------- | ---------- | ----------
|                                    |            |            |           
|Revenues                            | $610.7     | $576.0     | $527.9    
|Fuel and purchased power            | 212.8      | 191.1      | 170.6     
|Margin                              | $397.9     | $384.9     | $357.3    
|                                    |            |            |           
|Sales in kilowatt-hours             | 12,618,877 | 12,406,917 | 11,920,148

Wisconsin Public Service's electric utility margin
increased due to the electric rate increase and higher sales volumes to most
customer classes at Wisconsin Public Service. Summer weather was 66% warmer in
2001 than in 2000, and 17% warmer than normal. Partially offsetting these
factors was a 2% decrease in sales to large commercial and industrial customers
due to declining economic conditions.

Also affecting the electric utility margin was a change in
the customer mix. Sales to lower margin, non-firm customers increased more than
sales to higher margin customers.

Wisconsin Public Service's fuel expense for production
plants decreased $5.7 million, or 4%, largely due to decreased production
at its combustion turbine generation plants. Wisconsin Public Service's
purchased power expense, however, increased $27.4 million due to an
increase in power purchases and a 19% increase in the cost per kilowatt-hour of
power purchases made in 2001 compared with 2000. Power purchases were 21% higher
in 2001 due to warmer summer weather and the availability of economically priced
energy. Also contributing to increased power purchases were a scheduled outage
at Wisconsin Public Service's nuclear plant and an unscheduled outage at one of
its fossil-fueled generation plants.

Wisconsin Public Service's Kewaunee plant was off-line for
a scheduled refueling and replacement of its steam generators in late September
of 2001. The Kewaunee plant returned to service in early December as scheduled.
Wisconsin Public Service is currently a 59% owner of the Kewaunee plant.
Wisconsin Public Service's Pulliam Unit 7 was off-line for unscheduled
repairs in the fourth quarter of 2001 and returned to service on
February 3, 2002. Wisconsin Public Service chose to take advantage of
purchased power during these outages because of economically favorable pricing.

The Public Service Commission of Wisconsin allows
Wisconsin Public Service the opportunity to adjust prospectively the amount
billed to Wisconsin retail customers for fuel and purchased power if costs fall
outside a specified range. Wisconsin Public Service is required to file an
application to adjust rates either higher or lower when costs are plus or minus
2% from forecasted costs on an annualized basis. In the third quarter of 2001,
Wisconsin Public Service submitted a fuel filing with the Public Service
Commission of Wisconsin requesting a $1.9 million retail electric rate
reduction. The rate reduction was approved and implemented on September 3,
2001. Wisconsin Public Service submitted an additional fuel filing in November
2001, and a rate reduction of $0.3 million was approved and implemented on
December 8, 2001.

Gas Utility Operations

Effective April 1, 2001, the gas utility margin at
Wisconsin Public Service includes the merged Wisconsin Fuel and Light
Company operations.

|Wisconsin Public Service Corporation'sGas Utility Results (Millions) | 2001    | 2000    | 1999   
|-------------------------------------------------------------------- | ------- | ------- | -------
|                                                                     |         |         |        
|Revenues                                                             | $321.6  | $264.5  | $191.5 
|Purchase costs                                                       | 230.2   | 185.1   | 117.6  
|Margin                                                               | $ 91.4  | $ 79.4  | $ 73.9 
|                                                                     |         |         |        
|Throughput in therms                                                 | 742,722 | 701,094 | 662,615

The gas utility margin at Wisconsin Public Service
increased $12.0 million, or 15%, in 2001. This increase was due to a 1.5%
increase in Wisconsin retail natural gas rates effective January 1, 2001,
and higher overall natural gas throughput volumes of 6%. Increased gas
throughput volumes were largely the result of Wisconsin Public Service's
acquisition of Wisconsin Fuel and Light in the second quarter of 2001. Gas
throughput volumes to large commercial and industrial customers, however,
decreased 9% as a result of customers switching to the gas transport customer
class and declining economic conditions. Gas throughput volumes to gas transport
customers increased 15%. In addition, gas throughput volumes to interruptible
customers decreased 6%. Gas throughput volumes were negatively affected by
winter weather which was 9% milder in 2001 than in 2000, and 8% milder than
normal.

Wisconsin Public Service's natural gas revenues increased
$57.1 million, or 22%, as the result of an increase in the average unit
cost of natural gas in the first half of 2001, increased throughput, and the
1.5% increase in Wisconsin retail gas rates.

Wisconsin Public Service's natural gas purchase costs
increased $45.1 million, or 24%, largely due to a higher average unit cost
of natural gas in the first half of 2001. The higher natural gas prices
experienced earlier in 2001 were passed on to customers and are reflected in
both revenues and gas purchases, thus having little impact on margin.

Under current regulatory practice, the Public Service
Commission of Wisconsin and the Michigan Public Service Commission allow
Wisconsin Public Service to pass changes in the cost of natural gas on to
customers through a purchased gas adjustment clause.

Other Utility Expenses/Income

Utility operating expenses increased $36.3 million
largely due to increased transmission expenses associated with the transfer of
assets to American Transmission Company, increased payments to the Wisconsin
Department of Administration for demand-side management (energy conservation)
activities, increased maintenance costs at the Kewaunee plant during its
refueling outage, and higher write-offs of uncollectible accounts.

The Public Service Commission of Wisconsin has allowed a
portion of the higher transmission costs to be deferred. The deferred
transmission costs, $4.4 million for 2001, are expected to be recovered in
future regulatory proceedings.

Lower earnings on the nuclear decommissioning fund
contributed to a decrease in other income from utility operations. Due to
regulatory practice, lower earnings on the nuclear decommissioning fund were
offset by decreased depreciation expense. Also contributing to decreased
depreciation expense were an extension in the Kewaunee plant's assumed
depreciable life and a reduction in the nuclear decommissioning fund
contribution.

Interest expense increased due to the issuance of
additional long-term debt by Wisconsin Public Service in August of 2001.

Other Nonutility Income

Other nonutility income at Wisconsin Public Service
included a pre-tax gain of $13.1 million on the sale of hydro lands in
December of 2001. The sale of these hydro lands was the first significant
transaction in our five to seven-year asset management strategy to increase
shareholder return from the sale, development, or use of certain real estate
assets deemed to be no longer essential to operations. In addition, earnings on
equity investments were higher in 2001 compared with 2000 primarily due to our
investment in American Transmission Company.

2000 Compared with 1999

Overview

Wisconsin Public Service's 2000 and 1999 results of
operations are shown in the following chart:

|Wisconsin Public Service's Results (Millions) | 2000   | 1999   | Change
|--------------------------------------------- | ------ | ------ | ------
|                                              |        |        |       
|Operating revenues                            | $840.5 | $719.4 | 17%   
|Earnings on common stock                      | 70.4   | 67.1   | 5%    

Earnings from electric utility operations were
$58.2 million in 2000 compared with $54.1 million in 1999. Earnings
from natural gas utility operations were $11.6 million in 2000 and
$11.2 million in 1999. The primary reasons for higher utility earnings were
a Wisconsin retail electric rate increase and increased natural gas sales
volumes as the result of winter weather that was 8% colder in 2000 than in 1999.

Electric Utility Operations

Wisconsin Public Service's electric utility margin
increased $27.6 million, or 8%, primarily due to a 4.6% Wisconsin retail
electric rate increase which became effective on January 1, 2000. This rate
increase was primarily intended to recover additional fuel and purchased power
costs for the year. The 2000 electric rate increase also took into account the
expected gain on the sale of utility assets which is discussed under "Other
Electric and Gas Utility Expenses/Income."

Electric utility revenues increased $48.1 million, or
9%, due to a 4% increase in overall sales volume coupled with the Wisconsin
retail electric rate increase. Sales volumes increased in spite of summer
weather that was 31% cooler in 2000 than in 1999.

Fuel expense increased $15.3 million, or 14%, due to
increased production at Wisconsin Public Service's fossil-fueled and
combustion turbine generation plants. In addition, the average cost of
generation at the combustion turbine plants increased 90% largely as a result of
a higher unit cost of natural gas. Generation costs at the Kewaunee plant
decreased 14% in 2000 due to its scheduled outage for refueling and maintenance
in the second quarter of 2000. A similar outage did not occur in 1999. The
Kewaunee plant was off-line beginning April 22, 2000 and returned to full power
on June 2, 2000. During the scheduled outage, nuclear generation was
replaced with additional fossil fuel and combustion turbine generation and
additional purchased power. Wisconsin Public Service was the operator and 41.2%
owner of the Kewaunee plant in 2000 and 1999. Purchased power expense decreased
$5.2 million, however, largely due to a 5% decrease in the cost per
kilowatt-hour of power purchases made by Wisconsin Public Service in 2000
compared with 1999.

Annual fuel costs at December 31, 2000 were within
the 2% fuel window authorized by the Public Service Commission of Wisconsin and,
accordingly, no adjustment was made to electric rates for 2000 fuel costs.

Gas Utility Operations

Wisconsin Public Service's gas utility margin increased
$5.4 million, or 7%, in 2000. This increase was primarily due to an
increase in throughput volumes.

Winter weather was a factor for natural gas operations in
2000. Weather was 8% colder in 2000 than in 1999; however, weather was 2% warmer
than normal in 2000. Natural gas revenues increased $73.0 million, or 38%,
as the result of a 43% increase in the average unit cost of natural gas coupled
with a 6% increase in overall throughput volumes.

Natural gas purchase costs increased $67.5 million,
or 57%. This increase resulted from a higher average unit cost of natural gas
and higher gas volumes purchased of 10%. The higher unit cost of natural gas is
reflected in both revenues and gas purchases, thus having little impact on
margin.

Other Electric and Gas Utility Expenses/Income

Utility operation and maintenance expenses increased
$20.6 million. Electric utility operation and maintenance expenses
increased $16.6 million primarily due to costs associated with the
scheduled outage and other maintenance activities at the Kewaunee plant.

Higher earnings of $6.2 million on the Kewaunee
plant's nuclear decommissioning fund resulted in increased other income in 2000.
Due to regulatory practices, this higher income was offset by increased
depreciation and decommissioning expense. Other income also included a gain of
$3.8 million on the sale of a combustion turbine which Wisconsin Public
Service constructed for another Wisconsin utility. The Public Service Commission
of Wisconsin considered this gain in the Wisconsin retail electric rate
adjustment which was effective January 1, 2000.



BALANCE SHEET - WISCONSIN PUBLIC SERVICE

2001 Compared with 2000

Regulatory assets increased $16.6 million as the
result of deferred costs related to compliance with certain Nuclear Regulatory
Commission requirements and additional regulatory assets acquired as a result of
the Wisconsin Fuel and Light merger, largely related to future environmental
remediation costs. The goodwill balance of $35.4 million relates to
Wisconsin Public Service's acquisition of Wisconsin Fuel and Light in 2001.
Investments and other assets increased $56.2 million largely as a result of
Wisconsin Public Service's ownership interest in American Transmission Company.

Commercial paper decreased $60.0 million as the
result of replacing short-term debt with additional long-term debt at Wisconsin
Public Service. The current portion of long-term debt includes
$50.0 million of 7.30% first mortgage bonds which mature on October 1,
2002. We currently have no plans to refinance these bonds with long-term debt.
Long-term debt increased $46.8 million as the result of additional senior
notes issued in the third quarter of 2001.

Regulatory liabilities increased $28.0 million
primarily due to the deferral of $11.8 million in pension settlement gains
resulting from employees transferring from Wisconsin Public Service to Nuclear
Management Company, LLC.



FINANCIAL CONDITION - WISCONSIN PUBLIC SERVICE

Payments for return of capital of $35.0 million were
paid by Wisconsin Public Service to WPS Resources in 2001.
WPS Resources made equity contributions of $95.0 million to Wisconsin
Public Service in 2001. These payments and equity contributions allowed
Wisconsin Public Service's average equity capitalization and its capitalization
ratio for ratemaking to remain near target levels as established by the Public
Service Commission of Wisconsin in its most recent rate order.
WPS Resources also contributed $54.8 million of equity to Wisconsin
Public Service for the Wisconsin Fuel and Light acquisition.

Cash requirements exceeded internally generated funds by
$17.9 million in 2001. Short-term borrowings through commercial paper
decreased $60.0 million as the result of issuing additional long-term debt
at Wisconsin Public Service in the third quarter of 2001. Pretax interest
coverage was 4.64 times for the 12 months ended December 31, 2001.

Standard & Poor's has recently reviewed the credit
ratings of many of the Wisconsin utilities. The current credit ratings for
Wisconsin Public Service are listed in the table below.

|Credit Ratings                                                                                      | Standard & Poor's      | Moody's               
|--------------------------------------------------------------------------------------------------- | ---------------------- | ----------------------
|                                                                                                    |                        |                       
|Wisconsin Public Service Corporation
        Bonds
        Preferred stock
        Commercial paper | AA-
      A
      A-1+ | Aa1
      A1
      P-1

We normally use internally-generated funds and short-term
borrowing to satisfy most of our capital requirements. We may periodically issue
additional long-term debt to reduce short-term debt, maintain desired
capitalization ratios, and fund future growth.

Wisconsin Public Service issued $150.0 million of
6.125% senior notes in the third quarter of 2001, with part of the proceeds used
to refinance $53.1 million of 8.8% first mortgage bonds. The remainder of
the proceeds was used to reduce short-term debt and support working capital
requirements. The senior notes are secured by a pledge of first mortgage bonds
but become unsecured if Wisconsin Public Service retires all of its outstanding
first mortgage bonds.

Wisconsin Public Service makes large investments in
capital assets. Net construction expenditures, including nuclear fuel, for
Wisconsin Public Service are expected to be approximately $565 million in
the aggregate for the 2002 through 2004 period. Larger projects include
$60 million for automated meter reading, $27 million for computer
software and systems, and $68 million for the start of construction of
generation facilities that will continue to be constructed through 2007.

Other capital requirements for Wisconsin Public Service
for the three-year period include contributions of $7.8 million to the
Kewaunee plant's decommissioning trust fund.

In 2004, the second phase of Wisconsin Public Service's
agreement to purchase electricity from the De Pere Energy Center, a gas-fired
cogeneration facility, will be accounted for as a capital lease. The De Pere
Energy Center lease will be capitalized at approximately $80 million.

Regulatory

On December 21, 2000, Wisconsin Public Service
received an order from the Public Service Commission of Wisconsin authorizing a
5.4% increase in retail electric rates and a 1.5% increase in retail natural gas
rates for 2001 and 2002. A 12.1% return on equity was approved. The new rates
were implemented on January 1, 2001.

On April 12, 2001, Wisconsin Public Service filed an
application with the Public Service Commission of Wisconsin for additional
rate relief in 2002. Wisconsin Public Service requested an
$86.8 million, or 16.1%, increase in retail electric rates and a
$13.5 million, or 4.5%, increase in retail natural gas rates for 2002.
Wisconsin Public Service requested a 12.6% return on equity, with equity
constituting 55% of the capital structure. The Public Service Commission of
Wisconsin's order, originally expected to be issued in January 2002, has now
been delayed until April of 2002.

Wisconsin Public Service received an interim rate order on
December 19, 2001 and implemented interim rates on January 1, 2002.
The order authorized a $55.5 million, or 10.3%, retail electric rate
increase and a $11.2 million, or 4.7% retail natural gas rate increase.
Interim rates are based on a 12.1% return on equity, with equity constituting
55% of the capital structure, are subject to refund to the extent interim
revenues exceed revenues authorized in the final rate order, and will be in
effect until superseded by the final rate order establishing new rates.
Wisconsin Public Service anticipates that it will not be required to refund
revenues collected under the interim rates.

Merger with Wisconsin Fuel and Light Company

The merger of Wisconsin Fuel and Light Company into
Wisconsin Public Service was completed on April 1, 2001. Wisconsin Fuel and
Light shareholders received 1.73 shares of WPS Resources' common stock for
each share of Wisconsin Fuel and Light's common stock. A total of 1,763,943
shares were issued resulting in a purchase price of $54.8 million based on
an average price of $31.0625, the prevailing price at the time of the merger
announcement.

Wisconsin Public Service used the purchase method of
accounting and recorded $41.9 million of total premium associated with the
purchase. Of that total, $36.1 million was recorded as goodwill and
$5.8 million after-tax was recorded as an acquisition adjustment included
in plant. The acquisition adjustment is expected to be recovered in Wisconsin
retail rates over the period 2003-2005 as approved by the Public Service
Commission of Wisconsin.

American Transmission Company, LLC

In the first quarter of 2001, Wisconsin Public Service
transferred transmission assets at their net book value to American Transmission
Company in exchange for cash and an approximate 11% ownership interest in
American Transmission Company.

The Public Service Commission of Wisconsin initiated a
generic docket to address the potential recovery of deferred 2000 and 2001
start-up costs and increased transmission operating costs of American
Transmission Company by the member Wisconsin utilities including Wisconsin
Public Service. Completion of the docket is anticipated in the spring of 2002
and should identify the costs to be recovered and the method for recovery.
Wisconsin Public Service began recovering some of these costs, as a result of
its interim rate case order, which was implemented January 1, 2002. The
interim recovery of these costs is subject to refund should the costs in the
final generic docket be less than the costs included in the interim rates.

American Transmission Company implemented new Federal
Energy Regulatory Commission tariffs, subject to refund, on January 1, 2001.
Settlements related to issues surrounding these tariffs were approved in late
2001. The settlement reduced transmission rates for Wisconsin Public Service by
approximately $8 million during the 2001-2005 phase-in period.

On August 17, 2001, the Public Service Commission of
Wisconsin approved the construction of a 220-mile 345 kV transmission line
from Wausau, Wisconsin to Duluth, Minnesota. The joint project of Wisconsin
Public Service and Minnesota Power had received the approval of the Minnesota
Public Service Commission in March of 2001. Construction of the line is expected
to begin in 2002 with completion in 2005. Our funding obligation of the
construction costs is estimated to be between $46 million and
$92 million. The line will eventually be contributed to American
Transmission Company for an increased equity interest in American Transmission
Company.

Kewaunee Nuclear Plant

On January 1, 2001, Wisconsin Public Service's
administrative employees at the Kewaunee plant transferred to Nuclear Management
Company, LLC. As a result of these employees leaving the Wisconsin Public
Service benefit plans, a curtailment loss of $8.8 million was experienced.
Most of the curtailment loss was deferred as a regulatory asset. We recognized
settlement gains of $12.8 million in 2001 a result of these employees and
other former employees taking withdrawals from the pension plan during the year.
The majority of the settlement gains were recorded as a regulatory liability.
Wisconsin Public Service will return the net of settlement gains and curtailment
losses to ratepayers in future rates.

The Kewaunee plant's co-owners received approval from the
Public Service Commission of Wisconsin to apply deferred accounting treatment
beginning March 27, 2001 to the incremental costs associated with
compliance with certain Nuclear Regulatory Commission requirements mandating
improvements to plant procedures. Wisconsin Public Service received an order to
recover the deferred costs subject to review by the Public Service Commission of
Wisconsin in a future rate proceeding. Wisconsin Public Service has deferred
approximately $10 million as a regulatory asset through December 31,
2001.

On September 24, 2001, Wisconsin Public Service
acquired Madison Gas and Electric's 17.8% interest in the Kewaunee plant for
$17.5 million. This acquisition increased Wisconsin Public Service's
ownership interest in the Kewaunee plant to 59%.

Security

On December 19, 2001, the Public Service Commission
of Wisconsin authorized Wisconsin Public Service to defer additional costs
incurred with regard to increased security measures at Kewaunee and other
facilities. The deferred security costs will be addressed in Wisconsin Public
Service's rate proceeding to be filed in 2002 for 2003 rate relief.

Wisconsin River Power Company

Wisconsin Public Service's ownership interest in Wisconsin
River Power Company decreased to 50% effective December 31, 2001 as the
result of the sale of a portion of its ownership interest to Wisconsin Power and
Light.

Asset Management Strategy

In December 2001, Wisconsin Public Service sold
5,740 acres of land on the Peshtigo River in northeastern Wisconsin to the
Wisconsin Department of Natural Resources for $13.5 million. This sale was
the first significant transaction in a five to seven-year asset management
strategy that WPS Resources adopted in 2001. The agreement with the
Department of Natural Resources includes two options, one exercisable in 2003
and the other in 2004, whereby the Department may acquire, at less then
fair value, approximately 5,000 additional acres for $11.5 million if
both options are exercised. The value associated with the difference
between the option price and the fair value will be treated as a charitable
contribution.

TRENDS - WISCONSIN PUBLIC SERVICE

See WPS RESOURCES MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS for information regarding trends.



ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Market Risks

WPS Resources has potential market risk exposure for
instruments entered into for trading purposes related to commodity price risk
and for instruments entered into for purposes other than trading related to
interest rate risk, equity return and principal preservation risk, and commodity
price risk. There currently is no material exposure due to foreign currency
exchange rate risk. WPS Resources has risk management policies in place to
monitor and assist in controlling these market risks and may use derivative and
other instruments to manage some of these exposures.

Interest Rate Risk

WPS Resources is exposed to interest rate risk
resulting from its 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 enters into long-term fixed rate
debt when it is advantageous to do so. The company may also enter into
derivative financial instruments, such as swaps, to mitigate interest rate
exposure. At December 31, 2001, 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 WPS Resources variable rate debt outstanding
at December 31, 2001, a hypothetical increase in market interest rates of 100
basis points in 2002 would increase annual interest expense by approximately
$0.6 million. Comparatively, based on WPS Resources variable rate debt
outstanding at December 31, 2000, an increase in interest rates of 100 basis
points would have increased interest expense in 2001 by approximately
$1.8 million. These hypothetical changes are based on certain simplifying
assumptions, including a constant level of variable rate debt during the period
and an immediate increase in the level 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
the company'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 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 utility business 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. Therefore, the below
value-at-risk amounts do not include measures for WPS Resources' regulated
utilities. To further manage commodity price risk, our regulated utilities enter
into contracts of various duration for the purchase and/or sale of natural gas,
fuel for electric generation, and electricity.

WPS Power Development also uses purchase and/or sale
contracts for electric fuel and electricity to help manage its commodity price
risk. For purposes of risk management disclosure, all of WPS Power Development's
activities are classified as non-trading.

WPS Energy Services 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. WPS Energy
Services also utilizes these instruments to manage market risk associated with
anticipated energy purchases, as well as trading activities. For purposes of
risk management disclosure, all of WPS Energy Services' activities,
including all of its energy commodity purchase and sale contracts and its gas in
storage inventory, are classified as trading. WPS Energy Services therefore
follows mark-to-market accounting as required by Emerging Issues Task Force
Issue No. 98-10.

Value-at-Risk

To measure commodity price risk exposure,
WPS Resources performs a value-at-risk (VaR) analysis of its exposures.

VaR is used to describe a probabilistic approach to
quantifying the exposure to market risk. The VaR amount represents an estimate
of the potential change in fair value that could occur from adverse changes in
market factors, within a given confidence level, if an instrument or portfolio
is held for a specified time period. VaR 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 may 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. VaR is not necessarily indicative of actual results which may occur.

At WPS Resources, VaR 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 VaR 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.

Our VaR amount for trading activities was calculated to be
$0.5 million at December 31, 2001 compared with $0.4 million at
December 31, 2000. Our VaR amount for non-trading activities was calculated to
be $3.2 million at December 31, 2001 compared with $4.4 million
at December 31, 2000. A significant portion of the VaR amount related to
non-trading activities is mitigated by WPS Power Development's generating
capabilities, which are excluded from the VaR calculation as required by the
Securities and Exchange Commission rules.

For the year ended December 31, 2001, the average, high,
and low VaR amounts for trading activities were $0.4 million,
$0.6 million, and $0.2 million, respectively. The same amounts for the
year ended December 31, 2000 were $0.3 million, $0.4 million, and
$0.2 million. For the year ended December 31, 2001 the average, high, and
low VaR amounts for non-trading activities were $3.0 million,
$4.4 million, and $1.4 million, respectively. The same amounts for the
year ended December 31, 2000 were $2.2 million, $4.4 million, and
$1.1 million. The average, high, and low amounts were computed using the
VaR amounts at the beginning of the reporting period and the four quarter-end
amounts.

Equity Return and Principal Preservation Risk

WPS Resources currently funds its liabilities 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 in the market value of these
investments can have an impact on the future expenses related to these
liabilities. The pension liability is adequately funded and under normal market
conditions future required contributions to the plan are unlikely. Changes in
the market value of investments related to other employee benefits or nuclear
decommissioning could impact future contributions. WPS Resources monitors
the trust fund portfolios by benchmarking the performance of the investments
against certain security indices. All decommissioning costs and most of the
employee benefit costs relate to WPS Resources' regulated utilities. As
such, the majority of these costs are recovered in customers' rates, mitigating
the equity return and principal preservation risk on theseexposures.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk
primarily through the purchase and sale of gas in Canada by one of our
nonregulated subsidiaries. This risk to WPS Resources at December 31, 2001
is immaterial.

|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                   |          |         
|------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
|                                                                                                                                            |          |         
|WPS RESOURCES CORPORATION                                                                                                                   |          |         
|                                                                                                                                            |          |         
|A. CONSOLIDATED
      STATEMENTS OF INCOME                                                                                                 
|                                                                                                                                            |          |         
|                                                                                                                                            |          |         
|Year Ended December 31 (Millions, except per share data)                                                                                    | 2001     | 2000    
|                                                                                                                                            |          |         
|Nonregulated revenue                                                                                                                        | $1,700.6 | $1,060.7
|Utility revenue                                                                                                                             | 974.9    | 888.3   
|Total revenues                                                                                                                              | 2,675.5  | 1,949.0 
|                                                                                                                                            |          |         
|Nonregulated cost of fuel, gas, and purchased power                                                                                         | 1,639.6  | 1,014.3 
|Utility cost of fuel, gas, and purchased power                                                                                              | 444.6    | 379.3   
|Operating and maintenance expense                                                                                                           | 361.2    | 311.5   
|Depreciation and decommissioning expense                                                                                                    | 86.6     | 99.9    
|Taxes other than income                                                                                                                     | 36.2     | 33.8    
|Operating income                                                                                                                            | 107.3    | 110.2   
|                                                                                                                                            |          |         
|Miscellaneous income                                                                                                                        | 37.5     | 20.2    
|Interest expense                                                                                                                            | (55.8)   | (50.8)  
|Distributions - preferred securities of subsidiary trust                                                                                    | (3.5)    | (3.5)   
|Other income (expense)                                                                                                                      | (21.8)   | (34.1)  
|                                                                                                                                            |          |         
|Income before taxes                                                                                                                         | 85.5     | 76.1    
|Provision for income taxes                                                                                                                  | 4.8      | 6.0     
|Net income before preferred dividends                                                                                                       | 80.7     | 70.1    
|                                                                                                                                            |          |         
|Preferred stock dividends of subsidiary                                                                                                     | 3.1      | 3.1     
|Income available for common shareholders                                                                                                    | $   77.6 | $   67.0
|                                                                                                                                            |          |         
|Average shares of common stock                                                                                                              | 28.2     | 26.5    
|Earnings per common share                                                                                                                   |          |         
|Basic                                                                                                                                       | $2.75    | $2.53   
|Diluted                                                                                                                                     | $2.74    | $2.53   
|Dividends per common share                                                                                                                  | $2.08    | $2.04   
|                                                                                                                                            |          |         
|                                                                                                                                            |          |         
|The accompanying notes to WPS Resources Corporation consolidated
      financial statements are an
      integral part of these statements.
|                                                                                                                                            |          |         

|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                   |          |         
|------------------------------------------------------------------------------------------------------------------------------------------- | -------- | --------
|                                                                                                                                            |          |         
|WPS RESOURCES CORPORATION                                                                                                                   |          |         
|                                                                                                                                            |          |         
|B. CONSOLIDATED
      BALANCE SHEETS                                                                                                       
|                                                                                                                                            |          |         
|At December 31 (Millions)                                                                                                                   | 2001     | 2000    
|                                                                                                                                            |          |         
|Assets                                                                                                                                      |          |         
|Cash and cash equivalents                                                                                                                   | $   43.9 | $   12.8
|Restricted funds                                                                                                                            | 21.3     | -       
|Accounts receivable - net of reserves of $5.0 and $4.2, respectively                                                                        | 248.0    | 317.8   
|Accrued unbilled revenues                                                                                                                   | 56.5     | 83.9    
|Inventories                                                                                                                                 | 102.5    | 84.1    
|Assets from risk management activities                                                                                                      | 487.4    | 642.5   
|Other current assets                                                                                                                        | 61.5     | 60.1    
|Current assets                                                                                                                              | 1,021.1  | 1,201.2 
|                                                                                                                                            |          |         
|Property, plant, and equipment, net                                                                                                         | 1,463.6  | 1,350.8 
|Regulatory assets                                                                                                                           | 91.0     | 74.5    
|Other                                                                                                                                       | 294.3    | 189.6   
|Total assets                                                                                                                                | $2,870.0 | $2,816.1
|                                                                                                                                            |          |         
|Liabilities and Shareholders' Equity                                                                                                        |          |         
|Short-term debt                                                                                                                             | $   46.2 | $  129.6
|Current portion of long-term debt                                                                                                           | 56.6     | 8.3     
|Accounts payable                                                                                                                            | 334.6    | 334.3   
|Liabilities from risk management activities                                                                                                 | 439.9    | 659.5   
|Other current liabilities                                                                                                                   | 69.4     | 50.9    
|Current liabilities                                                                                                                         | 946.7    | 1,182.6 
|                                                                                                                                            |          |         
|Long-term debt                                                                                                                              | 727.8    | 660.0   
|Deferred income taxes                                                                                                                       | 69.5     | 100.4   
|Deferred investment tax credits                                                                                                             | 21.0     | 24.0    
|Regulatory liabilities                                                                                                                      | 78.4     | 50.6    
|Environmental remediation liabilities                                                                                                       | 45.0     | 38.9    
|Benefit obligations                                                                                                                         | 53.6     | 47.3    
|Other                                                                                                                                       | 111.0    | 63.1    
|Long-term liabilities                                                                                                                       | 1,106.3  | 984.3   
|                                                                                                                                            |          |         
|Company-obligated mandatorily redeemable trust preferred                                                                                    |          |         
|securities of subsidiary trust holding solely                                                                                               |          |         
|WPS Resources 7.00% subordinated debentures                                                                                                 | 50.0     | 50.0    
|Preferred stock of subsidiary with no mandatory redemption                                                                                  | 51.1     | 51.1    
|Common stock equity                                                                                                                         | 715.9    | 548.1   
|Total liabilities and shareholders' equity                                                                                                  | $2,870.0 | $2,816.1
|                                                                                                                                            |          |         
|                                                                                                                                            |          |         
|The accompanying notes to WPS Resources Corporation consolidated
      financial statements are an
      integral part of these statements.
|                                                                                                                                            |          |         

|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                   |                     |       
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------- | ------
|                                                                                                                                            |                     |       
|WPS
      RESOURCES CORPORATION                                                                                                             |                     |       
|                                                                                                                                            |                     |       
|C. CONSOLIDATED STATEMENT OF COMMON SHAREHOLDERS' EQUITY                                                                                   
|                                                                                                                                            |                     |       
|                                                                                                                                            |                     |       
|(Millions)                                                                                                                                  | ComprehensiveIncome | Total 
|Balance at December 31, 1998                                                                                                                |                     | $519.8
|Net income before preferred dividends                                                                                                       | $62.7               | 62.7  
|Dividends on preferred                                                                                                                      | (3.1)               | (3.1) 
|Income available for common shareholders                                                                                                    | 59.6                | -     
|Other comprehensive income                                                                                                                  | -                   | -     
|Comprehensive income                                                                                                                        | $59.6               | -     
|Issuance of common stock                                                                                                                    | -                   | 9.0   
|Dividends on common stock                                                                                                                   | -                   | (53.1)
|Other                                                                                                                                       | -                   | 4.6   
|                                                                                                                                            |                     |       
|Balance at December 31, 1999                                                                                                                | -                   | $539.9
|Net income before preferred dividends                                                                                                       | $70.1               | 70.1  
|Dividends on preferred                                                                                                                      | (3.1)               | (3.1) 
|Income available for common shareholders                                                                                                    | 67.0                | -     
|Other comprehensive income                                                                                                                  | -                   | -     
|Comprehensive income                                                                                                                        | $67.0               | -     
|Issuance of common stock                                                                                                                    | -                   | 0.4   
|Dividends on common stock                                                                                                                   | -                   | (53.9)
|Other                                                                                                                                       | -                   | (5.3) 
|                                                                                                                                            |                     |       
|Balance at December 31, 2000                                                                                                                | -                   | $548.1
|Net income before preferred dividends                                                                                                       | $80.7               | 80.7  
|Dividends on preferred                                                                                                                      | (3.1)               | (3.1) 
|Income available for common shareholders                                                                                                    | 77.6                | -     
|Other comprehensive income - cash flow hedge                                                                                                | (2.7)               | (2.7) 
|Comprehensive income                                                                                                                        | $74.9               | -     
|Issuance of common stock                                                                                                                    | -                   | 152.3 
|Dividends on common stock                                                                                                                   | -                   | (58.8)
|Other                                                                                                                                       | -                   | (0.6) 
|                                                                                                                                            |                     |       
|Balance at December 31, 2001                                                                                                                | -                   | $715.9
|                                                                                                                                            |                     |       
|The accompanying notes to WPS Resources Corporation consolidated
      financial statements
      are an integral part of these statements. |                     |       
|                                                                                                                                            |                     |       
|                                                                                                                                            |                     |       

|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                   |                                                              |                           |        
|------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------ | ------------------------- | -------
|                                                                                                                                            |                                                              |                           |        
|WPS RESOURCES CORPORATION                                                                                                                   |                                                              |                           |        
|                                                                                                                                            |                                                              |                           |        
|D. CONSOLIDATED STATEMENTS OF CASH FLOWS                                                                                                    |                                                             
|                                                                                                                                            |                                                              |                           |        
|Year Ended December 31 (Millions)                                                                                                           | 2001                                                         | 2000                      | 1999   
|Operating Activities                                                                                                                        |                                                              |                           |        
|Net income before preferred dividends                                                                                                       | $ 80.7                                                       | $ 70.1                    | $ 62.7 
|Adjustments to reconcile net income cash provided by operating
      activities                                                             |                                                             
|                                                                                                                                            | Depreciation, amortization and decommissioning               | 102.1                     | 119.5  
|                                                                                                                                            | Gain on nuclear decommissioning trust                        | (8.1)                     | (10.8) 
|                                                                                                                                            | Deferred income taxes and investment tax credit              | (34.4)                    | (16.8) 
|                                                                                                                                            | Unrealized gains and losses on nonregulated energy contracts | 14.4                      | 17.0   
|                                                                                                                                            | Gain on sale of property                                     | (17.1)                    | (3.8)  
|                                                                                                                                            | Other                                                        | (9.2)                     | 4.3    
|                                                                                                                                            | Changes in working capital                                   |                           |        
|                                                                                                                                            |                                                              | Receivables               | 83.6   
|                                                                                                                                            |                                                              | Inventories               | (46.0) 
|                                                                                                                                            |                                                              | Other current assets      | 0.9    
|                                                                                                                                            |                                                              | Accounts payable          | (35.0) 
|                                                                                                                                            |                                                              | Other current liabilities | 11.0   
|Net cash provided by operating activities                                                                                                   | 142.9                                                        | 143.9                     | 117.9  
|                                                                                                                                            |                                                              |                           |        
|Investing Activities                                                                                                                        |                                                              |                           |        
|Capital expenditures                                                                                                                        | (248.7)                                                      | (199.1)                   | (273.2)
|Return of capital from equity method investment                                                                                             | 42.4                                                         | -                         | -      
|Sale of assets                                                                                                                              | 58.8                                                         | 31.3                      | -      
|Decommissioning funding                                                                                                                     | (2.6)                                                        | (8.8)                     | (9.2)  
|Other                                                                                                                                       |                                                              | 10.8                      | (15.5) 
|Net cash used for investing activities                                                                                                      | (139.3)                                                      | (192.1)                   | (269.5)
|                                                                                                                                            |                                                              |                           |        
|Financing Activities                                                                                                                        |                                                              |                           |        
|Short-term debt - net                                                                                                                       | (104.6)                                                      | 39.7                      | 30.0   
|Issuance of long-term debt                                                                                                                  | 180.8                                                        | 87.4                      | 174.4  
|Repayment of long-term debt and capital lease                                                                                               | (64.7)                                                       | (10.3)                    | (1.5)  
|Payment of dividends                                                                                                                        |                                                              |                           |        
|                                                                                                                                            | Preferred stock                                              | (3.1)                     | (3.1)  
|                                                                                                                                            | Common stock                                                 | (58.3)                    | (53.9) 
|Issuance common stock                                                                                                                       | 96.4                                                         | -                         | 9.0    
|Purchase of common stock                                                                                                                    | (1.1)                                                        | (10.5)                    | (0.6)  
|Redemption of obligations acquired in purchase business combination                                                                         | (17.9)                                                       | -                         | -      
|Other                                                                                                                                       |                                                              | -                         | 1.2    
|Net cash provided by financing activities                                                                                                   | 27.5                                                         | 50.5                      | 155.0  
|Increase in cash and cash equivalents                                                                                                       | $ 31.1                                                       | $  2.3                    | $  3.4 
|                                                                                                                                            |                                                              |                           |        
|Cash and cash equivalents at beginning of year                                                                                              | 12.8                                                         | 10.5                      | 7.1    
|Cash and cash equivalents at end of year                                                                                                    | $ 43.9                                                       | $ 12.8                    | $ 10.5 
|                                                                                                                                            |                                                              |                           |        
|                                                                                                                                            |                                                              |                           |        
|The accompanying notes to WPS Resources Corporation consolidated
      financial statements are an
      integral part of these statements.
|                                                                                                                                            |                                                              |                           |        



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WPS RESOURCES CORPORATION

E. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE 1--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Nature of Operations--WPS Resources
Corporation is a holding company. Our wholly-owned subsidiary,
Wisconsin Public Service Corporation, is an electric and gas utility.
Wisconsin Public Service 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, Upper Peninsula Power Company, is an electric utility.
Upper Peninsula Power supplies and distributes electric energy in the
Upper Peninsula of Michigan. Another wholly-owned subsidiary,
WPS Resources Capital Corporation, is a holding company for our
nonregulated businesses, WPS Energy Services, Inc. and WPS Power
Development, Inc. WPS Energy Services is a diversified energy supply and
services company. WPS Power Development develops, owns and operates,
through its own subsidiaries, electric generation projects.

The term "utility" refers to the regulated
activities of Wisconsin Public Service and Upper Peninsula Power,
while the term "nonutility" refers to the activities of
Wisconsin Public Service and Upper Peninsula Power, which are not
regulated. The term "nonregulated" refers to activities other than
those of Wisconsin Public Service and Upper Peninsula Power.

(b) Use of Estimates--We prepare our financial
statements in conformity with accounting principles generally accepted in the
United States. 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 those estimates.

(c) Income Taxes--We account for income taxes using
the liability method as prescribed by Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under the
liability method, deferred income tax liabilities are established for all
temporary differences in the book and tax basis of assets and liabilities based
upon enacted tax laws and rates applicable to the periods in which the taxes
become payable.

(d) Capitalized Interest and Allowance for Funds
Used During Construction--WPS Resources' nonregulated subsidiaries
capitalize interest for construction projects, while our utilities are required
to use an allowance for funds used during construction calculation, which
includes both an interest and an equity component.

Approximately 50% of Wisconsin Public Service's retail
jurisdictional construction work-in-progress expenditures are subject to
allowance for funds used during construction. The Public Service Commission of
Wisconsin allowed accrual of allowance for funds used during construction on
100% of the Kewaunee plant's steam generator replacement project. For 2001,
Wisconsin Public Service's retail rate allowance for funds used during
construction was 10.1%.

Wisconsin Public Service's construction
work-in-progress debt and equity percentages for wholesale jurisdictional
electric allowance for funds used during construction are specified in the
Federal Energy Regulatory Commission's Uniform System of Accounts. For 2001, the
allowance for funds used during construction wholesale rate was 6.3%.

Upper Peninsula Power is subject to one allowance for
funds used during construction rate. That rate is the Michigan Public Service
Commission's allowed rate of return. For 2001, the allowance for funds used
during construction rate was 5.7%. Historically, there have been few
calculations of allowance for funds used during construction due to the small
dollar amounts or short construction periods of Upper Peninsula Power's
construction projects. We expect larger projects to occur in the future that
will be subject to the application of the allowance for funds used during
construction calculation.

Both WPS Energy Services and WPS Power
Development calculate capitalized interest on long-term construction projects
for periods where financing is provided by WPS Resources by interim debt.
The interest rate capitalized is based upon the monthly short-term borrowing
rate WPS Resources incurs for such funds.

(e) Leases--Wisconsin Public Service
accounts for the agreement to purchase power from De Pere Energy Center, LLC as
a capital lease. On June 14, 1999, Wisconsin Public Service recorded a
leased asset and a lease obligation equal to the present value of the minimum
lease payments. The leased asset is depreciated over 25 years, the life of
the contract.

(f) Revenue and Customer Receivables--We accrue
estimated amounts for electric and natural gas service rendered but not billed.
Approximately 9% of WPS Resources' total revenue is from companies in the
paper products industry.

Wisconsin Public Service and
Upper Peninsula Power use automatic fuel adjustment clauses for the
Federal Energy Regulatory Commission wholesale-electric and the
Michigan Public Service Commission retail-electric portions of the
business. The Wisconsin retail-electric portion of
Wisconsin Public Service's business uses a "cost variance
range" approach, based on a specific estimated fuel cost for the forecast
year. If Wisconsin Public Service's actual fuel costs fall outside this
range, a hearing can be held resulting in an adjustment to future rates.

The Public Service Commission of Wisconsin has
approved a modified one-for-one gas cost recovery plan for
Wisconsin Public Service. Implementation of the modified one-for-one
gas cost recovery plan began in January 1999. This plan allows
Wisconsin Public Service to pass changes in the cost of natural gas
purchased from its suppliers on to system natural gas customers, subject to
regulatory review.

Billings to Upper Peninsula Power's customers under
the Michigan Public Service Commission's jurisdiction include base rate
charges and a power supply cost recovery factor. Upper Peninsula Power
receives Michigan Public Service Commission approval each year to
recover projected power supply costs by establishment of power supply cost
recovery factors. Annually, the Michigan Public Service Commission reconciles
these factors to actual costs and permits 100% recovery of allowed power supply
costs. Upper Peninsula Power defers any over or under recovery on the
balance sheet. The deferrals are relieved with additional billings or refunds.

Wisconsin Public Service and
Upper Peninsula Power 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 deposits or refund deposits
accordingly. Both utilities are precluded from discontinuing service to
residential customers during winter moratorium months.

At WPS Power Development, 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.

WPS Energy Services accrues revenues in the month
that energy is delivered and/or services are rendered. WPS Energy Services
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.

(g) Natural Gas in Storage--Average cost is used to
value natural gas in storage used for nontrading activities. Natural gas in
storage used for trading activities is recorded at fair market value.
Approximately 56% and 67% of the total natural gas in storage at
December 31, 2001 and 2000, respectfully, was recorded at fair market
value.

(h) Regulatory Assets and Liabilities--Wisconsin Public Service
and Upper Peninsula Power are subject to the provisions of Financial
Accounting Standards Statement No. 71, "Accounting for the Effects of
Certain Types of Regulation." Regulatory assets represent probable future
revenue associated with certain incurred costs. Revenue 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.

(i) Retirement of Debt--Amortization of gains or
losses resulting from the settlement of long-term utility debt obligations
occurred concurrently with rate recovery as required by regulators.

(j) Stock Options--We issue stock options under our
stock option plans and account for them using the intrinsic value-based method
described in Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" (Opinion 25). The intrinsic value-based method
only records compensation expense for the excess of the quoted market price of
the stock at the issue date over the option exercise price. The exercise price
is the amount an employee must pay to acquire the stock.

(k) Consolidation Basis of Presentation--All significant
intercompany transactions and accounts are eliminated. If a minority owner's
equity is reduced to zero, it is our policy 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.

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

NOTE 2--CASH AND EQUIVALENTS

We consider short-term investments with an original
maturity of three months or less to be cash equivalents.

Cash paid for taxes during 2001, 2000, and 1999 was
$34.0 million, $25.5 million, and $35.3 million, respectively.
During 2001, cash paid for interest totaled $52.6 million. For 2000 and
1999, $49.5 million and $34.1 million were paid for interest,
respectively.

The following noncash investing and financing activities
occurred in 2001:

> 1. An investment in American Transmission Company, LLC was made with the
>   exchange of $93.1 million of transmission assets net of accumulated
>   depreciation for an approximate 15% equity interest in American Transmission
>   Company and a $42.4 million return of capital as shown on the Consolidated
>   Statements of Cash Flows.
>   2. As a result of the merger of Wisconsin Fuel and Light into Wisconsin
>   Public Service, Wisconsin Public Service acquired the assets and assumed
>   certain liabilities of Wisconsin Fuel and Light Company in exchange for
>   1.8 million shares of WPS Resources' common stock.

There were no noncash investing and financing activities
during 2000.

The following noncash investing and financing activities
occurred in 1999:

> 1. A capital lease obligation of $74.1 million was incurred when
>   Wisconsin Public Service entered into a long-term lease agreement for utility
>   plant assets.
>   2. Net cash surrender value of a key executive life insurance policy of
>   $11.8 million was transferred from Wisconsin Public Service to
>   WPS Resources.
>   3. Nonutility assets of $0.1 million were transferred from Wisconsin
>   Public Service to WPS Resources.

NOTE 3--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 those investments and
obligations.

Nuclear Decommissioning Trusts: The value of nuclear
decommissioning trust investments included in utility plant is recorded at
market value, net of taxes payable on unrealized gains and losses. The amount
recorded in nuclear decommissioning trusts - other assets represents income
taxes payable on unrealized gains and losses.

Long-Term Debt and Preferred Stock: The fair value 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: Most of the fair value of risk
management activities is due to WPS Energy Services' mark-to-market activities
under Emerging Issues Task Force Issue 98-10, "Accounting for Contracts
Involved in Energy Trading and Risk Management Activities." See Note 4 for
additional information.

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

|(Millions)                                                | 2001           | 2000     
|--------------------------------------------------------- | -------------- | ---------
|                                                          | CarryingAmount | FairValue
|                                                          |                |          
|Cash and cash equivalents                                 | $ 43.9         | $ 43.9   
|Restricted cash                                           | 21.3           | 21.3     
|Energy conservation loans                                 | 2.6            | 2.6      
|Nuclear decommissioning trusts -
      utility plant      | 311.3          | 311.3    
|Nuclear decommissioning trusts -
      other assets       | 22.4           | 22.4     
|Notes payable                                             | 31.3           | 31.3     
|Commercial paper                                          | 15.0           | 15.0     
|Trust preferred securities                                | 50.0           | 49.9     
|Long-term debt (excluding capital
      lease obligation) | 712.6          | 744.2    
|Preferred stock                                           | 51.1           | 43.9     
|Risk management activities                                | 47.5           | 47.5     

NOTE 4--RISK MANAGEMENT ACTIVITIES

On January 1, 2001, WPS Resources adopted
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities," as amended. Statement No.
133 establishes accounting and financial reporting standards for derivative
instruments, such as forward contracts, futures, and options, and related
hedging activities. Statement No. 133 requires, in part, that we recognize
all derivative instruments on the balance sheet as assets or liabilities at
their fair value. The treatment of subsequent changes in fair value of the
derivatives are recorded currently in earnings unless certain hedge accounting
criteria are met or if the derivatives are subject to the provisions of
Statement No. 71.

WPS Resources has concluded that the majority of its
contracts do not meet the definition of a derivative as defined by Statement No.
133. Therefore, at December 31, 2001, such contracts are not subject to the
accounting requirements of this statement, as amended.

Wisconsin Public Service has entered into a limited number
of commodity contracts to service its customers that meet the definition of a
derivative under Statement No. 133. A majority of these contracts are
natural gas purchase agreements. Management believes any gains or losses
resulting from the eventual settlement of these gas purchase agreements will be
collected from or refunded to customers. Therefore, the derivative amounts to be
recorded as a result of these natural gas contracts will be offset with a
corresponding regulatory asset or liability pursuant to Statement No. 71. As of
December 31, 2001, we have recorded an asset from risk management
activities and a regulatory liability of $5.0 million related to these
Wisconsin Public Service contracts.

WPS Resources' nonregulated segments have also
entered into a limited number of contracts that meet the definition of a
derivative under Statement No. 133. One of these contracts was an electric
energy contract that was used to protect WPS Resources against potential
summer energy price spikes. This contract expired during the third quarter. The
total pre-tax loss of $3.5 million for this contract is included in other
income in the Consolidated Statements of Income. A similar contract was held in
2000 that resulted in a $3.8 million pre-tax loss.

We have also classified as a derivative an interest rate
swap that is used to fix the entire interest rate for the full term of an
18-year variable rate loan. In accordance with Statement No. 133, management has
designated this contract as a cash flow hedge. Because the swap was calculated
to be 100% effective, we have recorded the $2.7 million mark-to-market
loss, net of deferred taxes, for 2001 directly to other comprehensive income.
WPS Resources did not exclude any components of the derivative instrument's
loss from the assessment of hedge effectiveness.

Both Wisconsin Public Service and WPS Resources'
nonregulated segments hold a limited number of other derivative instruments. The
cumulative effect on the balance sheet and income statement for these contracts
at December 31, 2001 was not significant.

WPS Energy Services uses derivative financial and
commodity instruments to reduce market risk associated with changing prices of
natural gas and electricity sold at firm prices to its customers.
WPS Energy Services also utilizes these instruments to manage market risk
associated with trading activities. WPS Energy Services marks its energy
contracts and related financial instruments, including intercompany contracts,
to fair value in accordance with Emerging Issues Task Force Issue 98-10,
"Accounting for Contracts Involved in Energy Trading and Risk Management
Activities." As such, the impact of Statement No. 133 on WPS Energy
Services at December 31, 2001 was not significant. The majority of WPS
Resources' assets and liabilities from risk management activities are the result
of WPS Energy Services' mark-to-market activities under EITF Issue 98-10.

WPS Energy Services measures the fair value of contracts,
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 using risk
management systems. The primary input for natural gas pricing is the forward
price curve of the NYMEX exchange settled spreads, contracts, and options. Basis
pricing is derived from published indices and documented broker quotes. WPS
Energy Services bases electric prices on NYMEX exchange settlement prices and
documented broker quotes. Because the majority of the contracts have a term of
less than 36 months, the forward curves have a reasonable degree of liquidity
and WPS Energy Services does not determine any forward price curves internally.
Low tolerance for price risk causes WPS Energy Services to use financial
instruments to hedge substantially all of its positions and, therefore, changes
in the primary variable, which is the forward price curves, have little impact
on the net fair value of the contracts as marked-to-market.

NOTE 5--PROPERTY, PLANT, AND EQUIPMENT

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

|(Millions)                                         | 2001     | 2000    
|-------------------------------------------------- | -------- | --------
|Electric utility                                   | $1,906.3 | $1,893.4
|Gas utility                                        | 392.6    | 302.9   
|Property under capital lease                       | 74.1     | 74.1    
|Total utility plant                                | 2,373.0  | 2,270.4 
|Less: Accumulated depreciation and decommissioning | 1,496.6  | 1,365.3 
|Net                                                | 876.4    | 905.1   
|Nuclear decommissioning trusts                     | 311.3    | 207.2   
|Construction in progress                           | 60.3     | 70.0    
|Nuclear fuel, less accumulated amortization        | 24.9     | 16.0    
|Net utility plant                                  | 1,272.9  | 1,198.3 
|                                                   |          |         
|Nonutility plant                                   | 4.7      | 4.7     
|Less: Accumulated depreciation                     | 0.5      | 0.4     
|Net nonutility plant                               | 4.2      | 4.3     
|                                                   |          |         
|Electric nonregulated                              | 167.4    | 134.7   
|Gas nonregulated                                   | 12.3     | 1.1     
|Other nonregulated                                 | 25.0     | 25.3    
|Total nonregulated property, plant, and equipment  | 204.7    | 161.1   
|Less: Accumulated depreciation                     | 18.2     | 12.9    
|Net nonregulated property, plant, and equipment    | 186.5    | 148.2   
|                                                   |          |         
|Total property, plant, and equipment               | $1,463.6 | $1,350.8

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. The utility charges the cost of
units of property retired, sold, or otherwise disposed of, plus removal, less
salvage, to the accumulated provision for depreciation. Maintenance, repair,
replacement, and renewal costs associated with items not qualifying as units of
property are considered operating expenses.

We record straight-line depreciation expense over the
estimated useful life of utility property and include amounts for estimated
removal and salvage. The Public Service Commission of Wisconsin approved
depreciation rates for Wisconsin Public Service effective
January 1, 1999.

Depreciation for the Kewaunee plant is being accrued based
on a Public Service Commission of Wisconsin order that became effective on
January 1, 2001. The order included a change in the methodology for
the Kewaunee plant after the steam generators were replaced. The cost of the new
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.

Depreciation rates for Upper Peninsula Power were
approved by the Michigan Public Service Commission on January 1,
1994 and were in effect through 2001. A new depreciation study was filed with
the Michigan Public Service Commission in 2001, and new approved rates are
effective January 1, 2002 through December 31, 2006.

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.



|Annual Utility CompositeDepreciation Rates | 2001  | 2000  | 1999 
|------------------------------------------ | ----- | ----- | -----
|                                           |       |       |      
|Electric                                   | 3.23% | 3.52% | 3.46%
|Gas                                        | 3.37% | 3.26% | 3.23%

Nonutility property interest capitalization takes place
during construction, and gain and loss recognition occurs in connection with
retirements. Nonregulated property, plant, and equipment are capitalized at
original cost. Significant additions or improvements that extend asset lives are
capitalized, while repairs and maintenance are charged to expense as incurred.

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 for those assets, or estimated fair
value at the time of acquisition, based upon Accounting Principles Bulletin No.
16, "Accounting for Business Combinations." The costs of renewals,
betterments, and major overhauls are capitalized as an addition to plant
accounts. The gains or losses associated with ordinary retirements are recorded
in the period of retirement. Maintenance, repairs, and minor replacements are
expensed as incurred.

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

> Structures
>         and improvements
>       15 to 40
>         yearsOffice and
>         plant equipment
>       5 to 35
>         yearsOffice
>         furniture and fixtures
>       5 to 10
>         yearsVehicles
>       5 yearsLeasehold
>         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.

NOTE 6--ACQUISITIONS AND SALES OF ASSETS

On April 1, 2001, Wisconsin Public Service completed its
merger with Wisconsin Fuel and Light Company. Wisconsin Fuel and Light served
residential, commercial, and industrial customers in Manitowoc and Wausau,
Wisconsin with natural gas. Wisconsin Fuel and Light's shareholders
received 1.73 shares of WPS Resources' common stock for each share of
Wisconsin Fuel and Light common stock. A total of 1,763,943 shares were issued
resulting in a purchase price of $54.8 million based on an average price of
$31.0625, the prevailing price at the time of the merger announcement.

Wisconsin Public Service used the purchase method of
accounting and recorded $41.9 million of total premium associated with the
purchase. Of the total premium, $36.1 million was recorded as goodwill and
is included in other assets on the Consolidated Balance Sheets. During 2001,
Wisconsin Public Service amortized $0.7 million of goodwill using the
straight-line method over a period of 40 years. We adopted Statement of
Financial Accounting Standard No. 142, "Goodwill and Other Intangible
Assets," on January 1, 2002. In accordance with the requirements of this
statement, we ceased amortizing the goodwill on January 1, 2002 and prepared a
preliminary evaluation of the fair market value of the gas utility business
segment to assess the potential impairment of the goodwill balance. Based on the
estimated fair value, an impairment charge was not required at the time of the
adoption of the statement.

The remaining premium, $5.8 million after-tax, was
recorded as an acquisition adjustment in plant, which we expect to be recovered
in Wisconsin retail rates over the three-year period of 2003 through 2005. The
acquisition premium will be amortized over the recovery period.

The operations of Wisconsin Fuel and Light are included in
the financial statements presented for Wisconsin Public Service and
WPS Resources for the period beginning April 1, 2001 and ending
December 31, 2001, but do not have a material impact.

On September 24, 2001, Wisconsin Public Service acquired
Madison Gas and Electric Company's 17.8% interest in the Kewaunee plant
including its decommissioning trust assets. As a result of the
$17.5 million purchase, Wisconsin Public Service now owns 59% of the plant
with the remaining portion held by Wisconsin Power and Light Company. The
additional share of the operations of the Kewaunee plant is included in the
financial statements of Wisconsin Public Service beginning September 24, 2001.
Madison Gas and Electric will retain its obligations as they relate to the plant
for the period of time it was an owner.

Madison Gas and Electric will maintain one decommissioning
trust fund that will accumulate its remaining contributions in accordance with
its existing funding plan, which extends to December 31, 2002. On
January 2, 2003, Madison Gas and Electric will transfer that trust fund to
Wisconsin Public Service. Wisconsin Public Service also assumed Madison Gas and
Electric's share of the decommissioning obligations in exchange for the trust
funds transferred on September 24, 2001 and to be transferred on January 2,
2003.

In December 2001, WPS Power Development reached
an agreement to purchase the stock of CH Resources, Inc, which owns three
power plants and other assets. The plants have a combined capacity of
257 megawatts and are located in New York. The $62 million transaction
is subject to regulatory approvals and is expected to close in the second
quarter of 2002. WPS Resources is expected to provide financing for this
project with short-term debt.

WPS Northern Nevada, LLC, a direct, wholly-owned
subsidiary of WPS Power Development, entered into an asset purchase
agreement on October 25, 2000 to acquire the 545-megawatt Tracy/Pinon Power
Station and related assets from Sierra Pacific Power Company, a Nevada electric
utility and wholly-owned subsidiary of Sierra Pacific Resources.
WPS Northern Nevada expected to close this acquisition during 2001. On
April 18, 2001, the state of Nevada passed a law placing a moratorium on the
sale of generation assets by electric utilities until July 1, 2003. As a result,
the purchase has not yet been closed. WPS Power Development is currently working
with Sierra Pacific to evaluate the engineering and economic feasibility of
modifying the coal gasification unit at the site in order to achieve commercial
operation. The original asset purchase agreement does not contain an automatic
termination provision if closing does not occur. The agreement does allow either
party to terminate the agreement after specified dates in 2002.

In November 2001, WPS Power Development, through its
subsidiary ECO Coal Pelletization #12, LLC, entered into a transaction with a
subsidiary of a public company resulting in ECO #12 contributing 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.

The transaction generated a pre-tax gain of
$40.1 million of which $38.0 million has been deferred as of
December 31, 2001 as a result of certain rights of rescission and put
options being granted to the buyer. As these rights of rescission expire and the
amount of the put options of the buyer diminishes, WPS Power Development
will recognize through earnings the deferred gain on the transaction.

Concurrent with the sale of a portion of its interest in
this project, WPS Power Development bought out the interest of its previous
partner in the ECO #12 project. The actual payments to this former partner are
contingent upon the same provisions referred to above. As a result,
$21.3 million is held in escrow that will be released proportionally as the
respective rescission rights and put options expire.

In 2001, Wisconsin Public Service sold 5,740 acres of land
associated with several hydroelectric projects on the Peshtigo River in
northeastern Wisconsin to the Wisconsin Department of Natural Resources for
$13.5 million. The sale resulted in a pre-tax gain of $13.1 million. The
agreement with the Department of Natural Resources includes two options, one
exercisable in 2003 and the other in 2004, whereby the Department may acquire,
at less than fair value, approximately 5,000 additional acres for $11.5 million
if both options are exercised. The value associated with the difference between
the option price and the fair value will be treated as a charitable
contribution. The sale was the first part of a five to seven year asset
management strategy adopted by WPS Resources in 2001.

Wisconsin Public Service increased its ownership in
Wisconsin River Power Company to two-thirds by purchasing an additional
one-third interest from Consolidated Water Power Company in 2000. In
December 2001, Wisconsin Power and Light exercised its option to purchase
one-half of Wisconsin Public Service's additional one-third share of Wisconsin
River Power. Both transactions were at net book value of Wisconsin River Power
at August 31, 2000. As a result, Wisconsin Public Service and Wisconsin
Power and Light each own one-half of Wisconsin River Power with Wisconsin Public
Service remaining the operator of the facility.

NOTE 7--JOINTLY-OWNED UTILITY FACILITIES

Information regarding Wisconsin Public Service's
share of major jointly-owned electric-generating facilities in service at
December 31, 2001 is set forth below:

|(Millions, except for percentages) | West MarinetteUnit No. 33 | ColumbiaEnergy Center | EdgewaterUnit No. 4 | KewauneePlant
|---------------------------------- | ------------------------- | --------------------- | ------------------- | -------------
|Ownership                          | 68.0%                     | 31.8%                 | 31.8%               | 59.0%        
|Plant capacity (Megawatts)         | 77.0                      | 322.6                 | 105.8               | 315.0        
|Utility plant in service           | $17.5                     | $118.7                | $24.8               | $235.7       
|Accumulated depreciation           | $ 5.2                     | $ 75.6                | $15.3               | $151.7       
|In-service date                    | 1993                      | 1975 and 1978         | 1969                | 1974         

The increase in ownership at the Kewaunee plant during
2001 is the result of the purchase of Madison Gas and Electric's 17.8% interest.
See Note 6 for more information on the transaction.

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

NOTE 8--NUCLEAR PLANT OPERATION

On September 24, 2001, Wisconsin Public Service acquired
Madison Gas and Electric Company's 17.8% interest in the Kewaunee plant
including its decommissioning trust assets. In addition to the decommissioning
trust assets Wisconsin Public Service received from Madison Gas and Electric in
September 2001, Wisconsin Public Service will receive one remaining
decommissioning trust fund on January 2, 2003. Wisconsin Public Service
assumed Madison Gas and Electric's share of the decommissioning obligations in
exchange for the trust funds transferred on September 24, 2001 and those to be
transferred on January 2, 2003.

The additional share of the operations of the Kewaunee
plant is included in the financial statements of Wisconsin Public Service
beginning September 24, 2001. The net book value of
Wisconsin Public Service's 59% total share of the Kewaunee plant at
December 31, 2001 was $88.5 million, including construction
work-in-progress. For more information on the transaction with Madison Gas and
Electric see Note 6.

The quantity of heat produced for the generation of
electric energy by the Kewaunee plant is the basis for the amortization of the
costs of nuclear fuel to electric production fuel expense, 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. During 2001 and 2000, payments to the Department of
Energy totaled $1.4 million for each year.

On an interim basis, spent nuclear fuel storage space is
provided at the Kewaunee plant. Expenses associated with interim spent fuel
storage at the Kewaunee plant are recognized as current operating costs. With
minor plant modifications that were completed in 2001, the Kewaunee plant should
have sufficient fuel storage capacity until the end of its useful life in 2013.

The accumulated provision for nuclear fuel, which
represents nuclear fuel purchases and amortization, totaled $247.6 million
at December 31, 2001 and $167.7 million at December 31,
2000.

For information on the depreciation policy for the
Kewaunee plant see Note 5.

Wisconsin Public Service's share of nuclear decommissioning
costs to date has been accrued over the estimated service life of the Kewaunee
plant, recovered currently from customers in rates, and deposited in external
trusts. Such costs totaled $2.6 million in 2001, $8.9 million in 2000,
and $9.2 million in 1999. The 1999 and 2000 funding levels used a recovery
period ending in 2002. Beginning in 2001, the Public Service Commission of
Wisconsin authorized use of a funding period ending in 2010. As a result of this
extension, the contributions for 2001 decreased to $2.6 million. In
developing our decommissioning funding plan, we assumed a long-term after-tax
earnings rate of approximately 5%.

Wisconsin Public Service's share of the Kewaunee plant
decommissioning, based on its 59% ownership interest, is estimated to be
$319 million in current dollars based on a site-specific study. The study,
which was performed in 1998, uses immediate dismantlement as the method of
decommissioning and assumes shutdown in 2013. As of December 31, 2001, the
market value of the external nuclear decommissioning trusts, which are recorded
as a part of property, plant and equipment on the consolidated balance sheets,
totaled $311.3 million, including the trust currently held by Madison Gas
and Electric that is to be transferred to Wisconsin Public Service on January 2,
2003. Therefore, the current cost of Wisconsin Public Service's share
of the estimated costs to decommission the Kewaunee plant, assuming early
retirement, exceeds the trust assets at December 31, 2001 by about
$7.7 million.

Based on the standard cost escalation assumptions required
by a July 1994 Public Service Commission of Wisconsin order, the
undiscounted amount of Wisconsin Public Service's share of decommissioning costs
forecasted to be expended between the years 2013 and 2043 is $967 million
under the current funding plan.

Future decommissioning costs collected in customer rates
and a charge for realized earnings from external trusts are included in
depreciation expense. As of December 31, 2001, the accumulated
provision for depreciation and decommissioning included accumulated provisions
for decommissioning totaling $311.3 million. Realized trust earnings
totaled $8.1 million in 2001, $10.8 million in 2000, and
$4.6 million in 1999. Unrealized gains and losses, net of taxes, in
external trusts are reflected as increases and decreases to the decommissioning
reserve, since decommissioning expense is recognized as the gains and losses are
realized, in accordance with regulatory requirements.

Investments in the nuclear decommissioning trusts are
recorded at market value. Investments at December 31, 2001, consisted of
59.2% equity securities and 40.8% fixed income securities. The investments are
classified as utility plant and 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. 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 market value of the external nuclear decommissioning
trusts, net of tax is set forth below:

|2001 Security Type (Millions) | Market | Cost   | Unrealized Gain (Loss)
|----------------------------- | ------ | ------ | ----------------------
|                              |        |        |                       
|Fixed income                  | $127.0 | $123.8 | $ 3.2                 
|Equity                        | 184.3  | 129.0  | 55.3                  
|Balance at December 31        | $311.3 | $252.8 | $58.5                 
|                              |        |        |                       
|                              |        |        |                       
|2000 Security Type (Millions) | Market | Cost   | Unrealized Gain (Loss)
|                              |        |        |                       
|Fixed income                  | $100.7 | $ 98.9 | $ 1.8                 
|Equity                        | 106.5  | 62.0   | 44.5                  
|Balance at December 31        | $207.2 | $160.9 | $46.3                 

NOTE 9--REGULATORY ASSETS AND LIABILITIES



|WPS Resources Regulatory Assets/Liabilities(Millions)                | 2001  | 2000 
|-------------------------------------------------------------------- | ----- | -----
|                                                                     |       |      
|Regulatory assets                                                    |       |      
|Demand-side management expenditures                                  | $ 9.6 | $20.7
|Environmental remediation costs  (net of insurance
      recoveries) | 40.0  | 30.5 
|Funding for enrichment facilities                                    | 3.6   | 4.1  
|Pension curtailment loss                                             | 8.1   | 8.1  
|Deferred nuclear costs                                               | 9.9   | -    
|Unamortized loss on debt                                             | 4.5   | 1.4  
|Deferred American Transmission Company costs                         | 4.4   | 0.5  
|Other                                                                | 10.9  | 9.2  
|Total                                                                | $91.0 | $74.5
|                                                                     |       |      
|Regulatory liabilities                                               |       |      
|Income tax related items                                             | $26.1 | $25.2
|Unrealized gain on decommissioning trust                             | 22.4  | 18.3 
|Pension settlement gain                                              | 11.8  | -    
|Natural gas derivatives                                              | 5.0   | -    
|Deferred gain on emission allowance sales                            | 6.0   | 2.9  
|Interest from tax refunds                                            | 5.0   | 3.8  
|Other                                                                | 2.1   | 0.4  
|Total                                                                | $78.4 | $50.6

Our utility subsidiaries are recovering their regulatory
assets and returning their regulatory liabilities through rates charged to
customers based on specific ratemaking decisions or precedent for each item.
Except for amounts expended for environmental costs, Wisconsin Public
Service is recovering carrying costs for all regulatory assets.
Upper Peninsula Power may recover carrying costs on environmental
regulatory assets. Based on prior and current rate treatment for such costs, we
believe it is probable that Wisconsin Public Service and
Upper Peninsula Power will continue to recover from customers the
regulatory assets described above.

See Notes 13 and 15 for specific information on income tax
and pension related regulatory liabilities. See Note 14 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, 2001, 2000, and 1999
follow:

|(Millions)                                  | 2001  | 2000  | 1999
|------------------------------------------- | ----- | ----- | ----
|American Transmission Company, LLC          | $56.2 | $  -  | $  -
|Other                                       | 13.6  | 15.0  | 9.7 
|Investments in affiliates, at equity method | $69.8 | $15.0 | $9.7

Investments in affiliates under the equity method are part
of the other assets on the Consolidated Balance Sheets and the equity income is
recorded in miscellaneous income on the Consolidated Statements of Income.

WPS Investments, LLC, a consolidated subsidiary of
Wisconsin Public Service, has an approximate 15% ownership interest in American
Transmission Company, LLC. American Transmission Company is a for-profit,
transmission-only company. It owns, plans, maintains, monitors, and operates
electric transmission assets in portions of Wisconsin, Michigan, and Illinois.
American Transmission Company began operations on January 1, 2001. Its
assets previously were owned and operated by multiple electric utilities serving
the upper Midwest all of which transferred their transmission assets to American
Transmission Company 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.

Wisconsin Public Service contributed its transmission
assets on January 1, 2001 and Upper Peninsula Power contributed its
transmission assets on June 28, 2001. Our total ownership interest in American
Transmission Company fluctuated throughout 2001 due to other utilities
contributing assets and cash to become owners of American Transmission Company.

Condensed financial data of American Transmission Company
for 2001 follows:



|(Millions)                                 | 2001   
|------------------------------------------ | -------
|Income statement data                      |        
|Revenues                                   | $174.7 
|Operating expenses                         | (110.1)
|Other income (expense)                     | (11.4) 
|Net income                                 | $ 53.2 
|                                           |        
|WPS Investment's equity in net income      | $  7.1 
|                                           |        
|Balance sheet data                         |        
|Current assets                             | $ 56.7 
|Non-current assets                         | 666.6  
|Total assets                               | $723.3 
|                                           |        
|Current liabilities                        | $ 36.1 
|Long-term debt                             | 297.9  
|Other non-current liabilities              | 3.6    
|Shareholder's equity                       | 385.7  
|Total liabilities and shareholder's equity | $723.3 

NOTE 11--SHORT-TERM DEBT AND LINES OF CREDIT

To provide short-term borrowing flexibility and security
for commercial paper outstanding, WPS Resources and its subsidiaries
maintain bank lines of credit. These lines of credit require a fee.

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

|(Millions, except for percentages)                          | 2001   | 2000   | 1999  
|----------------------------------------------------------- | ------ | ------ | ------
|As of end of year                                           |        |        |       
|Commercial paper outstanding                                | $ 15.0 | $119.6 | $ 79.9
|Average discount rate on outstanding
      commercial paper | 1.95%  | 6.63%  | 6.55% 
|Short-term notes payable outstanding                        | $ 31.2 | $ 10.0 | $ 10.4
|Average interest rate on short-term notes
      payable     | 1.61%  | 6.73%  | 8.10% 
|Available (unused) lines of credit                          | $130.0 | $132.0 | $127.0
|For the year                                                |        |        |       
|Maximum amount of short-term debt                           | $177.6 | $139.5 | $218.5
|Average amount of short-term debt                           | $110.6 | $ 65.6 | $ 68.6
|Average interest rate on short-term debt                    | 4.32%  | 6.39%  | 5.34% 

NOTE 12--LONG-TERM DEBT

|At December 31 (Millions)                                | 2001   | 2000    
|-------------------------------------------------------- | ------ | --------
|Capital lease obligation - Wisconsin Public Service      | $ 73.0 | $ 73.6  
|Less: Current portion                                    | (0.9)  | (0.6)   
|Long-term capital lease obligation                       | 72.1   | 73.0    
|                                                         |        |         
|First mortgage bonds - Wisconsin Public Service          |        |         
|                                                         | Series | Year Due
|                                                         | 7.30%  | 2002    
|                                                         | 6.80%  | 2003    
|                                                         | 6.125% | 2005    
|                                                         | 6.90%  | 2013    
|                                                         | 8.80%  | 2021    
|                                                         | 7.125% | 2023    
|                                                         |        |         
|Senior notes - Wisconsin Public Service                  |        |         
|                                                         | Series | Year Due
|                                                         | 6.08%  | 2028    
|                                                         | 6.125% | 2011    
|                                                         |        |         
|First mortgage bonds - Upper Peninsula Power             |        |         
|                                                         | Series | Year Due
|                                                         | 7.94%  | 2003    
|                                                         | 10.0%  | 2008    
|                                                         | 9.32%  | 2021    
|                                                         |        |         
|Unsecured senior notes - WPS Resources                   |        |         
|                                                         | Series | Year Due
|                                                         | 7.00%  | 2009    
|                                                         |        |         
|Term loans - nonrecourse, secured by nonregulated assets | 95.8   | 102.8   
|Tax exempt bonds                                         | 27.0   | -       
|Notes payable to bank, secured by nonregulated plant     | 20.3   | 19.3    
|Senior secured note                                      | 3.3    | 3.5     
|Other long-term debt                                     | -      | 0.1     
|Total                                                    | 712.6  | 595.9   
|Unamortized discount and premium on bonds and debt       | (1.2)  | (1.2)   
|Total long-term debt                                     | 711.4  | 594.7   
|Less current portion                                     | (55.7) | (7.7)   
|Net long-term debt                                       | 655.7  | 587.0   
|Total long-term debt and capital lease obligation        | $727.8 | $660.0  

In November 1995, Wisconsin Public Service
signed a 25-year agreement to purchase power from De Pere Energy Center, LLC, an
independent power producer, which supplies the power from a cogeneration
facility it owns.

In June 1999, Phase I of the project went into
operation. We have accounted for the contract as a capital lease. In Phase I, an
initial asset and corresponding obligation were recorded at $74.1 million.
The asset and obligation represent the present value of minimum lease payments.
Excluded from the payments are executory costs such as insurance, maintenance,
and taxes. When the contract expires in 2024, Wisconsin Public Service
may renew the contract for two additional five-year periods with proper notice.
We are amortizing the leased asset on a straight-line basis over the original
25-year term of the contract. Following is a schedule of future minimum lease
payments, excluding executory costs, under the De Pere Energy Center
capital lease:

Year ending December 31 (Millions)2002
      $ 5.22003
      5.42004
      5.62005
      5.92006
      6.0Later years
      96.6Net minimum lease payments
      124.7Less: Amount representing interest
      (51.7)Present value of net minimum lease payments
      $ 73.0


In August 2001, Wisconsin Public Service retired
$53.1 million of 8.80% first mortgage bonds that would have matured in
2021. Also in August 2001, Wisconsin Public Service issued $150.0 million
of 6.125% senior notes. The senior notes are secured by a pledge of first
mortgage bonds and become unsecured if Wisconsin Public Service retires all of
its outstanding first mortgage bonds. At our utility subsidiaries, plant assets
secure first mortgage bonds.

Upper Peninsula Power is required to make bond
sinking fund payments for some of its outstanding first mortgage bonds.

Borrowing by WPS Power Development under term loans and
secured by nonregulated assets totals $95.8 million. The assets of
WPS New England Generation, Inc. and WPS Canada Generation, Inc.,
subsidiaries of WPS Power Development, secure $6.6 million and
$16.2 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 WPS Power
Development, is the borrower of the remaining $73.0 million that is secured
by its plant. Quarterly payments are made in relation to this financing that
carries an interest rate of 7.8725% 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 WPS Power Development, 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, 2001, the interest rate was 1.51833%. 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.

As of December 31, 2001, WPS Power Development
had aggregate outstanding indebtedness totaling $20.3 million under notes
payable to banks including $11.9 million of indebtedness under its
revolving credit note of $12.5 million. This note is secured by the assets
of the Stoneman plant and is guaranteed by WPS Resources. It is due in 2005
and requires quarterly payments. In addition, the note has a variable interest
rate that was at 3.85% at December 31, 2001. The remaining portion of the
$20.3 million of notes payable is secured by nonregulated plant, and also
matures in 2005.

The senior secured note of $3.3 million requires
semiannual payments at an interest rate of 9.25%, and it matures in 2011.

At December 31, 2001, 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
excluding capital lease payments, for WPS Resources is as follows:



|Year ending December 31 (Millions) |       
|---------------------------------- | ------
|                                   |       
|2002                               | $ 55.7
|2003                               | 71.1  
|2004                               | 6.7   
|2005                               | 36.3  
|2006                               | 7.7   
|Later years                        | 535.0 
|Total payments                     | $712.5

NOTE 13--INCOME TAXES

Deferred income taxes are recorded for temporary
differences in the recognition of certain assets or liabilities for tax and
financial reporting purposes. The principal components of our deferred tax
assets and liabilities recognized in the balance sheet as of December 31
are as follows:

|(Millions)                                      | 2001   | 2000  
|----------------------------------------------- | ------ | ------
|                                                |        |       
|Deferred tax assets                             |        |       
|Plant related                                   | $ 89.4 | $ 84.5
|State capital and operating loss carry forwards | 6.5    | 6.5   
|Deferred tax credit carry forwards              | 21.2   | 11.0  
|Employee benefits                               | 35.5   | 35.0  
|Regulatory assets                               | 5.7    | 4.7   
|Other                                           | 11.0   | 0.4   
|Total                                           | $169.3 | $142.1
|                                                |        |       
|Deferred tax liabilities                        |        |       
|Plant related                                   | $184.1 | $200.3
|Employee benefits                               | 30.0   | 31.3  
|Regulatory deferrals                            | 11.0   | 8.6   
|Other                                           | 13.7   | 2.3   
|Total                                           | $238.8 | $242.5
|                                                |        |       
|Net deferred tax liabilities                    | $ 69.5 | $100.4

A variety of factors are considered in determining the
amount of the deferred income tax assets to be recognized pursuant to Statement
of Financial Accounting Standards No. 109, including: the number of years that
capital and operating losses and tax credits can be carried forward, the
existence of taxable temporary differences, and WPS Resources' earnings
history and near-term earnings expectations. Although realization is not
assured, we believe it is more likely than not that the entire net deferred tax
asset will be realized.

WPS Resources is an owner in a facility that produces
synthetic fuel from coal fines, as defined in Section 29 of the Internal Revenue
Code. The production and sale of the synthetic fuel from this facility qualifies
for tax credits under Section 29 if certain requirements are satisfied. Credits
that are not utilized to reduce current tax expense in the current year are
carried forward as alternative minimum tax credits to reduce current tax expense
in future years. The production and sale of synthetic fuel resulted in a
reduction in current tax expense of $11.4 million in 2001.

The following is a reconciliation of the difference
between the current and future tax expense that would be computed by applying
the federal statutory rate to income before income taxes, and the actual current
and future income tax expense that was recorded on the income statement for the
year ended December 31:

|(Millions, except for percentages)                                            | 2001   | 2000   | 1999  
|----------------------------------------------------------------------------- | ------ | ------ | ------
|                                                                              | Rate   | Amount | Rate  
|                                                                              |        |        |       
|Statutory federal income tax                                                  | 35.0%  | $ 29.9 | 35.0% 
|State income taxes, net                                                       | 5.3    | 4.5    | 5.5   
|Rate
      difference on reversal of income
        tax temporary differences | (2.5)  | (2.2)  | (2.1) 
|Plant related                                                                 | (1.2)  | (1.0)  | -     
|Federal tax credits                                                           | (28.1) | (24.0) | (26.4)
|Other differences, net                                                        | (2.9)  | (2.4)  | (4.1) 
|Effective income tax                                                          | 5.6%   | $  4.8 | 7.9%  
|                                                                              |        |        |       
|Current provision                                                             |        |        |       
|Federal                                                                       |        | $ 29.2 |       
|State                                                                         |        | 8.5    |       
|Total current provision                                                       |        | 37.7   |       
|Deferred benefit                                                              |        | (32.9) |       
|Total income tax expense                                                      |        | $  4.8 |       

NOTE 14--COMMITMENTS AND CONTINGENCIES

Fuel and Purchased Power

WPS Resources routinely enters into long-term
commodity purchase and sale commitments that have various quantity requirements
and durations.

Wisconsin Public Service has obligations related to coal,
purchased power, and natural gas. Obligations related to coal supply extend
through 2016 and total $151.9 million. Of that amount, there is one
long-term contract totaling $83.7 million that provides approximately 23% of the
total requirements of Wisconsin Public Service through 2016. Through 2009,
Wisconsin Public Service has obligations totaling $115.0 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
$97.0 million through October 2010.

Wisconsin Public Service expects to recover these costs in
future customer rates. Additionally, Wisconsin Public Service has contracts to
sell electricity and natural gas to customers. Many of these contracts have
indefinite lives.

WPS Power Development also enters into long-term
commodity contracts, mainly related to the purchase of coal for the Sunbury
plant. The contracts total $11.9 million and extend through 2004.

WPS Energy Services has unconditional purchase
obligations related to energy supply contracts that total $842.9 million
and extend through 2007. All the contracts have offsetting sale contracts.

Capital Lease

In November 1995, Wisconsin Public Service
signed a 25-year agreement to purchase power from De Pere Energy Center, LLC, an
independent power producer that built a cogeneration facility and is selling
electrical power to Wisconsin Public Service.

In June 1999, Phase I of the project went into
operation. We have accounted for the contract as a capital lease. Phase II of
the project is currently projected to be operational in 2004. When Phase II
becomes operational, Wisconsin Public Service will record an additional utility
plant asset under a capital lease of approximately $80 million.

Corporate Guaranties

Since May 2000, WPS Resources has provided limited
financial support and energy supply services to Quest Energy, LLC, a Michigan
limited liability company. Financial support is in the form of an
interest-bearing note with an initial maturity date of May 2005, secured by the
assets of Quest. WPS Resources provides corporate guaranties to two
transmission providers on behalf of Quest. At December 31, 2001, the
guaranties totaled $4.5 million. These guaranties assure Quest's ability to
pay for the transmission services it purchases from these entities.

Nuclear Liability

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 Wisconsin Public Service to pay up to a maximum of
$52.0 million per incident. The payments will not exceed $5.9 million
per incident in a given calendar year. These amounts represent
Wisconsin Public Service's 59% ownership in the Kewaunee plant.

Nuclear Plant Operation

See Note 8 for detailed information on the operations of
the Kewaunee plant.

Clean Air Regulations

Early compliance by Wisconsin Public Service with the
Federal Clean Air Act has generated surplus sulfur dioxide allowances. We will
consider the sale of any allowances available in excess of Wisconsin Public
Service's needs. The Public Service Commission of Wisconsin has ordered that
profits from the sale of allowances be passed on to customers. During 2001,
Wisconsin Public Service recorded $4.2 million of proceeds from the sale of
allowances.

The United States Environmental Protection Agency has
designated southeastern Wisconsin as an ozone non-attainment area. Under the
Clean Air Act, the State of Wisconsin developed a nitrogen oxide reduction plan
for Wisconsin's ozone non-attainment area. The nitrogen oxide reductions begin
in 2003 and gradually increase to 2007. This plan affects Edgewater Unit 4, of
which Wisconsin Public Service owns 31.8%. A compliance plan for this unit was
initiated in 2000. The plan includes a combination of combustion optimization
and emission trading at a cost to Wisconsin Public Service of about
$5 million.

The State of Wisconsin is also seeking voluntary
reductions from utility units outside the ozone non-attainment area, which may
lead toadditional expenditures for nitrogen oxide
reductions at other units. Wisconsin Public Service is participating in
voluntary efforts to reduce nitrogen oxide levels at the Columbia Energy Center.
Wisconsin Public Service owns 31.8% of Columbia. The Public Service Commission
of Wisconsin has approved recovery of the costs associated with nitrogen oxide
compliance.

Recent air quality modeling by the Wisconsin Department of
Natural Resources revealed that Weston Units 1 and 2 contribute to a modeled
deviation from the sulfur dioxide ambient air quality standard. Wisconsin Public
Service and the Wisconsin Department of Natural Resources developed a plan to
eliminate the model deviation by extending the existing stacks at Weston
Units 1 and 2 by 55 feet and limiting the sulfur content of the fuel to
1.2 pounds per million Btu. The cost of the stack extension is about
$0.9 million. The current and projected fuel meets the sulfur content
limit. The Environmental Protection Agency was unwilling to agree with this
approach unless further studies were done to justify the stack height increase.
Wisconsin Public Service is cooperating with the Wisconsin Department of Natural
Resources to develop an approach to resolve this issue.

On November 3, 1999, the Environmental Protection Agency
announced that it was pursuing an enforcement initiative against seven
utilities, or their subsidiaries, located in the Midwest and the South as well
as the Tennessee Valley Authority. The enforcement initiative alleges that the
utilities undertook modifications at their coal-fired power plants in violation
of the Clean Air Act. The Environmental Protection Agency is seeking penalties
and the installation of additional pollution control equipment.

As a continuation of this initiative, the Environmental
Protection Agency requested on December 14, 2000 that Wisconsin Public
Service provide information pursuant to Section 114 of the Clean Air Act
relating to projects undertaken at the Pulliam and Weston plants. The
information was submitted on January 16, 2001 and no response has been received
from the Environmental Protection Agency.

Wisconsin Power and Light Company, the operator of the
Columbia and Edgewater plants jointly-owned with Wisconsin Public Service, also
submitted information related to projects undertaken at those plants. The
Environmental Protection Agency requested additional information on February 26,
2001. The additional information was submitted on March 28, 2001 and April 27,
2001.

The Wisconsin Department of Natural Resources has
initiated a rulemaking effort aimed at the control of mercury emissions. Coal
burning power plants are the primary target of this regulatory effort. The
proposed rule was open to comment in October 2001. A final rule could be
completed in the spring of 2002. As proposed, the rulerequires
phased in mercury emission reduction reaching 90% reduction 15 years after
completion of the rule. Wisconsin Public Service estimates that it could cost
$105 million per year for it to achieve the proposed 90% reduction.

WPS Power Development acquired 30 years of emission
allowances as a result of the acquisition of Sunbury Generation, LLC in November
1999. The purchase of WPS Westwood Generation, LLC in September 2000 also
included 30 years of emission allowances. A consistent valuation across vintage
years is being utilized to allocate the cost of these allowances. The cost
assigned to these allowances is being charged to expense as the allowances are
used. When necessary, the Sunbury plant also purchases incremental emission
allowances on the open market to comply with air regulations. Additional
technology is being installed at the Sunbury plant to comply with nitrogen oxide
standards that become effective in 2003. We expect total expenditures for this
technology will be about $16 million. During 2001, approximately $3 million
was spent to begin installing the technology.

Partial Sale of ECO Coal Pelletization #12

In November 2001, WPS Power Development, through its
subsidiary ECO Coal Pelletization #12 LLC, entered into a transaction with a
subsidiary of a public company resulting in ECO #12 contributing 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. The transaction
generated a pre-tax gain of $40.1 million of which $38.0 million has
been deferred as of December 31, 2001 as a result of certain rights of
rescission and put options being granted to the buyer. All such options expire
in 2003.

Concurrent with the sale of a portion of this project,
WPS Power Development bought out the interest of its previous partner in
the ECO #12 project. The actual payments to this former partner are contingent
upon the same provisions referred to above. As a result, $21.3 million is
held in escrow that will be released proportionately as the respective
rescission rights and put option expire.

For more information on the transaction see Note 6.

Manufactured Gas Plant Remediation

Wisconsin Public Service continues to investigate the
environmental cleanup of ten manufactured gas plant sites, including two sites
formerly owned by Wisconsin Fuel and Light. The cleanup of Wisconsin Public
Service's Stevens Point manufactured gas plant site is substantially complete
with monitoring of the site continuing. Costs of this cleanup were within the
range expected for this site. Cleanup began at both the Sheboygan sites in
November 2000, and cleanup of the land portion of the sites was substantially
completed by August 2001. Sediment cleanup remains to be addressed at one
Sheboygan site. To-date, costs are at expected levels. Wisconsin Public Service
estimates future undiscounted investigation and cleanup costs to be between
$43 million and $50 million. These estimates may be adjusted in the
future contingent upon remediation technology, regulatory requirements, and the
assessment of natural resources damages.

Wisconsin Public Service currently has a
$43.4 million liability recorded for cleanup with an offsetting regulatory
asset (deferred charge). We expect to recover cleanup costs, net of insurance
recoveries, in future customer rates. Carrying costs associated with the cleanup
expenditures will not be recoverable. Wisconsin Public Service has received
$12.7 million in insurance recoveries that we recorded as a reduction to
the regulatory asset.

Future Capital Expenditures

We estimate utility plant construction expenditures at
Wisconsin Public Service for 2002 to be approximately $208 million and
construction expenditures at Upper Peninsula Power for 2002 to be approximately
$9 million. Wisconsin Public Service estimates demand-side management
expenditures to be $24 million in 2002. Recovery of previously deferred
demand-side management expenditures of about $6 million from customers will
occur through 2002. In addition to the 2002 estimated expenditures, Upper
Peninsula Power is considering the potential need for construction of a
combustion turbine at an estimated cost of $41 million during the 2002-2003
timeframe.

There are no commitments for additional acquisition
expenditures for the nonregulated subsidiaries at this time other than
commitments made under the stock purchase agreement to acquire CH Resources and
the asset purchase agreement to acquire the Tracy/Pinon Power Station. The CH
Resources transaction is expected to close in the second quarter of 2002 for
$62 million. The Tracy/Pinon transaction is currently subject to a
legislative moratorium and may be terminated before the moratorium expires. For
more information on both transactions see Note 6.

NOTE 15--EMPLOYEE BENEFIT PLANS

WPS Resources has non-contributory retirement plans
covering substantially all employees under which the company may make annual
contributions to an irrevocable trust. We established the plans to provide
retired employees, who meet conditions relating to age and length of service,
with a monthly payment. Wisconsin Public Service administers and maintains the
plans. These plans are fully funded and no contributions were made to them in
2001, 2000, or 1999.

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. Wisconsin Public Service
and Upper Peninsula Power expensed and recovered through customer rates the net
periodic benefit cost. Our nonregulated subsidiaries expensed allocated amounts.
Our non-administrative plan is a collectively bargained plan and, therefore, is
tax exempt. The investments in the trust covering administrative employees are
subject to federal unrelated business income taxes at a 39.1% tax rate.

All pension costs and postretirement plan costs are
accounted for under Statements of Financial Accounting Standards Nos. 87 and
106, "Employers' Accounting for Pensions" and "Employers'
Accounting for Postretirement Benefits Other Than Pensions," respectively.
The standards require the company to accrue the cost of these benefits as
expense over the period in which the employee renders service. The transition
obligation for current and future retirees under Statement of Financial
Accounting Standards No. 106 is recognized over 20 years beginning in 1993.

The following tables provide a reconciliation of the
changes in the plan's benefit obligations and fair value of assets over the
three one-year periods ending December 31, 2001, 2000, and 1999, and a
statement of the funded status as of December 31 for each year:

|(Millions)                                                  | 2001    | 2000    | 1999   
|----------------------------------------------------------- | ------- | ------- | -------
|                                                            |         |         |        
|Reconciliation of benefit obligation
      - pension       
|Obligation at January 1                                     | $484.9  | $396.7  | $399.4 
|Service cost                                                | 11.0    | 10.2    | 10.9   
|Interest cost                                               | 32.7    | 31.5    | 27.5   
|Plan amendments                                             | 0.2     | 56.5    | 4.0    
|Actuarial (gain) loss                                       | 35.4    | 2.2     | (31.5) 
|Acquisitions                                                | 13.1    | -       | 4.8    
|Benefit payments                                            | (21.2)  | (19.4)  | (18.4) 
|(Settlements)/curtailments                                  | (60.9)  | 7.2     | -      
|Obligation at December 31                                   | $495.2  | $484.9  | $396.7 
|                                                            |         |         |        
|Reconciliation of fair value of plan
      assets - pension
|Fair value of plan assets at January
      1                | $676.1  | $654.3  | $610.5 
|Actual return on plan assets                                | (13.7)  | 41.2    | 58.0   
|Employer contributions                                      | -       | -       | -      
|Acquisitions                                                | 18.1    | -       | 4.2    
|Benefit payments                                            | (88.6)  | (19.4)  | (18.4) 
|Fair value of plan assets at
      December 31              | $591.9  | $676.1  | $654.3 
|                                                            |         |         |        
|Funded status at December 31                                | $ 96.7  | $191.2  | $257.6 
|Unrecognized transition (asset)
      obligation            | (2.2)   | (6.1)   | (9.9)  
|Unrecognized prior-service cost                             | 59.1    | 64.4    | 21.2   
|Unrecognized (gain) loss                                    | (69.3)  | (186.5) | (204.0)
|Net prepaid benefit cost                                    | $ 84.3  | $ 63.0  | $ 64.9 
|                                                            |         |         |        
|(Millions)                                                  | 2001    | 2000    | 1999   
|                                                           
|Reconciliation of benefit obligation
      - other         
|Obligation at January 1                                     | $102.6  | $135.2  | $138.8 
|Service cost                                                | 3.0     | 2.7     | 4.6    
|Interest cost                                               | 7.6     | 7.8     | 9.4    
|Plan amendments                                             | -       | (16.8)  | -      
|Actuarial (gain) loss                                       | 65.5    | (19.0)  | (13.8) 
|Acquisitions adjustments                                    | 3.7     | (1.3)   | 2.2    
|Benefit payments                                            | (6.2)   | (6.0)   | (6.0)  
|Obligation at December 31                                   | $176.2  | $102.6  | $135.2 
|                                                            |         |         |        
|Reconciliation of fair value of plan
      assets - other  
|Fair value of plan assets at January
      1                | $152.3  | $149.7  | $139.8 
|Actual return on plan assets                                | (4.4)   | 7.9     | 15.2   
|Employer contributions                                      | (7.0)   | 0.7     | 0.7    
|Benefit payments                                            | (6.2)   | (6.0)   | (6.0)  
|Fair value of plan assets at
      December 31              | $134.7  | $152.3  | $149.7 
|                                                            |         |         |        
|Funded status at December 31                                | $(41.5) | $ 49.7  | $ 14.5 
|Unrecognized transition (asset)
      obligation            | (12.4)  | 15.7    | 36.6   
|Unrecognized prior-service cost                             | (12.9)  | (14.1)  | 3.9    
|Unrecognized (gain) loss                                    | 14.4    | (96.9)  | (105.0)
|Net accrued benefit liability                               | $(52.4) | $(45.6) | $(50.0)



|(Millions)                                                                      | 2001   | 2000   | 1999  
|------------------------------------------------------------------------------- | ------ | ------ | ------
|                                                                                |        |        |       
|Net periodic benefit cost - pension                                             |        |        |       
|Service cost                                                                    | $11.0  | $10.2  | $10.9 
|Interest cost                                                                   | 32.7   | 31.5   | 27.5  
|Expected return on plan assets                                                  | (47.0) | (46.3) | (42.4)
|Amortization of transition asset                                                | (3.5)  | (3.6)  | (3.6) 
|Amortization of prior-service cost                                              | 5.5    | 4.7    | 2.1   
|Amortization of net gain                                                        | (2.3)  | (2.7)  | -     
|Net periodic
      benefit cost before settlement
        gain/curtailment loss | $(3.6) | $(6.2) | $(5.5)
|(Settlement gain)/curtailment loss                                              | (12.7) | 8.7    | -     
|Regulatory liability/(asset) offset                                             | 11.8   | (8.1)  | -     
|Net periodic benefit cost                                                       | $(4.5) | $(5.6) | $(5.5)
|                                                                                |        |        |       
|Net periodic benefit cost - other                                               |        |        |       
|Service cost                                                                    | $ 3.0  | $ 2.7  | $ 4.6 
|Interest cost                                                                   | 7.6    | 7.8    | 9.4   
|Expected return on plan assets                                                  | (9.7)  | (9.3)  | (8.3) 
|Amortization of transition obligation                                           | 1.3    | 1.8    | 2.8   
|Amortization of prior-service cost                                              | (1.2)  | (0.7)  | 0.3   
|Amortization of net gain                                                        | (4.6)  | (4.6)  | (2.7) 
|Net periodic benefit cost                                                       | $(3.6) | $(2.3) | $ 6.1 



For the reasons mentioned above, large numbers of lump sum
payments were paid out of the pension plan during the course of 2001. This
required settlement accounting under Statement of Financial Accounting Standards
No. 88, "Employers' Accounting for Settlements and Curtailments of
Defined Benefit Pension Plans and for Termination Benefits." Most of the
settlement gain was deferred as a regulatory liability.

The assumptions used in measuring WPS Resources'
benefit obligation are shown in the following table:

|                                                               | 2001  | 2000  | 1999 
|-------------------------------------------------------------- | ----- | ----- | -----
|Weighted average assumptions as of
      December 31 - pension
|Discount rate                                                  | 7.25% | 7.50% | 7.50%
|Expected return on plan assets                                 | 8.75% | 8.75% | 8.75%
|Rate of compensation increase                                  | 5.50% | 5.50% | 5.50%
|                                                               |       |       |      
|Weighted average assumptions as of
      December 31 - other  
|Discount rate                                                  | 7.25% | 7.50% | 7.50%
|Expected return on plan assets                                 | 8.75% | 8.75% | 8.75%

For the December 31, 2001 disclosed postretirement
obligation, we assumed medical cost trend rates of 11% for those under age 65
and 13% for those over age 65, decreasing to 5% and 6.5%, respectively, by the
year 2008. We assumed dental cost trend rates of 8% decreasing to 5% by the year
2004. These trend rates represent a change from our prior assumptions. At
December 31, 1999, we assumed medical cost trend rates of 8% and dental
cost trend rates of 7.5%, both decreasing to 7% at December 31, 2000 and
eventually reaching 5% by 2006. 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
|----------------------------------------------------------------------------------------------------------------------- | ----------- | -----------
|                                                                                                                        |             |            
|Effect on total of service and interest cost  components of net periodic
      postretirement  health care benefit cost | $ 1.8       | $ (1.4)    
|Effect on the health care component of the  accumulated postretirement
      benefit obligation                         | $26.0       | $(21.8)    

Wisconsin Public Service has an Employee Stock
Ownership Plan that held 1.9 million shares of WPS Resources common
stock (market value of approximately $69.2 million) at December 31,
2001. The Employee Stock Ownership Plan also had a loan guaranteed by
Wisconsin Public Service and secured by common stock that was paid off in
June of 2000. The company was paying principal and interest on the loan using
contributions from Wisconsin Public Service and dividends on our
common stock held by the Employee Stock Ownership Plan. The Employee Stock
Ownership Plan allocated shares to participants as the loan was repaid. Tax
benefits from certain dividends paid to the Employee Stock Ownership Plan are
recognized as a reduction in Wisconsin Public Service's cost of
providing service to customers.



NOTE 16--COMPANY-OBLIGATED MANDATORILY REDEEMABLE TRUST PREFERRED SECURITIES                 
OF SUBSIDIARY 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 owns all of the outstanding trust common securities
of the Trust, and the only asset of the Trust is $51.5 million of
subordinated debentures that we issued. The debentures are due on June 30,
2038 and bear interest at 7% per year. The terms and interest payments on the
debentures correspond to the terms and distributions on the trust preferred
securities. We have consolidated the preferred securities of the Trust into our
financial statements. We reflect the interest payments on the debentures as
"Distributions - preferred securities of subsidiary trust." These
payments are tax deductible by WPS Resources.

We may defer interest payments on the debentures for up to
20 consecutive quarters. This would require the deferral of distributions
on the trust preferred securities as well. If we would defer interest payments,
interest and distributions would continue to accrue and compounding interest on
the deferred amounts would also accrue. Through 2001, we have not deferred
interest payments. After July 30, 2003, we may redeem all or part of the
debentures. This would require the Trust to redeem an equal amount of trust
securities at face value plus any accrued interest and unpaid distributions. We
entered into a limited guarantee of payment of distributions, redemption
payments, and liquidation payments with respect to the trust preferred
securities. This guarantee, together with our obligations under the debentures,
and under other related documents, provides a full and unconditional guarantee
by us of amounts due on the outstanding trust preferred securities.

NOTE 17--COMMON EQUITY

|Shares outstanding at December 31                               | 2001       | 2000      
|--------------------------------------------------------------- | ---------- | ----------
|Common stock,
      $1 par value, 100,000,000 shares authorized | 31,496,296 | 26,851,034
|Treasury
      stock                                            | 307,052    | 336,385   
|Average cost of treasury shares                                 | $25.17     | $24.23    
|Shares in
      deferred compensation trust                     | 135,995    | 105,179   
|Average cost of deferred compensation trust shares              | $30.67     | $29.78    

As part of the merger of Wisconsin Fuel and Light into
Wisconsin Public Service, 1,763,943 shares of common stock were issued on April
1, 2001 to Wisconsin Fuel and Light shareholders. See Note 6 for more
information on the merger.

On December 17, 2001, 2,300,000 shares of
WPS Resources common stock were issued at $34.36 per share and resulted in
a net increase in equity of $76.0 million.

Effective January 2001, we began issuing new stock
under our Stock Investment Plan and under certain of our stock-based employee
benefit plans. During 2001, we issued 544,515 shares under these plans, which
increased equity $18.6 million.

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 and the company if efforts are made to gain control of our
company in a manner that is not in our best interests or 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.

At December 31, 2001, we had $365.8 million of
retained earnings available for dividends.

Earnings per share is computed by dividing net income
available for common shareholders for the period by the weighted average number
of shares of common stock outstanding during the period. Diluted earnings per
share is computed by dividing net income available for common shareholders for
the period 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 and
deferred compensation plan shares. The calculation of diluted earnings per share
for the years shown excludes deferred compensation plan shares and some stock
option plan shares that had an anti-dilutive effect. The following table
reconciles the computation of basic and diluted earnings per share:

|Reconciliation of Earnings Per Share        |       |       |      
|------------------------------------------- | ----- | ----- | -----
|(Millions, except per share amounts)        | 2001  | 2000  | 1999 
|Net income available to common shareholders | $77.6 | $67.0 | $59.6
|Basic weighted average shares               | 28.2  | 26.5  | 26.6 
|Incremental issuable shares                 | 0.1   | -     | -    
|                                            |       |       |      
|Diluted weighted average shares             | 28.3  | 26.5  | 26.6 
|Basic earnings per common share             | $2.75 | $2.53 | $2.24
|Diluted earnings per common share           | $2.74 | $2.53 | $2.24

NOTE 18--STOCK OPTION PLANS

In May of 2001, shareholders approved the
WPS Resources Corporation 2001 Omnibus Incentive Compensation Plan for
certain management personnel. In 1999, shareholders approved the
WPS Resources Corporation 1999 Stock Option Plan for certain management
personnel. In December 1999, the Board of Directors approved the
WPS Resources Corporation 1999 Non-Employee Directors Stock Option Plan.
Opinion 25 and related interpretations are used to account for these plans.
Accordingly, no compensation costs have been recognized for these plans in 2001,
2000, or 1999. Had compensation cost been determined consistent with Financial
Accounting Standards Board Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation," net income and earnings per
share would have been reduced to the pro forma amounts indicated below:



|(Millions, except per share amounts) | 2001  | 2000  | 1999 
|------------------------------------ | ----- | ----- | -----
|Net income                           |       |       |      
|As reported                          | $77.6 | $67.0 | $59.6
|Pro forma                            | 77.3  | 66.8  | 56.5 
|                                     |       |       |      
|Basic earnings per common share      |       |       |      
|As reported                          | $2.75 | $2.53 | $2.24
|Pro forma                            | 2.74  | 2.53  | 2.23 
|                                     |       |       |      
|Diluted earnings per common share    |       |       |      
|As reported                          | $2.74 | $2.53 | $2.24
|Pro forma                            | 2.73  | 2.52  | 2.23 

Under the provisions of the 2001 Omnibus Incentive
Compensation 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
and Nominating 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. Stock options were granted under the 1999
Stock Option Plan on February 11, 1999 (subject to shareholder approval of
the 1999 Stock Option Plan that was received on May 6, 1999, at which time the
exercise price was established for the initial grant), March 13, 2000, and
December 14, 2000 having exercise prices of $29.875, $23.1875, and
$34.75, respectively. Stock options were granted under the 2001 Omnibus Plan on
July 12, 2001 and December 13, 2001 having exercise prices of $34.38
and $34.09, respectively. One-fourth of the stock options granted will become
vested and exercisable each year on the anniversary date of the grant. No
additional stock options will be issued under the 1999 Stock Option Plan,
although the plan will continue to exist for purposes of the existing
outstanding options.

Under the provisions of the 1999 Non-Employee Directors
Stock Option 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. Options were granted on
December 9, 1999 and February 10, 2000, with exercise prices
of $25.4375 and $25.6875, respectively.

The number of shares subject to each stock option plan and
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.

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

|                         | WPS Resources
      Corporation 2001
      Omnibus
      Incentive
      CompensationPlan | WPS Resources
      1999
      Stock OptionPlan | WPS Resources 1999
      Non-Employee
      DirectorsStock Option Plan
|------------------------ | ----------------------------------------------------------------------------------------- | ----------------------------------------------- | ----------------------------------------------------------------------
|                         |                                                                                           |                                                 |                                                                       
|Annual dividend yield    |                                                                                           |                                                 |                                                                       
|May 6, 1999              |                                                                                           | 6.63%                                           |                                                                       
|December 31, 1999        |                                                                                           |                                                 | 7.94%                                                                 
|March 13, 2000           |                                                                                           | 8.71%                                           |                                                                       
|December 14, 2000        |                                                                                           | 5.93%                                           |                                                                       
|July 12, 2001            | 6.58%                                                                                     |                                                 |                                                                       
|December 13, 2001        | 6.60%                                                                                     |                                                 |                                                                       
|                         |                                                                                           |                                                 |                                                                       
|Expected volatility      |                                                                                           |                                                 |                                                                       
|May 6, 1999              |                                                                                           | 14.00%                                          |                                                                       
|December 31, 1999        |                                                                                           |                                                 | 14.90%                                                                
|March 13, 2000           |                                                                                           | 15.50%                                          |                                                                       
|December 14, 2000        |                                                                                           | 20.40%                                          |                                                                       
|July 12, 2001            | 20.93%                                                                                    |                                                 |                                                                       
|December 13, 2001        | 20.19%                                                                                    |                                                 |                                                                       
|                         |                                                                                           |                                                 |                                                                       
|Risk-free interest rate  |                                                                                           |                                                 |                                                                       
|May 6, 1999              |                                                                                           | 5.52%                                           |                                                                       
|December 31, 1999        |                                                                                           |                                                 | 6.14%                                                                 
|March 13, 2000           |                                                                                           | 6.36%                                           |                                                                       
|December 14, 2000        |                                                                                           | 5.23%                                           |                                                                       
|July 12, 2001            | 5.54%                                                                                     |                                                 |                                                                       
|December 13, 2001        | 5.62%                                                                                     |                                                 |                                                                       
|                         |                                                                                           |                                                 |                                                                       
|Expected life (in years) | 10                                                                                        | 10                                              | 10                                                                    

A summary of the status of the stock option plans as of
December 31, 2001 is presented below:

|Stock Options                                                  | Shares  | Weighted-Average Exercise Price
|-------------------------------------------------------------- | ------- | -------------------------------
|                                                               |         |                                
|Options outstanding at beginning of year                       |         |                                
|Omnibus plan                                                   | -       | -                              
|Employee plan                                                  | 722,416 | $30.9322                       
|Director plan                                                  | 24,000  | 25.4688                        
|Granted during 2001                                            |         |                                
|Omnibus plan                                                   | 327,927 | 34.1038                        
|Exercised during 2001                                          |         |                                
|Employee plan                                                  | 16,500  | 34.7394                        
|Director plan                                                  | 850     | 34.8400                        
|Forfeited during 2001                                          | -       | -                              
|Outstanding at end of year                                     |         |                                
|Omnibus plan                                                   | 327,927 | 34.1038                        
|Employee plan                                                  | 705,916 | 30.9806                        
|Director plan                                                  | 23,150  | 25.4699                        
|Options exercisable at year-end                                |         |                                
|Employee plan                                                  | 283,604 | 30.6072                        
|Director plan                                                  | 23,150  | 25.4699                        
|Weighted-average fair value of options granted during the year
|Omnibus plan                                                   | $3.23  

A summary of the status of the stock option plans as of
December 31, 2000 is presented below:

|Stock Options                                                  | Shares  | Weighted-Average Exercise Price
|-------------------------------------------------------------- | ------- | -------------------------------
|                                                               |         |                                
|Options outstanding at beginning of year                       |         |                                
|Employee plan                                                  | 478,000 | $29.8750                       
|Director plan                                                  | 21,000  | 25.4375                        
|Granted during 2000                                            |         |                                
|Employee plan                                                  | 244,416 | 32.9997                        
|Director plan                                                  | 3,000   | 25.6875                        
|Exercised during 2000                                          | -       | -                              
|Forfeited during 2000                                          | -       | -                              
|Outstanding at end of year                                     |         |                                
|Employee plan                                                  | 722,416 | 30.9322                        
|Director plan                                                  | 24,000  | 25.4688                        
|Options exercisable at year-end                                |         |                                
|Employee plan                                                  | 119,500 | 29.8750                        
|Director plan                                                  | 21,000  | 25.4375                        
|Weighted-average fair value of options granted during the year
|Employee plan                                                  | $3.87  
|Director plan                                                  | $1.08  

A summary of the status of the stock option plans as of
December 31, 1999 is presented below:

|Stock Options                                                  | Shares  | Weighted-Average Exercise Price
|-------------------------------------------------------------- | ------- | -------------------------------
|                                                               |         |                                
|Options outstanding at beginning of year                       | -       | $     -                        
|Granted during 1999                                            |         |                                
|Employee plan                                                  | 478,000 | 29.8750                        
|Director plan                                                  | 21,000  | 25.4375                        
|Exercised during 1999                                          | -       | -                              
|Forfeited during 1999                                          | -       | -                              
|Outstanding at end of year                                     |         |                                
|Employee plan                                                  | 478,000 | 29.8750                        
|Director plan                                                  | 21,000  | 25.4375                        
|Options exercisable at year-end                                | -       | -                              
|Weighted-average fair value of options granted during the year
|Employee plan                                                  | $2.04  
|Director plan                                                  | $1.38  

The stock options outstanding at December 31, 2001
under the 2001 Omnibus Plan for an aggregate of 327,927 shares have exercise
prices of $34.38 and $34.09 and are summarized below:

|2001 Omnibus Plan Options Outstanding
|-------------------------------------
|Exerciseprices                       
|                                     
|$34.3800                             
|34.0900                              

None of the 2001 Omnibus Plan stock options are currently
exercisable.

The stock options outstanding at December 31, 2001
under the 1999 Stock Option Plan for an aggregate of 705,916 shares have
exercise prices between $23.1875 and $34.7500 and are summarized below:

|1999
      Stock Option Plan Options Outstanding
|------------------------------------------------
|Exerciseprices                                  
|                                                
|$23.1875                                        
|29.8750                                         
|34.7500                                         

The stock options at December 31, 2001 exercisable
under the 1999 Stock Option Plan for an aggregate of 283,604 shares have
exercise prices of $23.1875, $29.8750, and $34.7500 and remaining lives of 8, 8,
and 9 years.

The stock options outstanding at December 31, 2001
under the 1999 Non-Employee Director Stock Option Plan for an aggregate of
23,150 shares have exercise prices of $25.4375 and $25.6875 and are summarized
below:

|1999 Non-Employee Director Stock Option Plan Options Outstanding
|----------------------------------------------------------------
|Exerciseprices                                                  
|                                                                
|$25.4375                                                        
|25.6875                                                         

All remaining stock options granted under the 1999
Non-Employee Stock Option Director Plan for an aggregate of 23,150 shares are
exercisable at year-end at the above referenced exercise prices.

NOTE 19--REGULATORY ENVIRONMENT

Wisconsin Public Service filed for and received an interim
rate order in the Wisconsin jurisdiction effective January 1, 2002. The order
authorized a $55.5 million increase in electric revenues and an increase of
$11.2 million in gas revenues on an annual basis. The revenues are based on
a 12.1% return on utility common equity, with equity constituting 55% of the
capital structure. These revenues are subject to refund to the extent that they
exceed the revenues authorized in the final rate order. The interim rates will
be superseded when a final rate order is issued in this case which is expected
early in the second quarter of 2002.

Upper Peninsula Power's application for a
$5.7 million rate increase, which had been pending before the Michigan
Public Service Commission since October 2000, was dismissed in August 2001 at
Upper Peninsula Power's request. Upper Peninsula Power requested a dismissal
because the information filed in the case was outdated. Upper Peninsula Power
expects to submit a new application for rate increases in 2002.

NOTE 20--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 Wisconsin Public Service
and Upper Peninsula Power and the regulated gas utility operations of
Wisconsin Public Service. Our other reportable segments include
WPS Energy Services and WPS Power Development. WPS Energy
Services is a diversified energy supply and services company, and WPS Power
Development is an electric generation asset development company. Nonutility
operations and subsidiaries of WPS Resources not already mentioned are
included in the Other column. The tables below present information for the
respective years pertaining to our operations segmented by lines of business.

|Segments of Business (Millions)                     |                    
|--------------------------------------------------- | -------------------
|                                                    | Regulated Utilities
|2001                                                | ElectricUtility*   
|                                                    |                    
|Income Statement                                    |                    
|Total revenues                                      | $  675.7           
|Depreciation and
      decommissioning              | 66.4               
|Other income
      (expense)                        | 14.5               
|Interest expense                                    | 28.3               
|Provision for
      income taxes                    | 31.6               
|Income available for common
      shareholders      | 58.8               
|Balance Sheet                                       |                    
|Total assets                                        | 1,356.8            
|Cash expenditures
      for long-lived
      assets | 175.8              

* Includes only utility operations.
Nonutility operations are included in the Other column.

|Segments of Business (Millions)                     |                    
|--------------------------------------------------- | -------------------
|                                                    | Regulated Utilities
|2000                                                | ElectricUtility*   
|                                                    |                    
|Income Statement                                    |                    
|Total revenues                                      | $  642.7           
|Depreciation and
      decommissioning              | 82.4               
|Other income
      (expense)                        | 18.1               
|Interest expense                                    | 27.3               
|Provision for
      income taxes                    | 33.6               
|Income available for common
      shareholders      | 60.7               
|Balance Sheet                                       |                    
|Total assets                                        | 1,239.0            
|Cash expenditures
      for long-lived
      assets | 138.0              

* Includes only utility operations.
Nonutility operations are included in the Other column.



|Segments of Business (Millions)                      |                    
|---------------------------------------------------- | -------------------
|                                                     | Regulated Utilities
|1999                                                 | ElectricUtility*   
|                                                     |                    
|Income Statement                                     |                    
|Total revenues                                       | $  590.4           
|Depreciation and
      decommissioning               | 70.9               
|Other income
      (expense)                         | 7.2                
|Interest expense                                     | 24.0               
|Provision for
      income taxes                     | 32.0               
|Income available
      for common
      shareholders | 56.1               
|Balance Sheet                                        |                    
|Total assets                                         | 1,247.9            
|Cash expenditures
      for long-lived
      assets  | 120.9              

* Includes only utility operations.
Nonutility operations are included in the Other column.

NOTE 21--QUARTERLY FINANCIAL INFORMATION (Unaudited)

|(Millions, except for share amounts)           | Three Months Ended
|---------------------------------------------- | ------------------
|                                               | 2001              
|                                               | March             
|Operating revenues                             | $997.4            
|Net income                                     | $ 23.6            
|Average number of shares of common
      stock | 26.5              
|Basic earnings per share *                     | $0.89             
|Diluted earnings per share *                   | $0.89             
|                                               |                   
|                                               | 2000              
|                                               | March             
|Operating revenues                             | $398.8            
|Net income                                     | $ 29.2            
|Average number of shares of common
      stock | 26.6              
|Basic earnings per share                       | $1.10             
|Diluted earnings per share                     | $1.10             

Because of various factors, which affect
the utility business, the quarterly results of operations are not necessarily
comparable.

* Earnings per share for the individual
quarters of 2001 do not total the year ended 2001 earnings per share amount
because of the significant changes to the average number of shares outstanding
throughout the year.

NOTE 22--NEW ACCOUNTING STANDARDS

Effective January 1, 2002, WPS Resources adopted
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets." Under Statement No. 142 amortization of
goodwill is no longer allowed. Instead, an assessment of fair-value will be used
to test for impairment of goodwill on an annual basis or when circumstances
indicate a possible impairment.

Most of the goodwill at WPS Resources is related to
the Wisconsin Fuel and Light acquisition. In accordance with the requirements of
the statement, we prepared an evaluation of the fair market value of the gas
utility business segment to assess the potential impairment of the goodwill
balance. Based on the estimated fair value, an impairment charge was not
required at January 1, 2002.

In June 2001, the Financial Accounting Standards Board
finalized Statement of Financial Accounting Standards No. 143, "Accounting
for Asset Retirement Obligations." This statement applies to all entities
with legal obligations associated with the retirement of a tangible long-lived
asset that result from the acquisition, construction, or development and/or
normal operation of a long-lived asset. An asset retirement obligation should be
recognized when it meets the definition of a liability and be measured at fair
value. We are still analyzing the impact this statement will have on
WPS Resources and its subsidiaries. It will be effective for WPS Resources
on January 1, 2003.

Effective January 1, 2002, we adopted Statement of
Financial Accounting Standards No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets." The statement intends to unify the
accounting for long-lived assets to be disposed of, based on the framework
established by Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." The statement didn't have a significant impact on WPS Resources.

ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA

WPS RESOURCES CORPORATION

F. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To
the Board of Directors of WPS Resources Corporation:

We have audited the accompanying consolidated balance sheets of
WPS Resources Corporation (a Wisconsin corporation) and subsidiaries as of
December 31, 2001 and 2000, and the related consolidated statements of
income, shareholders' equity, and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the 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, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of WPS Resources
Corporation and subsidiaries as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States. >



> /s/ Arthur Andersen LLP
>           
>           Arthur Andersen LLP





Milwaukee, Wisconsin
January 28, 2002



|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                      
|-----------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                               
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                           
|                                                                                                                                               
|G. CONSOLIDATED
      STATEMENTS OF INCOME AND COMPREHENSIVE 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                                                                                                                             
|Income before interest expense                                                                                                                 
|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                                                                                                                       
|Other comprehensive income                                                                                                                     
|Comprehensive income                                                                                                                           
|                                                                                                                                               
|The accompanying WPS Resources Corporation and Wisconsin Public Service
      Corporation notes are an integral
      part of these statements.



|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                
|-----------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                         
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                     
|                                                                                                                                         
|H. CONSOLIDATED
      BALANCE SHEETS                                                                                                     
|                                                                                                                                         
|                                                                                                                                         
|Assets                                                                                                                                   
|At December 31 (Millions)                                                                                                                
|Utility plant                                                                                                                            
|Electric                                                                                                                                 
|Gas                                                                                                                                      
|Property under capital lease                                                                                                             
|Total                                                                                                                                    
|Less - Accumulated depreciation and decommissioning                                                                                      
|Total                                                                                                                                    
|Nuclear decommissioning trusts                                                                                                           
|Construction in progress                                                                                                                 
|Nuclear fuel, less accumulated amortization                                                                                              
|Net utility plant                                                                                                                        
|                                                                                                                                         
|Current assets                                                                                                                           
|Cash and equivalents                                                                                                                     
|Customer and other receivables, net of reserves of $3.5                                                                                  
|at December 31, 2001 and $3.4 at December 31, 2000                                                                                       
|Accrued utility revenues                                                                                                                 
|Fossil fuel, at average cost                                                                                                             
|Gas in storage, at average cost                                                                                                          
|Materials and supplies, at average cost                                                                                                  
|Assets from risk management                                                                                                              
|Prepayments and other                                                                                                                    
|Total current assets                                                                                                                     
|                                                                                                                                         
|Regulatory assets                                                                                                                        
|Nonutility plant, net of accumulated depreciation of $0.2                                                                                
|at December 31, 2001 and $0.2 at December 31, 2000                                                                                       
|Pension assets                                                                                                                           
|Goodwill                                                                                                                                 
|Investments and other assets                                                                                                             
|Total                                                                                                                                    
|                                                                                                                                         
|                                                                                                                                         
|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                
|                                                                                                                                         
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                     
|                                                                                                                                         
|H. CONSOLIDATED
      BALANCE SHEETS (CONTINUED)                                                                                         
|                                                                                                                                         
|                                                                                                                                         
|Capitalization and Liabilities                                                                                                           
|At December 31 (Millions)                                                                                                                
|Capitalization                                                                                                                           
|Common stock equity                                                                                                                      
|Preferred stock with no mandatory redemption                                                                                             
|Capital lease obligation                                                                                                                 
|Long-term debt to parent                                                                                                                 
|Long-term debt                                                                                                                           
|Total capitalization                                                                                                                     
|                                                                                                                                         
|Current liabilities                                                                                                                      
|Current portion of long-term debt and capital lease obligation                                                                           
|Note payable                                                                                                                             
|Commercial paper                                                                                                                         
|Accounts payable                                                                                                                         
|Accrued interest and taxes                                                                                                               
|Other                                                                                                                                    
|Total current liabilities                                                                                                                
|                                                                                                                                         
|Long-term liabilities and deferred credits                                                                                               
|Accumulated deferred income taxes                                                                                                        
|Accumulated deferred investment tax credits                                                                                              
|Regulatory liabilities                                                                                                                   
|Environmental remediation liability                                                                                                      
|Postretirement liabilities                                                                                                               
|Other long-term liabilities                                                                                                              
|Total long-term liabilities and deferred credits                                                                                         
|                                                                                                                                         
|Commitments and contingencies (See Note 14)                                                                                              
|Total                                                                                                                                    
|                                                                                                                                         
|The accompanying WPS Resources Corporation and Wisconsin Public Service
      Corporation notes are an integral part of these statements.
|                                                                                                                                         

|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                                                                                                                 
|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%       132,000                                                                                                                      
|5.04%        30,000                                                                                                                      
|5.08%        50,000                                                                                                                      
|6.76%       150,000                                                                                                                      
|6.88%       150,000                                                                                                                      
|Total preferred stock                                                                                                                    
|                                                                                                                                         
|Capital lease obligation                                                                                                                 
|Current portion                                                                                                                          
|Net capital lease obligation                                                                                                             
|                                                                                                                                         
|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                                                                                                                       
|------    --------                                                                                                                       
|7.30%       2002                                                                                                                         
|6.80%       2003                                                                                                                         
|6.125%      2005                                                                                                                         
|6.90%       2013                                                                                                                         
|8.80%       2021                                                                                                                         
|7.125%      2023                                                                                                                         
|Senior notes                                                                                                                             
|Series    Year Due                                                                                                                       
|------    --------                                                                                                                       
|6.08%       2028                                                                                                                         
|6.125%      2011                                                                                                                         
|Total                                                                                                                                    
|Unamortized discount and premium on bonds, net                                                                                           
|Total first mortgage bonds                                                                                                               
|Other long-term debt                                                                                                                     
|Current portion                                                                                                                          
|Total long-term debt                                                                                                                     
|Total capitalization                                                                                                                     
|                                                                                                                                         
|The accompanying WPS Resources Corporation and Wisconsin Public Service
      Corporation notes are an integral part of these statements.
|                                                                                                                                         

|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                
|-----------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                         
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                     
|                                                                                                                                         
|J. CONSOLIDATED
      STATEMENTS OF CASH FLOWS                                                                                           
|                                                                                                                                         
|Year Ended December 31 (Millions)                                                                                                        
|                                                                                                                                         
|Cash flows from operating activities:                                                                                                    
|Net income                                                                                                                               
|                                                                                                                                         
|Adjustments to reconcile net income to net cash from                                                                                     
|operating activities -                                                                                                                   
|Depreciation and decommissioning                                                                                                         
|Gain on nuclear decommissioning trust                                                                                                    
|Amortization of nuclear fuel and other                                                                                                   
|Deferred income taxes                                                                                                                    
|Investment tax credit restored                                                                                                           
|Allowance for equity funds used during construction                                                                                      
|Equity income, net of minority interest                                                                                                  
|Gain on sale of property                                                                                                                 
|Pension income                                                                                                                           
|Postretirement funding                                                                                                                   
|Other, net                                                                                                                               
|Changes in -                                                                                                                             
|Customer and other receivables                                                                                                           
|Accrued utility revenues                                                                                                                 
|Fossil fuel inventory                                                                                                                    
|Gas in storage                                                                                                                           
|Miscellaneous assets                                                                                                                     
|Accounts payable                                                                                                                         
|Miscellaneous current and accrued liabilities                                                                                            
|Accrued taxes                                                                                                                            
|Net cash provided by operating activities                                                                                                
|                                                                                                                                         
|Cash flows from investing activities:                                                                                                    
|Construction of utility plant and nuclear fuel expenditures                                                                              
|Decommissioning funding                                                                                                                  
|Purchase of other property and equipment                                                                                                 
|Proceeds from sale of property                                                                                                           
|Return of capital on equity method investment                                                                                            
|Dividends received from equity method investment                                                                                         
|Other                                                                                                                                    
|Net cash used for investing activities                                                                                                   
|                                                                                                                                         
|Cash flows from financing activities:                                                                                                    
|Payments of long-term debt and capital lease                                                                                             
|Issuance of senior notes                                                                                                                 
|Short-term debt - net                                                                                                                    
|Redemption of obligations acquired in purchase business combination                                                                      
|Equity contributions from parent                                                                                                         
|Preferred stock dividends                                                                                                                
|Dividends to parent                                                                                                                      
|Equity withdrawal by parent                                                                                                              
|Other                                                                                                                                    
|Net cash provided by (used for) financing activities                                                                                     
|Net increase in cash and equivalents                                                                                                     
|Cash and equivalents at beginning of year                                                                                                
|Cash and equivalents at end of year                                                                                                      
|                                                                                                                                         
|The accompanying WPS Resources Corporation and Wisconsin Public Service
      Corporation notes are an integral part of these statements.
|                                                                                                                                         

|ITEM 8. FINANCIAL STATEMENTS AND
      SUPPLEMENTARY DATA                                                                                 |        |       
|----------------------------------------------------------------------------------------------------------------------------------------- | ------ | ------
|                                                                                                                                          |        |       
|WISCONSIN PUBLIC SERVICE CORPORATION                                                                                                      |        |       
|                                                                                                                                          |        |       
|K. CONSOLIDATED
      STATEMENTS OF RETAINED EARNINGS                                                                                    
|                                                                                                                                          |        |       
|                                                                                                                                          |        |       
|                                                                                                                                          |        |       
|Year Ended December 31 (Millions)                                                                                                         | 2001   | 2000  
|                                                                                                                                          |        |       
|Balance at beginning of year                                                                                                              | $229.3 | $263.9
|Add - Net income                                                                                                                          | 83.7   | 73.5  
|                                                                                                                                          | 313.0  | 337.4 
|Deduct -                                                                                                                                  |        |       
|Cash dividends declared on preferred stock                                                                                                |        |       
|5.00% Series ($5.00 per share)                                                                                                            | 0.7    | 0.7   
|5.04% Series ($5.04 per share)                                                                                                            | 0.1    | 0.1   
|5.08% Series ($5.08 per share)                                                                                                            | 0.3    | 0.3   
|6.76% Series ($6.76 per share)                                                                                                            | 1.0    | 1.0   
|6.88% Series ($6.88 per share)                                                                                                            | 1.0    | 1.0   
|Dividend to parent                                                                                                                        | 59.5   | 105.0 
|                                                                                                                                          | 62.6   | 108.1 
|Balance at end of year                                                                                                                    | $250.4 | $229.3
|                                                                                                                                          |        |       
|The accompanying WPS Resources Corporation and Wisconsin Public Service
      Corporation notes are an integral part of these statements.
|                                                                                                                                          |        |       



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WISCONSIN PUBLIC SERVICE
CORPORATION

L. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following are supplemental notes to the
WPS Resources Corporation financial statements and should be read in
conjunction with WPS Resources consolidated financial statements and the
related notes.

NOTE 1--CASH AND EQUIVALENTS

We consider short-term investments with
an original maturity of three months or less to be cash equivalents.

Cash paid for taxes during 2001, 2000, and 1999 was
$43.0 million, $45.2 million, and $44.4 million, respectively.
During 2001, cash paid for interest totaled $23.6 million. For 2000 and
1999, $24.4 million and $22.9 million were paid for interest,
respectively.

The following noncash investing and financing activities
occurred in 2001:

> 1. An investment in American Transmission Company, LLC was made with the
>   exchange of $71.1 million of transmission assets net of accumulated
>   depreciation for an approximate 11% equity interest in American Transmission
>   Company and a $32.2 million return of capital as shown on the Consolidated
>   Statements of Cash Flows.
>   2. As a result of the merger of Wisconsin Fuel and Light into Wisconsin
>   Public Service, Wisconsin Public Service acquired the assets and assumed
>   certain liabilities of Wisconsin Fuel and Light Company. In connection with
>   the merger WPS Resources contributed $54.8 million of additional capital
>   to Wisconsin Public Service.

There were no noncash investing and financing activities
during 2000.

The following noncash investing and financing activities
occurred in 1999:

> 1. A capital lease obligation of $74.1 million was incurred when
>   Wisconsin Public Service entered into a long-term lease agreement for utility
>   plant assets.
>   2. Net cash surrender value of a key executive life insurance policy of
>   $11.8 million was transferred from Wisconsin Public Service to
>   WPS Resources.
>   3. Nonutility assets of $0.1 million were transferred from Wisconsin
>   Public Service to WPS Resources.

NOTE 2--FAIR VALUE OF FINANCIAL INSTRUMENTS



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 those investments and
obligations.

Nuclear Decommissioning Trusts: The value of nuclear
decommissioning trust investments included in utility plant is recorded at
market value, net of taxes payable on unrealized gains and losses. The amount
recorded in nuclear decommissioning trusts - other assets represents income
taxes payable on unrealized gains and losses.

Long-Term Debt and Preferred Stock: The fair value 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: All derivatives are recorded
at their fair value in accordance with Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended. Refer to Note 4 of WPS Resources Notes to
Consolidated Financial Statements for more information.

The estimated fair values of Wisconsin Public Service's
financial instruments as of December 31 were:

|(Millions)                                                | 2001            | 2000     
|--------------------------------------------------------- | --------------- | ---------
|                                                          | Carrying Amount | FairValue
|                                                          |                 |          
|Cash and cash equivalents                                 | $  9.9          | $  9.9   
|Energy conservation loans                                 | 2.6             | 2.6      
|Nuclear decommissioning trusts -
      utility plant      | 311.3           | 311.3    
|Nuclear decommissioning trusts -
      other assets       | 22.4            | 22.4     
|Notes payable                                             | 10.0            | 10.0     
|Commercial paper                                          | -               | -        
|Long-term debt (excluding capital
      lease obligation) | 381.1           | 377.6    
|Preferred stock                                           | 51.2            | 43.9     
|Risk management activities                                | 5.0             | 5.0      



NOTE 3--REGULATORY ASSETS AND LIABILITIES





|(Millions)                                                           | 2001  | 2000 
|-------------------------------------------------------------------- | ----- | -----
|                                                                     |       |      
|Regulatory assets                                                    |       |      
|Demand-side management expenditures                                  | $ 9.6 | $20.7
|Environmental remediation costs  (net of insurance
      recoveries) | 38.5  | 29.0 
|Funding for enrichment facilities                                    | 3.6   | 4.1  
|Pension curtailment loss                                             | 8.1   | 8.1  
|Deferred nuclear costs                                               | 9.9   | -    
|Unamortized loss on debt                                             | 4.5   | 1.4  
|Deferred American Transmission Company costs                         | 4.4   | 0.5  
|Other                                                                | 10.4  | 8.6  
|Total                                                                | $89.0 | $72.4
|                                                                     |       |      
|Regulatory liabilities                                               |       |      
|Income tax related items                                             | $18.4 | $17.3
|Unrealized gain on decommissioning trust                             | 22.4  | 18.3 
|Pension settlement gain                                              | 11.8  | -    
|Deferred gain on emission allowance sales                            | 6.0   | 2.9  
|Natural gas derivatives                                              | 5.0   | -    
|Interest from tax refunds                                            | 5.0   | 3.8  
|Other                                                                | 2.1   | 0.4  
|Total                                                                | $70.7 | $42.7



NOTE 4--COMMON EQUITY

Wisconsin Public Service is restricted by a
Public Service Commission of Wisconsin order to pay normal common stock
dividends of no more than 109% of the previous year's common stock dividend
without the Public Service Commission of Wisconsin'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
Wisconsin Public Service from making loans to or guaranteeing
obligations of WPS Resources or its other subsidiaries.

During 2001, Wisconsin Public Service received equity
contributions of $95.0 million from WPS Resources.
Wisconsin Public Service paid common dividends of $59.5 million
to WPS Resources in 2001. Also during 2001, WPS Resources received a
return of capital from Wisconsin Public Service of $35.0 million. The
equity contributions, common dividends, and returns of capital allowed Wisconsin
Public Service's average equity capitalization ratio for ratemaking to remain
near target levels as established by the Public Service Commission of
Wisconsin in its most recent rate order.

NOTE 5--LONG-TERM DEBT

At Wisconsin Public Service, utility plant
assets secure first mortgage bonds. In August 2001, Wisconsin Public Service
retired $53.1 million of 8.80% first mortgage bonds that would have matured
in 2021.

Wisconsin Public Service issued $150.0 million of
6.125% senior notes on August 14, 2001, which will mature in 2011.
These notes are secured by a pledge of first mortgage bonds and become unsecured
if Wisconsin Public Service retires all of its outstanding first mortgage bonds.

At December 31, 2001, Wisconsin Public Service was in
compliance with all covenants relating to outstanding debt. A schedule of all
principal debt payment amounts, including bond maturities and excluding capital
lease payments is as follows:



|Year ending December 31 (Millions) |       
|---------------------------------- | ------
|                                   |       
|2002                               | $ 50.0
|2003                               | 50.0  
|2004                               | -     
|2005                               | 9.1   
|2006                               | -     
|Later years                        | 272.0 
|Total payments                     | $381.1



NOTE 6--SHORT-TERM DEBT AND LINES OF CREDIT

To provide short-term borrowing flexibility and security
for commercial paper outstanding, Wisconsin Public Service maintains bank lines
of credit. These lines of credit require a fee.

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

|(Millions, except for percentages)                          | 2001  | 2000  | 1999 
|----------------------------------------------------------- | ----- | ----- | -----
|                                                            |       |       |      
|As of end of year                                           |       |       |      
|Commercial paper outstanding                                | $   - | $60.0 | $40.0
|Average discount rate on outstanding
      commercial paper | -%    | 6.62% | 6.50%
|Short-term notes payable outstanding                        | $10.0 | $10.0 | $10.0
|Average interest rate on short-term
      notes payable     | 2.06% | 6.73% | 6.43%
|Available (unused) lines of credit                          | $55.0 | $65.0 | $30.0
|                                                            |       |       |      
|For the year                                                |       |       |      
|Maximum amount of short-term debt                           | $90.0 | $73.0 | $54.0
|Average amount of short-term debt                           | $47.3 | $44.8 | $29.0
|Average interest rate on short-term
      debt              | 4.41% | 6.51% | 5.27%



NOTE 7--INCOME TAXES

Deferred income taxes are provided for temporary
differences in the recognition of certain assets or liabilities for tax and
financial reporting purposes. The principal components of Wisconsin Public
Service's deferred tax assets and liabilities recognized in the balance sheet as
of December 31 are as follows:



|(Millions)                   | 2001   | 2000  
|---------------------------- | ------ | ------
|                             |        |       
|Deferred tax assets          |        |       
|Plant related                | $ 62.8 | $ 78.5
|Employee benefits            | 33.3   | 31.0  
|Regulatory deferrals         | 5.7    | 4.7   
|Other                        | 0.3    | 0.5   
|Total                        | $102.1 | $114.7
|                             |        |       
|Deferred tax liabilities     |        |       
|Plant related                | $165.1 | $183.4
|Employee benefits            | 29.9   | 31.3  
|Regulatory deferrals         | 16.2   | 8.6   
|Other                        | 7.5    | 0.4   
|Total                        | $218.7 | $223.7
|                             |        |       
|Net deferred tax liabilities | $116.6 | $109.0



|(Millions, except for percentages)                                            | 2001  | 2000   | 1999 
|----------------------------------------------------------------------------- | ----- | ------ | -----
|                                                                              | Rate  | Amount | Rate 
|                                                                              |       |        |      
|Statutory federal income tax                                                  | 35.0% | $44.6  | 35.0%
|State income taxes, net                                                       | 5.1   | 6.4    | 5.5  
|Investment tax credit restored                                                | (1.2) | (1.5)  | (1.4)
|Rate
      difference on reversal of
        income tax temporary differences | (1.6) | (2.0)  | (1.3)
|Other differences, net                                                        | (2.9) | (3.6)  | (2.5)
|Effective income tax                                                          | 34.4% | $43.9  | 35.3%
|                                                                              |       |        |      
|Current provision                                                             |       |        |      
|Federal                                                                       |       | $33.3  |      
|State                                                                         |       | 7.4    |      
|Total current provision                                                       |       | 40.8   |      
|Deferred benefit                                                              |       | 4.7    |      
|Investment tax credit restored, net                                           |       | (1.5)  |      
|Total income tax expense                                                      |       | $43.9  |      

Wisconsin Public Service is refunding taxes for which
deferred taxes were recorded in prior years at rates greater than current rates
to customers prospectively as the temporary differences reverse. The regulatory
liability for these refunds totaled $18.4 million as of
December 31, 2001 and $17.3 million as of December 31, 2000.

NOTE 8--MINORITY INTEREST



NOTE 9--SEGMENTS OF BUSINESS

Wisconsin Public Service 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 Wisconsin Public Service
segmented by lines of business.

|Segments of Business (Millions)         |                    
|--------------------------------------- | -------------------
|                                        | Regulated Utilities
|2001                                    | ElectricUtility    
|                                        |                    
|Income Statement                        |                    
|Operating revenues                      | $  610.7           
|Depreciation and decommissioning        | 60.9               
|Other income                            | 13.2               
|Interest expense                        | 24.0               
|Income taxes                            | 30.7               
|Earnings on common stock                | 57.9               
|Balance Sheet                           |                    
|Total assets                            | 1,245.3            
|Cash expenditures for long-lived assets | 163.7              

* Nonutility operations are included in the
Other column.



|Segments of Business (Millions)          |                    
|---------------------------------------- | -------------------
|                                         | Regulated Utilities
|2000                                     | ElectricUtility    
|                                         |                    
|Income Statement                         |                    
|Operating revenues                       | $  576.0           
|Depreciation and decommissioning         | 76.4               
|Other income                             | 18.1               
|Interest expense                         | 22.9               
|Income taxes                             | 32.7               
|Earnings on common stock                 | 58.2               
|Balance Sheet                            |                    
|Total assets                             | 1,112.4            
|Cash expenditures for long-lived  assets | 129.0              

* Nonutility operations are included in the
Other column.



|Segments of Business (Millions)          |                    
|---------------------------------------- | -------------------
|                                         | Regulated Utilities
|1999                                     | ElectricUtility    
|                                         |                    
|                                         |                    
|Income Statement                         |                    
|Operating revenues                       | $  527.9           
|Depreciation and decommissioning         | 65.0               
|Other income                             | 6.5                
|Interest expense                         | 19.7               
|Income taxes                             | 30.7               
|Earnings on common stock                 | 54.1               
|Balance Sheet                            |                    
|Total assets                             | 1,122.7            
|Cash expenditures for long-lived  assets | 114.0              

* Nonutility operations are included in the
Other column.

NOTE 10--QUARTERLY FINANCIAL INFORMATION (Unaudited)

|(Millions)               | Three Months Ended
|------------------------ | ------------------
|                         | 2001              
|                         | March             
|                         |                   
|Operating revenues       | $314.8            
|Earnings on common stock | $ 24.5            
|                         |                   
|                         | 2000              
|                         | March             
|                         |                   
|Operating revenues       | $217.1            
|Earnings on common stock | $ 27.3            

Because of various factors, which affect
the utility business, the quarterly results of operations are not necessarily
comparable.

NOTE 11--RELATED PARTY TRANSACTIONS

Wisconsin Public Service enters into transactions with
Upper Peninsula Power and WPS Energy Services, which are both wholly-owned
subsidiaries of WPS Resources. For 2001, Wisconsin Public Service recorded
revenue of $21.4 million from electric sales to Upper Peninsula Power and
$2.5 million from gas sales to WPS Energy Services. Wisconsin Public
Service also purchased $5.2 million of gas from WPS Energy Services.
During 2000, Wisconsin Public Service recorded revenue of $20.6 million
from electric sales to Upper Peninsula Power and $0.9 million from gas
sales to WPS Energy Services. In addition, Wisconsin Public Service
purchased $5.7 million of gas from WPS Energy Services. During 1999,
Wisconsin Public Service recorded revenue of $8.3 million from electric
sales to Upper Peninsula Power and $2.8 million from gas sales to
WPS Energy Services. Wisconsin Public Service also purchased
$1.5 million of gas from WPS Energy Services. Included in the accounts
receivable balance at December 31, 2001 are amounts due from related
parties under the relationships described.





ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

WISCONSIN PUBLIC SERVICE CORPORATION

M. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS



To the Board of Directors of Wisconsin Public Service Corporation:

We have audited the accompanying consolidated balance
sheets and consolidated statements of capitalization of Wisconsin Public Service
Corporation (a Wisconsin corporation) and subsidiaries as of December 31,
2001 and 2000, and the related consolidated statements of income, comprehensive
income, retained earnings and cash flows for each of the three years in the
period ended December 31, 2001. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing
standards generally accepted in the 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, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Wisconsin Public Service Corporation and subsidiaries as of December
31, 2001 and 2000, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 2001, in conformity
with accounting principles generally accepted in the United States.



> /s/ Arthur Andersen LLP
>             
>             Arthur Andersen LLP



Milwaukee, Wisconsin
January 28, 2002



ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.



PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors of WPS Resources
and those Class B directors seeking election can be found in our March 28,
2002 Proxy Statement. Such information is incorporated by reference as if fully
set forth herein.

Information regarding our executive officers, which is not
included in our Proxy Statement, can be found in this document in Item 4A.



ITEM 11. EXECUTIVE COMPENSATION

WPS Resources Corporation

Information required under Item 11 regarding compensation
paid by WPS Resources to its Named Executive Officers can be found in our
March 28, 2002 Proxy Statement. 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 2001.

Wisconsin Public Service Corporation

Summary Compensation Table

This table shows cash and other compensation paid to or
earned by each of the Named Executive Officers for the last three fiscal years.
Named Executive Officers include the Chief Executive Officer and the next four
most highly compensated executive officers for 2001. Compensation amounts for
those Wisconsin Public Service 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                            
|(a)                                                                 | (b)                        | (c)                                
|Name andTitle                                                       | Year                       | Salary                             
|                                                                    |                            | ($) (1)                            
|Larry L. Weyers
      Chairman,
      and CEO                       | 2001
      2000
      1999 | 454,795
      346,066
      404,167
|Patrick D. Schrickel
      President and Chief Operating Officer    | 2001
      2000
      1999 | 275,500
      271,018
      253,282
|Ralph G. Baeten
      Senior Vice President - Finance and Treasurer | 2001
      2000
      1999 | 161,731
      142,228
      136,620
|Thomas P. Meinz
      Senior Vice President - Public Affairs        | 2001
      2000
      1999 | 136,006
      130,032
      121,918
|Bernard J. Treml
      Vice President - Human Resources             | 2001
      2000
      1999 | 134,446
      141,721
      135,801

> 

(1) In addition to base salary, these amounts include Elective Deferred
Compensation in the Reserve Account.

(2) These amounts reflect Above-Market Earnings on Elective Deferred
Compensation. Perquisites for the Chief Executive Officer and the four 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, 2001, the closing stock price of
WPS Resources common stock was $36.55. Based on this valuation the
performance shares have a value at year end of $889,993 for Larry L. Weyers,
$157,348 for Patrick D. Schrickel, $54,460 for Ralph G. Baeten,  $129,131
for Thomas P. Meinz, and $70,578 for Bernard J. Treml.

(4) All Other Compensation as reported in the table above is:

> 



|Name and Title                                                      | Year                       | Contributions to Employee Stock Ownership Plan($) | Above Market Earnings on Mandatory Deferred Compensation($) | Elective Deferred Compensation($) 
|------------------------------------------------------------------- | -------------------------- | ------------------------------------------------- | ----------------------------------------------------------- | ----------------------------------
|Larry L. Weyers
      Director,
      Chairman and CEO              | 2001
      2000
      1999 | 8,979
      3,122
      2,496                     | 6,962
      5,261
      3,475                               | 44,136
      337,331
      124,127
|                                                                    |                            |                                                   |                                                             |                                   
|Patrick D. Schrickel
      President and Chief Operating Officer    | 2001
      2000
      1999 | 9,052
      3,138
      1,377                     | 8,481
      6,420
      4,241                               | 14,500
      38,540
      31,039  
|                                                                    |                            |                                                   |                                                             |                                   
|Ralph G. Baeten
      Senior Vice President - Finance and Treasurer | 2001
      2000
      1999 | 8,024
      2,525
      2,292                     | 2,732
      2,065
      1,364                               | 87,644
      43,493
      33,550  
|                                                                    |                            |                                                   |                                                             |                                   
|Thomas P. Meinz
      Senior Vice President - Public Affairs        | 2001
      2000
      1999 | 7,417
      2,381
      2,164                     | 2,931
      2,214
      1,463                               | 89,404
      53,500
      39,328  
|                                                                    |                            |                                                   |                                                             |                                   
|Bernard J. Treml
      Vice President - Human Resources             | 2001
      2000
      1999 | 8,932
      2,838
      2,285                     | 3,112
      2,351
      1,554                               | 79,974
      12,000
      12,000  

Individual employment and severance agreements exist with
each of the officers of Wisconsin Public Service Corporation listed in the
Summary Compensation Table above. 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.Generally, total termination payments provided are not to exceed the
present value of 2.99 times the executive's average annual salary including
annual bonuses for the five years immediately preceding a change of control.
Certain executives, including some of the Named Executive Officers, may receive
termination payments in excess of 2.99 times average annual salary. The
termination payments replace all other severance payments to which the executive
may be entitled under current severance agreements.



Option Grants to Named Executives in Last Fiscal Year

|Individual Grants   
|--------------------
|Name                
|(a)                 
|Larry L. Weyers     
|                    
|Patrick D. Schrickel
|                    
|Ralph G. Baeten     
|                    
|Thomas P. Meinz     
|                    
|Bernard J. Treml    

All options, for WPS Resources common stock, reported
above will vest at a rate of 25% per year beginning on December 13, 2002 and
ending on December 13, 2005, with the exception of the 4,372 options granted to
Ralph G. Baeten. These options will vest at a rate of 25% per year
beginning on July 12, 2002 and ending on July 12, 2005. The year-end closing
price of WPS Resources stock was $36.55. There were no stock appreciation
rights granted to any employee in 2001.

The grant date present value in column (f) above is based
on option values of $3.22 per option granted on December 13, 2001 and $3.38 per
option granted on July 12, 2001. These values were calculated using the standard
Black-Scholes Model. For purposes of determining the value of these options the
following assumptions were made:



|Option Value             | $3.22    | $3.38   
|------------------------ | -------- | --------
|Annual dividend yield    | 6.60%    | 6.58%   
|Volatility               | 20.19%   | 20.93%  
|Risk free rate of return | 5.62%    | 5.54%   
|Time of exercise         | 10 years | 10 years

The annual dividend yield was based on a dividend of $2.10
per share and the closing stock price on the date of grant. 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 Options in Last Fiscal Year and Fiscal Year End Option Values

|                     |                                 |                   | Number of securities underlying unexercised options/SARs
      at fiscal year end | Value of unexercised
      in-the-money options/SARs at fiscal year end
|-------------------- | ------------------------------- | ----------------- | --------------------------------------------------------------------------------- | -----------------------------------------------------------------------
|                     |                                 |                   | (#)                                                                               | ($)                                                                    
|Name                 | Shares acquired on exercise (#) | Value Realized($) | Exercisable/Unexercisable                                                         | Exercisable/Unexercisable                                              
|(a)                  | (b)                             | (c)               | (d)                                                                               | (e)                                                                    
|Larry L. Weyers      | 0                               | 0                 | 86,710/210,246                                                                    | 487,578/766,779                                                        
|Patrick D. Schrickel | 14,000                          | 71,750            | 6,888/56,333                                                                      | 12,398/242,961                                                         
|Ralph G. Baeten      | 0                               | 0                 | 7,550/17,334                                                                      | 42,840/63,595                                                          
|Thomas P. Meinz      | 0                               | 0                 | 13,819/31,508                                                                     | 78,499/118,293                                                         
|Bernard J. Treml     | 0                               | 0                 | 12,550/22,197                                                                     | 76,215/97,901                                                          

There were no SARs granted to any employees.

Performance
Share (Long Term Incentive Plan) Awards

|Long Term
      Incentive Plans - Awards in Last Fiscal Year
|------------------------------------------------------------
|Name                                                        
|Threshold($ or #)                                           
|(a)                                                         
|Larry
      L. Weyers                                       
|2001 Incentive                                              
|2002 Incentive                                              
|Patrick
      D. Schrickel                                  
|2001 Incentive                                              
|2002
      Incentive                                        
|Ralph
      G. Baeten                                       
|2001 Incentive                                              
|2002 Incentive                                              
|Thomas
      P. Meinz                                       
|2001 Incentive                                              
|2002 Incentive                                              
|Bernard J.
      Treml                                      
|2001 Incentive                                              
|2002 Incentive                                              

Pension Compensation for the Named Executive Officers is:

|Name and Title                                                      | 2001 Pension Compensation ($) | Years of Service
|------------------------------------------------------------------- | ----------------------------- | ----------------
|Larry L. Weyers
      Director,
      Chairman and CEO              | 708,669                       | 16              
|Patrick D. Schrickel
      President and Chief Operating Officer    | 392,136                       | 36              
|Ralph G. Baeten
      Senior Vice President - Finance and Treasurer | 218,811                       | 32              
|Thomas P. Meinz
      Senior Vice President - Public Affairs        | 202,935                       | 33              
|Bernard J. Treml
      Vice President - Human Resources             | 198,408                       | 30              

Additional information required under Item 11 regarding
compensation paid by Wisconsin Public Service Corporation to its Chief Executive
Officer and its other executive officers can be found in the WPS Resources
March 28, 2002 Proxy Statement. Such information is incorporated by reference as
if fully set forth herein.



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

WPS Resources Corporation

Information concerning principal securities holders and
the security holdings of our management can be found in our March 28, 2002
Proxy Statement. Such information is incorporated by reference as if fully set
forth herein.

Wisconsin Public Service Corporation

Ownership of Voting Securities

All of the common stock of Wisconsin Public Service is
held by WPS Resources. Information concerning the security holdings of
WPS Resources' management can be found in its March 28, 2002 Proxy
Statement, which is incorporated by reference as if fully set forth herein.
Listed in the following table are the shares of WPS Resources' common stock
owned by the executive officers listed in the Summary Compensation Table and all
directors of Wisconsin Public Service, as well as the number of shares owned by
the directors and officers as a group as of January 1, 2002.

This table indicates the $1 Par Value WPS Resources
Common Stock and Stock Options the officers and directors of Wisconsin Public
Service own as of January 1, 2002. We believe that the following table is an
accurate representation of beneficial owners of more than 5% of any class of our
securities. The table is based upon reports on Schedules 13G filed with the
Securities and Exchange Commission and other information believed to be
reliable.

|                                                                                                  |     | Amount and Nature of Shares Beneficially OwnedJanuary 1, 2002
|------------------------------------------------------------------------------------------------- | --- | -------------------------------------------------------------
|Name and Title                                                                                    |     | Aggregate Number 
      of Shares Beneficially Owned(8)      
|A. Dean Arganbright
      Director                                                                |     | 6,000                                                        
|Michael S. Ariens
      Director                                                                  | (1) | 13,867                                                       
|Richard A. Bemis
      Director                                                                   |     | 11,897                                                       
|Robert C. Gallagher
      Director                                                                |     | 14,511                                                       
|Kathryn M. Hasselblad-Pascale
      Director                                                      | (2) | 8,407                                                        
|James L. Kemerling
      Director                                                                 | (3) | 6,208                                                        
|John C. Meng
      Director                                                                       | (4) | 16,648                                                       
|William F. Protz
      Director                                                                   | (5) | 718,384                                                      
|Larry L. Weyers
      Director
      Chairman, President, and CEO
      WPS Resources Corporation |     | 117,145                                                      
|Patrick D. Schrickel
      Executive Vice President
      WPS Resources Corporation               | (6) | 31,229                                                       
|Ralph G. Baeten
      Senior Vice President - Finance and Treasurer                               |     | 18,522                                                       
|Thomas P. Meinz
      Senior Vice President - Public Affairs                                      |     | 26,056                                                       
|Bernard J. Treml
      Vice President - Human Resources                                           |     | 20,921                                                       
|All 17 directors and officers as a group                                                          | (7) | 1,026,070                                                    

* Less than 1% of WPS Resources outstanding shares of common stock

None of the persons listed beneficially owns shares of any
other class of our equity securities, except Mr. Arganbright's spouse who owns
10 shares of Wisconsin Public Service Preferred Stock 5% Series ($100 par
value).

> (1) Includes 3,535 shares held by M&M Ariens, Inc.
>   (2) Includes 2,187 shares owned by spouse.
>   (3) Includes 800 shares held in an individual retirement account.
>   (4) Includes 12,000 shares held in joint tenancy.
>   (5) Includes 695,363 shares held in two trusts, for which Mr. Protz is the
>   trustee and in which his spouse is a 1/16th beneficiary. As
>   trustee, Mr. Protz controls the voting of the shares and can direct the trust
>   to sell or retain the shares.
>   (6) Includes 200 shares held as custodian for children.
>   (7) Includes 12,387 shares held in joint tenancy and 336 shares held
>   as custodian for children.
>   (8) Aggregate Number of Shares Beneficially Owned includes shares of common
>   stock held in the Employee Stock Ownership Plan and Trust, the Wisconsin
>   Public Service Corporation Deferred Compensation Trust, and all stock options,
>   which are exercisable within six months of December 31, 2001. 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.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

WPS Resources Corporation

There have been no transactions since the beginning of
fiscal year 2001, or any currently proposed transactions, or series of similar
transactions, to which WPS Resources or any of its subsidiaries was or is
to be party to in which the amount exceeds $60,000 and in which any director,
executive officer, any nominee for election as a director, any security holder
owning of record or beneficially more than 5% of the Common Stock of
WPS Resources, or any member of the immediate family of any of the
foregoing persons had or will have a direct material interest.

Wisconsin Public Service Corporation

Wisconsin Public Service both 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 Public Service Commission of Wisconsin. The agreement provides
that Wisconsin Public Service receives payment equal to the higher of its cost
or fair value for services and property and other things of value which
Wisconsin Public Service provides to WPS Resources or its other
nonregulated subsidiaries, and Wisconsin Public Service 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 Wisconsin Public Service. The agreement further provides that any
services, property, or other things of value provided to or from Wisconsin
Public Service 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 Public Service Commission of Wisconsin.

Wisconsin Public Service may through the ordinary course
of business have sales of energy or energy services in excess of $60,000 to a
company in which a Wisconsin Public Service director may have a direct material
interest. All such transactions are at rates required by the various
governmental agencies, which regulate our rates.

Except as noted in the preceding paragraph, there have
been no transactions since the beginning of fiscal year 2001, or any currently
proposed transaction, or series of similar transactions, to which Wisconsin
Public Service or any of its subsidiaries was or is to be party to in which the
amount exceeds $60,000 and in which any director or executive officer, any
nominee for election as a director, any security holder owning of record or
beneficially more than 5% of the common stock of WPS Resources or of
Wisconsin Public Service, or any member of the immediate family of any of the
foregoing persons had or will have a direct material interest.



PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

|(a) | Documents filed as part of this report:                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                              
|(1) | Consolidated Financial Statements included in Part II at Item 8 above:                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                              
|    | Description                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                              
|    | WPS Resources Corporation                                                                                                                                                                                                                                                                                    
|    | Consolidated Statements of Income for the three years ended December
      31, 2001, 2000, and 1999                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Balance Sheets as of December 31, 2001 and 2000                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Statements of Common Shareholder's Equity                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Statements of Cash Flows for the three years ended
      December 31, 2001, 2000, and 1999                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                              
|    | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                              
|    | Report of Independent Public Accountants                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                              
|    | Wisconsin Public Service Corporation                                                                                                                                                                                                                                                                         
|    | Consolidated Statements of Income and Comprehensive Income for the
      three years ended December 31, 2001, 2000, and 1999                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Balance Sheets as of December 31, 2001 and 2000                                                                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Statements of Capitalization as of December 31, 2001 and
      2000                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Statements of Cash Flows for the three years ended
      December 31, 2001, 2000, and 1999                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                              
|    | Consolidated Statements of Retained Earnings for the three years ended
      December 31, 2001, 2000, and 1999                                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                              
|    | Notes to Consolidated Financial Statements                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                              
|    | Report of Independent Public Accountants                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                              
|(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.                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                              
|    | E.                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                              
|(3) | Listing of all exhibits, including those incorporated by reference.                                                                                                                                                                                                                                          



|ExhibitNumber | Description of Documents                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2*            | Asset Purchase Agreement Among Maine Public Service Company, Maine and
      New Brunswick Electrical Power Company, Limited and WPS Power
      Development, Inc. dated as of July 7, 1998. (Incorporated by reference to
      Exhibit 2 to Form 10-K for the year ended December 31, 1998.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2A-1*         | Asset Purchase Agreement By and Among PPL, Inc., PP&L Resources,
      Inc., Lady Jane Collieries, Inc. and Sunbury Holdings, LLC, dated as of
      May 1, 1999. (Incorporated by reference to Exhibit 2A to Form 10K for the
      year ended December 31, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2A-2*         | Asset Sale Agreement Between Sierra Pacific Power Company and
      WPS Northern Nevada, LLC for the Tracy/Pinon Asset Bundle, dated as
      of October 25, 2000. (Incorporated by reference to Exhibit 2A-2 to
      Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2A-3*         | Asset Contribution Agreement between American Transmission Company LLC
      and Wisconsin Electric Power Company, Wisconsin Power and Light Company,
      Wisconsin Public Service Corp, 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 Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2A-4*         | Operating Agreement of American Transmission Company LLC dated as of
      January 1, 2001. (Incorporated by reference to Exhibit 2A-4 to Form
      10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3A-1          | Restated Articles of Incorporation of WPS Resources Corporation.
      (Incorporated by reference to Appendix B to Amendment No. 1 to the
      Company's Registration Statement on Form S-4, filed February 28, 1994
      [Reg. No. 33-52199]).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3A-2          | Articles of Incorporation of Wisconsin Public Service Corporation 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3B-1          | By-Laws of WPS Resources Corporation as in effect April 1,
      2001.  (Incorporated by reference to Exhibit 3B-1 to Form 10-K for
      the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|3B-2          | By-Laws of Wisconsin Public Service Corporation as in effect
      April 1, 2001.  (Incorporated by reference to Exhibit 3B-2 to
      Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4A            | Copy of Rights Agreement, dated December 12, 1996 between
      WPS Resources Corporation and Firstar Trust Company (Incorporated by
      reference to Exhibit 4.1 to Form 8-A filed December 13, 1996 [File
      No.1-11337]).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4B            | Copy of First Mortgage and Deed of Trust, dated as of January 1,
      1941 from Wisconsin Public Service
      Corporation 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). All references to periodic reports are to those of Wisconsin Public
      Service Corporation (File No. 1-3016).
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4C            | Amended and Restated Declaration of Trust of WPS Resources Capital
      Trust I dated as of July 30, 1998 among WPS Resources
      Corporation as sponsor, State Street Bank and Trust Company as
      Administrative Trustee, First Union Trust Company, National Association,
      as Delaware Trustee, and Daniel P. Bittner and Ralph G. Baeten,
      as Administrative Trustees (Incorporated by reference to Exhibit 4.1 to
      Form 8-K filed August 6, 1998) (File No. 1-11337).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4D            | Indenture dated as of July 30, 1998, between WPS Resources
      Corporation and State Street Bank and Trust Company, as trustee
      (Incorporated by reference to Exhibit 4.2 to Form 8-K filed August 6,
      1998); First Supplemental Indenture dated as of July 30, 1998, between
      WPS Resources Corporation and State Street Bank and Trust Company, as
      trustee (Incorporated by reference to Exhibit 4.3 to Form 8-K filed
      August 6, 1998). References to periodic reports are to those of
      WPS Resources Corporation. (File No. 1-11337).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4E            | Trust Preferred Securities Guarantee Agreement dated as of
      July 30, 1998, between WPS Resources Corporation and State
      Street Bank and Trust Company, guarantee trustee (Incorporated by
      reference to Exhibit 4.4 to Form 8-K filed August 6, 1998) (File No.
      1-11337).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4F            | Indenture, dated as of December 1, 1998, between Wisconsin Public
      Service Corporation and 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
      Wisconsin Public Service Corporation and Firstar Bank Milwaukee, N.A.,
      National Association (Incorporated by reference to Exhibit 4C to Form 8-K
      filed December 18, 1998). References to periodic reports are to those of
      Wisconsin Public Service Corporation. (File No. 1-03016).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4G            | First Supplemental Indenture, dated as of November 1, 1999 between
      WPS Resources Corporation and Firstar Bank, National Association and
      Form of 7.00% Note Due November 1, 2009. (Incorporated by reference to
      Exhibit 4A of Form 8-K filed November 12, 1999. (File No. 1-11337)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|4H            | Second Supplemental Indenture, dated as of August 1, 2001 between
      WPS Resources Corporation and Firstar Bank, National Association.
      (Incorporated by reference to Exhibit 4C of Form 8-K filed August 24,
      2001. (File No. 1-03016)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10A           | Copy of Joint Power Supply Agreement among Wisconsin Public Service
      Corporation, 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10B           | Copy of Joint Power Supply Agreement (Exclusive of Exhibits) among
      Wisconsin Public Service Corporation, 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10C           | Settlement and Ownership Transfer Agreement dated September 29, 1998
      between Wisconsin Public Service Corporation and Madison Gas and Electric
      Company (Incorporated by reference to Exhibit 99-2 to Form 8-K/A filed
      March 2, 1999) (File No. 1-03016).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10D-1         | Copy of Basic Generating Agreement, Unit 4, Edgewater Generating
      Station, dated June 5, 1967, between Wisconsin Power and Light Company and
      Wisconsin Public Service Corporation (Incorporated by reference to Exhibit
      4.10 in File No. 2-27308).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10D-2         | Copy of 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 Wisconsin Public
      Service Corporation (Incorporated by reference to Exhibit 10C-1 to
      Form 10-K of Wisconsin Public Service Corporation for the year ended
      December 31, 1983 [File No. 1-3016]).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10D-3         | 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 Form 10-K of Wisconsin Public Service
      Corporation for the year ended December 31, 1988 [File
      No. 1-3016]).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10E           | Copy of revised Agreement for Construction and Operation of Columbia
      Generating Plant among Wisconsin Public Service Corporation, 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).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10G-1         | Copy of Power Purchase Agreement Between De Pere Energy LLC and
      Wisconsin Public Service Corporation dated November 8, 1995 and amended by
      a Letter Agreement dated February 18, 1997. (Incorporated by reference to
      Exhibit 10F-1 to the Form 10-K for the year ended December 31, 1997
      [File No. 1-3016]).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-1         | Copy of Amendment to Key Executive Employment and Severance Agreement
      entered into between WPS Resources Corporation and each of the
      following: Phillip M. Mikulsky, Patrick D. Schrickel, and
      Larry L. Weyers. (Incorporated by reference to Exhibit 10H-1 to Form
      10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-2         | Copy of Amendment to Key Executive Employment and Severance Agreement
      entered into between WPS Resources Corporation and each of the
      following: Diane L. Ford, Richard E. James, Thomas P. Meinz,
      Charles A. Schrock, and Bernard J. Treml. (Incorporated by
      reference to Exhibit 10H-2 to Form 10-K for the year ended
      December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-3         | WPS Resources Corporation Amended and Restated Deferred
      Compensation Plan to be effective January 1, 2001. (Incorporated by
      reference to Exhibit 4 to Form S-8 filed by WPS Resources on October
      22, 2001.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-4         | WPS Resources Corporation 2001 Omnibus Incentive Compensation Plan
      to be effective January 1, 2001. (Incorporated by reference to Exhibit
      10H-4 to Form 10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-5         | WPS Resources Corporation Non-Employee Director Deferred
      Compensation and Deferred Stock Unit Plan to be effective January 1,
      2001. (Incorporated by reference to Exhibit 4 to Form S-8 filed by
      WPS Resources on October 22, 2001.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-6         | WPS Resources Corporation Short-Term Variable Pay Plan effective
      January 1, 1999. (Incorporated by reference to Exhibit 10H-6 to Form 10-K
      for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-7         | Copy of WPS Resources 1999 Stock Option Plan effective May 6, 1999
      (Incorporated by reference to Exhibit 10-2 in the Form 10-Q for the
      quarter ended June 30, 1999, filed August 11, 1999. [File No.
      [1-1337])                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10H-8         | WPS Resources Corporation 1999 Non-Employee Directors Stock Option
      Plan (Incorporated by reference to Exhibit 4.2 in Form S-8
      December 21, 1999. [File No. 333-93193])                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10I-1         | Equity Contribution Agreement Between WPS Resources Corporation
      and WPS Northern Nevada, LLC, dated October 25, 2000 (Incorporated by
      reference to Exhibit 10I-1 to Form 10-K for the year ended
      December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10I-2         | Guaranty Agreement Between WPS Resources Corporation and
      WPS Northern Nevada, LLC, dated October 25, 2000. (Incorporated by
      reference to Exhibit 10I-2 to Form 10-K for the year ended
      December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10I-3*        | Transitional Power Purchase Agreement By and Between Sierra Pacific
      Power Company and WPS Northern Nevada, LLC, dated October 25, 2000.
      (Incorporated by reference to Exhibit 10I-3 to Form 10-K for the year
      ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10J-1         | 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 Form 10-K for
      the year ended December 31, 1999.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10J-2*        | 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 Form
      10-K for the year ended December 31, 2000.)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12            | WPS Resources Corporation Ratio of Earnings to Fixed Charges and
      Ratio of Earnings to Fixed Charges and Preferred Dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|21            | Subsidiaries of the Registrant                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|23            | Consent of Independent Public Accountants                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|24            | Powers of Attorney                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|*             | 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 Securities and Exchange Commission upon request.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|LISTING OF EXHIBITS ATTACHED
|----------------------------
|                            
|Exhibit Number              
|                            
|12                          
|                            
|21                          
|                            
|23                          
|                            
|24                          
|                            
|(b)                         
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            
|                            



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

WPS RESOURCES CORPORATION

and

WISCONSIN PUBLIC SERVICE CORPORATION



(Registrants)





|/s/ L. L. Weyers                                                                                         
|---------------------------------------------------------------------------------------------------------
|L. L. Weyers
      Chairman, President, and
      Chief Executive Officer
      WPS Resources Corporation



Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.

|Signature                     | Title                                    | Date            
|----------------------------- | ---------------------------------------- | ----------------
|                              |                                          |                 
|A. Dean Arganbright           | Director                                 | March 8, 2002   
|Michael S. Ariens             | Director                                 |                 
|Richard A. Bemis              | Director                                 |                 
|Robert C. Gallagher           | Director                                 |                 
|Kathryn M. Hasselblad-Pascale | Director                                 | /s/ L. L. Weyers
|James L. Kemerling            | Director                                 | L. L. Weyers    
|John C. Meng                  | Director                                 | Attorney-in Fact
|William F. Protz              | Director                                 |                 
|                              |                                          |                 
|/s/ L. L. Weyers              | Principal Executive Officer and Director |                 
|L. L. Weyers                  |                                          |                 
|                              |                                          |                 
|                              |                                          |                 
|                              |                                          |                 
|/s/ J. P. O'Leary             | Principal Financial Officer              |                 
|J. P. O'Leary                 |                                          |                 
|                              |                                          |                 
|                              |                                          |                 
|                              |                                          |                 
|/s/ D. L. Ford                | Principal Accounting Officer             |                 
|D. L. Ford                    |                                          |                 





SCHEDULE I - CONDENSED
PARENT COMPANY FINANCIAL STATEMENTS
WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)

A. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SCHEDULE I - CONDENSED PARENT COMPANY
ONLY FINANCIAL STATEMENTS



To the Board of Directors of WPS Resources Corporation:

We have audited in accordance with auditing standards
generally accepted in the United States, the consolidated financial statements
of WPS Resources Corporation included in this Form 10-K, and have
issued our report thereon dated January 28, 2002. Our audit was made for
the purpose of forming an opinion on the basic consolidated financial statements
taken as a whole. Supplemental Schedule I is the responsibility of the Company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not a part of the basic consolidated
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic consolidated financial statements
and, in our opinion, fairly states in all material respects the financial data
required to be set forth therein in relation to the basic consolidated financial
statements taken as a whole.



> /s/ Arthur Andersen LLP
>             ARTHUR ANDERSEN LLP







Milwaukee, Wisconsin
January 28, 2002





|SCHEDULE I - CONDENSED                                   |        |         |        
|-------------------------------------------------------- | ------ | ------- | -------
|PARENT COMPANY FINANCIAL STATEMENTS                      |        |         |        
|WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)          |        |         |        
|                                                         |        |         |        
|B. STATEMENTS OF INCOME AND RETAINED EARNINGS           
|                                                         |        |         |        
|                                                         |        |         |        
|Year Ended December 31 (Millions)                        | 2001   | 2000    | 1999   
|                                                         |        |         |        
|Income                                                   |        |         |        
|Dividends from subsidiaries in excess of equity earnings | $31.5  | ($33.5) | ($30.1)
|Dividends from subsidiaries                              | 59.0   | 109.3   | 91.9   
|Income from subsidiaries                                 | 90.5   | 75.8    | 61.8   
|Investment income and other                              | 5.3    | 8.7     | 5.1    
|                                                         |        |         |        
|Total income                                             | 95.8   | 84.5    | 66.9   
|                                                         |        |         |        
|                                                         |        |         |        
|Operating expenses                                       | 9.8    | 8.7     | 2.6    
|Income before interest expense and income taxes          | 86.0   | 75.8    | 64.3   
|Interest expense                                         | 17.7   | 15.6    | 7.1    
|Income before income taxes                               | 68.3   | 60.2    | 57.2   
|Income taxes                                             | (9.3)  | (6.8)   | (2.4)  
|Net Income                                               | 77.6   | 67.0    | 59.6   
|                                                         |        |         |        
|Retained earnings, beginning of year                     | 354.8  | 341.7   | 335.1  
|Common stock dividend                                    | (58.3) | (53.9)  | (53.0) 
|                                                         |        |         |        
|Retained earnings, end of year                           | $374.1 | $354.8  | $341.7 
|                                                         |        |         |        
|                                                         |        |         |        

|SCHEDULE I - CONDENSED                                          |        |       
|--------------------------------------------------------------- | ------ | ------
|PARENT COMPANY FINANCIAL STATEMENTS                             |        |       
|WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)                 |        |       
|                                                                |        |       
|C. BALANCE SHEETS                                              
|                                                                |        |       
|                                                                |        |       
|At December 31 (Millions)                                       | 2001   | 2000  
|Assets                                                          |        |       
|Current assets                                                  |        |       
|Cash and equivalents                                            | $  0.5 | $  3.0
|Accounts receivable - affiliates                                | 1.4    | 2.2   
|Other receivables                                               | 1.7    | 2.0   
|Notes receivable - affiliates (See Note 1)                      | 18.8   | 34.3  
|Total current assets                                            | 22.4   | 41.5  
|                                                                |        |       
|Long-term notes receivable - affiliates (See Note 2)            | 13.1   | 21.0  
|                                                                |        |       
|Investments in subsidiaries, at equity                          |        |       
|Wisconsin Public Service Corporation                            | 704.2  | 567.8 
|WPS Resources Capital Corporation                               | 155.6  | 108.6 
|Upper Peninsula Power Company                                   | 53.6   | 40.6  
|Other                                                           | 5.4    | 5.1   
|Total investments in subsidiaries, at equity                    | 918.8  | 722.1 
|                                                                |        |       
|Net equipment                                                   | 5.6    | 0.8   
|Other investments                                               | 21.6   | 21.6  
|Deferred income taxes                                           | 3.6    | 1.9   
|                                                                |        |       
|Total assets                                                    | $985.1 | $808.9
|                                                                |        |       
|                                                                |        |       
|Liabilities and Capitalization                                  |        |       
|Current liabilities                                             |        |       
|Notes payable - affiliates (See Note 3)                         | $ 26.8 | $    -
|Commercial paper                                                | 15.0   | 59.6  
|Accounts payable - affiliates                                   | 1.4    | 0.6   
|Accounts payable                                                | 6.0    | 0.8   
|Dividends payable                                               | 1.0    | 1.1   
|Other                                                           | 3.4    | 3.0   
|Total current liabilities                                       | 53.6   | 65.1  
|                                                                |        |       
|Capitalization                                                  |        |       
|Common stock, $1 par value, 100,000,000 shares                  |        |       
|authorized; 31.5 shares outstanding at                          |        |       
|December 31, 2001 and 26.9 shares                               |        |       
|outstanding at December 31, 2000                                | 31.5   | 26.9  
|Premium on capital stock                                        | 318.5  | 172.4 
|Retained earnings                                               | 374.1  | 354.8 
|Comprehensive income, cash flow hedge                           | (2.7)  | -     
|Employee Stock Ownership Plan loan guarantees                   | -      | -     
|Treasury shares                                                 | (7.7)  | (8.1) 
|Shares in deferred compensation trust                           | (4.2)  | (3.2) 
|Total common stock equity                                       | 709.5  | 542.8 
|Unsecured senior note, net of unamortized discount (See Note 4) | 149.5  | 149.5 
|Advances from affiliates (See Note 5)                           | 72.5   | 51.5  
|Total capitalization                                            | 931.5  | 743.8 
|                                                                |        |       
|                                                                |        |       
|Total liabilities and capitalization                            | $985.1 | $808.9
|                                                                |        |       
|                                                                |        |       

|SCHEDULE I - CONDENSED                                                |         |         |        
|--------------------------------------------------------------------- | ------- | ------- | -------
|PARENT COMPANY FINANCIAL STATEMENTS                                   |         |         |        
|WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)                       |         |         |        
|                                                                      |         |         |        
|D. STATEMENTS OF CASH FLOWS                                          
|                                                                      |         |         |        
|                                                                      |         |         |        
|Year Ended December 31 (Millions)                                     | 2001    | 2000    | 1999   
|                                                                      |         |         |        
|Operating                                                             |         |         |        
|Net income                                                            | $ 77.6  | $ 67.0  | $ 59.6 
|                                                                      |         |         |        
|Add (deduct) dividends from subsidiaries in excess of equity earnings |         |         |        
|(equity earnings from subsidiaries in excess of dividends)            | (31.5)  | 33.5    | 18.2   
|Deferred income taxes                                                 | (1.7)   | (1.3)   | (0.3)  
|Other - net                                                           | 0.5     | 3.4     | -      
|                                                                      |         |         |        
|Changes in other items                                                |         |         |        
|Receivables                                                           | 1.1     | (1.9)   | 0.6    
|Accounts payable                                                      | 6.0     | (4.2)   | 3.4    
|Other                                                                 | (0.3)   | (0.5)   | 1.9    
|Net cash - operating                                                  | 51.7    | 96.0    | 83.4   
|                                                                      |         |         |        
|Investing                                                             |         |         |        
|Notes receivable - affiliates                                         | 23.3    | 78.7    | (93.4) 
|Capital contributions - affiliates                                    | (113.1) | (124.0) | (108.6)
|Investments - other                                                   | (4.7)   | (4.7)   | (1.9)  
|Net cash - investing                                                  | (94.5)  | (50.0)  | (203.9)
|                                                                      |         |         |        
|Financing                                                             |         |         |        
|Short-term debt, net                                                  | -       | -       | (2.4)  
|Commercial paper, net                                                 | (44.6)  | 19.7    | 17.2   
|Intercompany debt, net                                                | 47.8    | -       | -      
|Proceeds from long-term debt                                          | -       | -       | 149.4  
|Purchase of deferred compensation stock                               | (1.1)   | (10.5)  | (0.6)  
|Proceeds from issuance of common stock                                | 96.4    | -       | 9.0    
|Common stock dividends                                                | (58.2)  | (53.9)  | (53.0) 
|Financing - other                                                     | 0.0     | 1.7     | -      
|Net cash - financing                                                  | 40.3    | (43.0)  | 119.6  
|                                                                      |         |         |        
|Net change in cash                                                    | (2.5)   | 3.0     | (0.9)  
|Cash, beginning of period                                             | 3.0     | -       | 0.9    
|Cash, end of period                                                   | $  0.5  | $  3.0  | $  0.0 
|                                                                      |         |         |        

SCHEDULE I - CONDENSED
PARENT COMPANY FINANCIAL STATEMENTS
WPS RESOURCES CORPORATION (PARENT COMPANY ONLY)

E. 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            
|                  
|Note 4            
|                  
|Note 5