SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K

    /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 For the fiscal year ended December 31, 2000

                                        OR

    / /   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                     THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from         to


                        Commission file number 1-7530

                             WISCONSIN GAS COMPANY
            ------------------------------------------------------
            (Exact name of registrant as specified in its charter)

                  Wisconsin                     39-0476515
     -------------------------------       -------------------
     (State or other jurisdiction of        (I.R.S. Employer
      incorporation or organization)       Identification No.)

                 231 W. Michigan St.
                    P.O. Box 2046
                 Milwaukee, Wisconsin                     53201
       ----------------------------------------        ----------
       (Address of principal executive offices)        (Zip Code)

     Registrant's telephone number, including area code:  414-221-2345


Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  None

       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]

       Aggregate market value of the voting stock held by non-affiliates
of the registrant:  None

       Number of shares outstanding of each of the registrant's classes
of common stock, as of February 28, 2001:

       Common Stock, $8 par value               1,125 shares

              -----   Documents Incorporated by Reference   -----
                                      None

                           Reduced Disclosure Format

The registrant meets the conditions set forth in General Instructions
I(1)(a) and (b) of Form 10-K and is therefore filing with the reduced
disclosure format.



                                                                   PAGE

PART I

Forward-Looking Statements

Item  1.  Business

  (a)  General
  (b)  General Information About the Company's Business.
  (c)  Competition
  (d)  Gas Supply, Pipeline Capacity and Storage

    (1)  Pipeline Capacity and Storage
    (2)  Term Gas Supply
    (3)  Secondary Market transactions
    (4)  Spot Market Gas Supply
    (5)  Proposed New Pipeline

  (e)  Wisconsin Regulatory Matters

    (1)  Rate Matters
    (2)  Gas Cost Recovery Mechanism
    (3)  Transition Cost Recovery Policy
    (4)  Changing Regulatory Environment

  (f)  Employees

Item  2.  Properties

Item  3.  Legal Proceedings

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



PART II

Item  5.  Market for Registrant's Common Equity and
            Related Stockholder Matters

Item  6.  Selected Financial Data

Item  7.  Management's Discussion and Analysis of Results of
         Operations and Financial Condition

Item 7A.  Quantitative and Qualitative Disclosures About
            Market Risk

Item  8.  Financial Statements and Supplementary Data

Item  9.  Changes in and Disagreements with Accountants on
         Accounting and Financial Disclosure



Part III

Item 10.  Directors and Executive Officers of the Registrant

Item 11.  Executive Compensation

Item 12.  Security Ownership of Certain
            Beneficial Owners and Management

Item 13.  Certain Relationships and Related Transactions



Part IV

Item 14.  Exhibits, Financial Statement Schedules
            and Reports on Form 8-K

  (a)  Documents Filed as Part of the Report

    1.  All Financial Statements and Report of
          Independent Public Accountants
    2.  Financial Statement Schedules
    3.  Exhibits

  (b)  Reports on Form 8-K



                                      PART I

                           Forward-Looking Statements
                           --------------------------

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

  This Annual Report and other documents or oral presentations to
which the Company refers or incorporates by reference contain or may
contain forward-looking statements made by or on behalf of Wisconsin
Gas Company ("Wisconsin Gas" or the "Company").  Such statements are
based upon management's current expectations and are subject to risks
and uncertainties that could cause Wisconsin Gas' actual results to
differ materially from those contemplated in the statements.  Readers
are cautioned not to place undue reliance on the forward-looking
statements.  When used in written documents or oral presentations, the
terms "anticipate," "believe," "estimate," "expect," "objective,"
"plan," "possible," "potential," "project" and similar expressions are
intended to identify forward-looking statements.  In addition to the
assumptions and other factors referred to specifically in connection
with such statements, factors that could cause Wisconsin Gas' actual
results to differ materially from those contemplated in any forward-
looking statements include, among others, the following.


Operating, Financial and Industry Factors

>>    Factors affecting utility operations such as unusual weather
conditions; catastrophic weather-related damage; unplanned maintenance
or repairs; unanticipated changes in gas supply or water supply costs
or availability due to higher demand, shortages, transportation
problems or other developments; nonperformance by natural gas
suppliers under existing gas supply contracts; environmental
incidents; gas pipeline system constraints; unanticipated
organizational structure or key personnel changes; collective
bargaining agreements with union employees or work stoppages;
inflation rates; or demographic and economic factors affecting utility
service territories or operating environment.

>>    Regulatory factors such as unanticipated changes in rate-setting
policies or procedures; unanticipated changes in regulatory accounting
policies and practices; industry restructuring initiatives;
distribution system operation and/or administration initiatives;
recovery of costs of previous investments made under traditional
regulation; required approvals for new construction.

>>    The rapidly changing and increasingly competitive gas utility
environment as market-based forces replace strict industry regulation
and other competitors enter the gas markets resulting in increased
wholesale and retail competition.

>>    Consolidation of the industry as a result of the combination and
acquisition of utilities in the Midwest, nationally and globally.

>>    Restrictions imposed by various financing arrangements and
regulatory requirements on the ability of Wisconsin Gas to transfer
funds to WICOR or Wisconsin Energy in the form of cash dividends,
loans or advances.

>>    Changes in social attitudes regarding the utility industry.

>>    Customer business conditions including demand for their products
or services and supply of labor and material used in creating their
products and services.

>>    The cost and other effects of legal and administrative
proceedings, settlements, investigations and claims, and changes in
those matters.

>>    Factors affecting the availability or cost of capital such as
changes in interest rates; the Company's capitalization structure;
market perceptions of the utility industry, the Company or any of its
subsidiaries; or security ratings.


>>    Federal, state or local legislative factors such as changes in tax
laws or rates; changes in trade, monetary and fiscal policies, laws
and regulations; gas industry restructuring initiatives; or changes in
environmental laws and regulations.

>>    Authoritative generally accepted accounting principle or policy
changes from such standard setting bodies as the Financial Accounting
Standards Board and the Securities and Exchange Commission.

>>    Unanticipated technological developments that result in
competitive disadvantages and create the potential for impairment of
existing assets.

>>    Other business or investment considerations that may be disclosed
from time to time in Wisconsin Gas' or Wisconsin Energy's Securities
and Exchange Commission filings or in other publicly disseminated
written documents.

Business Combination Factors

>>    Unanticipated costs or difficulties related to the integration of
the businesses of Wisconsin Energy and Wisconsin Gas.

>>    Unanticipated financing or other consequences resulting from the
additional short-term debt issued by Wisconsin Energy to fund the
acquisition of Wisconsin Gas.

>>    Unexpected difficulties or delays in realizing anticipated net
cost savings or unanticipated effects of the qualified five-year gas
rate freeze ordered by the Public Service Commission of Wisconsin (the
"PSCW") as a condition of approval of the merger.


The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.



Item  1.  BUSINESS

(a)  General Development of the Business

  Wisconsin Gas Company is a Wisconsin corporation and is a wholly-
owned subsidiary of WICOR Inc. ("WICOR"). On April 26, 2000, WICOR
completed an Agreement and Plan of Merger (the "Merger") with
Wisconsin Energy Corporation ("Wisconsin Energy"), pursuant to which
all of the outstanding common stock of WICOR was acquired by Wisconsin
Energy and WICOR become a wholly-owned subsidiary of Wisconsin Energy.
The Company, in turn, became an indirect subsidiary of Wisconsin
Energy.  The Company maintains its principal executive offices in
Milwaukee, Wisconsin.  The Company is the largest natural gas
distribution public utility in Wisconsin operating throughout
Wisconsin in a territory of approximately 12,400 square miles with an
estimated population of approximately 2,000,000. At December 31, 2000,
Wisconsin Gas distributed gas to approximately 544,400 residential,
commercial and industrial customers in its service territory.  The
Company is subject to the jurisdiction of the Public Service
Commission of Wisconsin ("PSCW") as to various phases of its
operations, including rates, service and issuance of securities.

  In November, 1998, the Company entered the water utility business
by acquiring the water distribution system of a Milwaukee suburb
serving about 500 customers.  The Company acquired another small water
utility in November, 1999, and served approximately 1,840 customers by
the end of 2000.


(b)  General Information About the Company's Business

  Wisconsin Gas' business is highly seasonal, particularly as to
residential and commercial sales for space heating purposes, with a
substantial portion of its sales occurring in the winter heating
season.  The following table sets forth the volumes of natural gas
delivered by Wisconsin Gas to its customers. The volumes shown as
transported represent customer-owned gas that was delivered by
Wisconsin Gas to such customers.  The sales volumes represent
quantities sold and delivered to customers by the Company.

<TABLE>
<CAPTION>
                                                        Year Ended
                                        -------------------------------------------
Customer Class                           December 31, 2000      December 31, 1999
--------------                          --------------------   --------------------
                                        Thousands              Thousands
Sales                                   of Therms*   Percent   of Therms*   Percent
-----                                   ----------   -------   ----------   -------
<S>                                     <C>           <C>      <C>          <C>
Residential                               467,980      37.3      440,390      36.0
Commercial/Industrial Firm                254,007      20.3      250,650      20.5
Commercial/Industrial Interruptible        22,710       1.8       28,830       2.4
                                        ----------   -------   ----------   -------
Total Sales                               744,697      59.4      719,870      58.9

Transportation
--------------
Transported                               508,653      40.6      502,600      41.1
                                        ----------   -------   ----------   -------
Total Gas Throughput                    1,253,350     100.0    1,222,470     100.0
                                        ==========   =======   ==========   =======
<FN>
*One therm equals 100,000 BTU's
</FN>
</TABLE>



  Wisconsin Gas' maximum daily send-out during 2000 was 811,635
dekatherms on January 20, 2000.  A dekatherm is equivalent to ten
therms or one million British thermal units.


(c)  Competition

  Competition in varying degrees exists between natural gas and other
forms of energy available to consumers.  Many of the Company's large
commercial and industrial customers are dual-fuel customers that are
equipped to switch between natural gas and alternate fuels.  The
Company offers lower-priced interruptible rates and transportation
services for these customers to enable them to reduce their energy
costs and use gas rather than other fuels.  Under gas transportation
agreements, customers purchase gas directly from gas marketers and
arrange with interstate pipelines and the Company to have the gas
transported to the facilities where it is used.  The Company earns
substantially the same margin (difference between revenue and cost of
gas), whether it sells and transports gas to customers or only
transports their gas.  The volume of gas sold by third parties and
distributed by Wisconsin Gas now constitutes approximately 40.6% of
total gas distributed by the Company.

  The Company's future ability to maintain its present share of the
industrial dual-fuel market (the market that is equipped to use gas or
other fuels) depends on the success of the Company and third-party gas
marketers in obtaining long-term and short-term supplies of natural
gas at marketable prices and their success in arranging or
facilitating competitively-priced transportation service for those
customers that desire to buy their own gas supplies.

  Federal and state regulators continue to implement policies to
bring more competition to the gas industry.  For information
concerning proceedings by the PSCW to consider how its regulation of
gas distribution utilities should change to reflect the changing
competitive environment in the gas industry, see "Wisconsin Regulatory
Matters-Changing Regulatory Environment" in Item 1 of this report.
While the gas utility distribution function is expected to remain a
heavily regulated, monopoly function, the sales of the natural gas
commodity and related services are expected to become increasingly
subject to competition from third parties.  However, it remains
uncertain if and when the current economic disincentives for small
customers to choose an alternative gas commodity supplier may be
removed such that the Company begins to face competition for the sale
of gas to its smaller firm customers.


 (d)  Gas Supply, Pipeline Capacity and Storage

  (1)  Pipeline Capacity and Storage

  Interstate pipelines serving Wisconsin originate in three major gas
producing areas of North America:  the Oklahoma and Texas basins, the
Gulf of Mexico and western Canada.  Wisconsin Gas has contracted for
long-term firm capacity on a relatively equal basis from each of these
areas.  This strategy reflects management's belief that overall supply
security is enhanced by geographic diversification of the Company's
supply portfolio and that Canada represents an important long-term
source of reliable, competitively-priced gas.

  Because of the seasonal variations in gas usage in Wisconsin,
Wisconsin Gas has also contracted for substantial underground storage
capacity, primarily in Michigan.  Storage enables Wisconsin Gas to
optimize its overall gas supply and capacity costs.  In summer, gas in
excess of market demand is transported into the storage fields, and in
winter, gas is withdrawn from storage and combined with gas purchased
in or near the production areas ("flowing gas") to meet the increased
winter market demand.  As a result, Wisconsin Gas can contract for
less long-line pipeline capacity than would otherwise be necessary,
and it can purchase gas on a more uniform daily basis from suppliers
year-round.  Each of these capabilities enables Wisconsin Gas to
reduce its overall costs.

  Wisconsin Gas also maintains high deliverability storage in the mid-
continent and Southeast production areas as well as in its market
area.  This storage capacity is designed to deliver gas when other
supplies cannot be delivered during extremely cold weather in the
producing areas, which can reduce long-line supply.

Wisconsin Gas holds firm daily transportation and storage capacity
entitlements from pipelines and other service providers under long-
term contracts.


  (2)  Term Gas Supply

Wisconsin Gas has contracts for firm supplies with terms in excess of 30
days with 19 gas suppliers for gas produced in each of the three
producing areas discussed above.  The term contracts have varying
durations so that only a portion of the Company's gas supply expires
in any year.  Management believes the volume of gas under contract is
sufficient to meet its forecasted firm peak day demand.


  (3)  Secondary Market Transactions

  Capacity release is a mechanism by which pipeline long-line and
storage capacity and for gas supplies under contract may be sold in
the secondary market.  Local distribution companies, such as Wisconsin
Gas, must contract for capacity and supply sufficient to meet the firm
peak day demand of their customers. Peak or near peak demand days
generally occur only a few times each year.  Capacity release
facilitates higher utilization of contracted capacity and supply
during those times when the full contracted capacity and supply are
not needed by the utility, helping to mitigate the fixed costs
associated with maintaining peak levels of capacity and gas supply.
Through pre-arranged agreements and day-to-day electronic bulletin
board postings, interested parties can purchase that excess capacity
and supply. The proceeds from these transactions are passed-through to
the ratepayers, subject to the incentive gas cost mechanism pursuant
to which the Company has an opportunity to share in the gas cost
savings. See "Wisconsin Regulatory Matters - Gas Cost Recovery" in
Item 1 of this report for information on the incentive gas cost
recovery mechanism.  During 2000, Wisconsin Gas continued its active
participation in the capacity release market.


  (4)  Spot Market Gas Supply

  Wisconsin Gas expects to continue to make gas purchases in the 30-
day spot market as price and other circumstances dictate.  The Company
has purchased spot market gas since 1985 and has supply relationships
with a number of sellers from whom it purchases spot gas.


  (5)  Proposed New Pipeline

  In March 1999, WICOR announced the formation of a joint venture,
Guardian Pipeline, L.L.C., to construct the Guardian interstate
natural gas pipeline from the Chicago market hub near Joliet, Illinois
to southeastern Wisconsin ("Guardian Pipeline"). CMS Energy, a
Dearborn, Michigan-based international energy company, and a
subsidiary of Xcel Energy, a Minneapolis-based diversified energy
company, are cosponsors of the project with WICOR.  The three partners
will have equal ownership interests in the project.  On March 14,
2001, the Federal Energy Regulatory Commission ("FERC") issued a
certificate of public convenience and necessity authorizing
construction and operation of the Guardian Pipeline.

  The Guardian Pipeline will consist of 141 miles of 36-inch pipe and
related compression equipment as well as an additional 8.5 mile, 16
inch lateral and will carry about 750,000 dekatherms per day of gas.
The total cost of the project is approximately $238 million. The joint
venture intends to finance the project using $70 million of capital
contributions from the three co-owners and issuing long-term debt for
the balance of the construction costs.  Currently, Guardian Pipeline
has firm precedent agreements to transport 88% of its design capacity.
The pipeline is scheduled to be in service by November, 2002.

  Wisconsin Gas has committed to purchase 650,000 dekatherms per day
of capacity on the pipeline and will construct a 35-mile lateral at a
cost of approximately $62 million to connect its distribution system
to the Guardian Pipeline.  In November 1999, Wisconsin Gas filed an
application with the PSCW to construct and operate the lateral.  In
October 2000, the PSCW affirmed the need for the Wisconsin Gas lateral
in a preliminary determination.  The preliminary determination covers
all non-environmental aspects of Wisconsin Gas' application, including
need and economic justification.  Wisconsin Gas anticipates final
approval by the PSCW in the summer of 2001.  Pending receipt of all
regulatory approvals, lateral construction is expected to begin in the
spring of 2002 with commercial operation beginning in the fall of the
same year.  Wisconsin Gas expects to fund the lateral project using
long-term debt financing.

  The Guardian Pipeline is expected to serve growing demand for
natural gas in Wisconsin and Northern Illinois.


(e)  Wisconsin Regulatory Matters

  (1)  Rate Matters

  Wisconsin Gas rates are set within the framework of the
Productivity-based Alternative Ratemaking Mechanism ("PARM"), which
was established in 1994 and has been extended through October 31,
2001. Under PARM, Wisconsin Gas has the ability to raise or lower
margin rates within a specified range on a quarterly basis. The PARM
order also specifies margin rate floors for each rate class.
Currently, Wisconsin Gas' rates recover $1.5 million per year less
than the maximum amount allowed by the PSCW's rate order. PARM has
certain criteria, including significant deterioration in safety,
failures to meet conservation goals, significant changes in interest
rates and "extraordinary items", which if not met, permit the PSCW to
reopen the rate proceeding.  To date, none of the criteria has been
triggered.

  On March 14, 2000, the PSCW issued an order approving the Merger.
That order stipulated that the Company, and Wisconsin Electric Power
Company ("Wisconsin Electric"), a wholly owned subsidiary of Wisconsin
Energy which provides electric and gas distribution services, be
limited in their respective ability to seek rate increases for a five-
year period effective January 1, 2001 beyond adjustments to reflect
the Company's cost of gas purchased.  This limitation is subject to
certain exceptions including capital spending for major gas lateral
extensions and operating changes resulting from government mandates.

  On November 1, 2000, Wisconsin Gas and Wisconsin Electric filed a
joint application with the PSCW for authority to transfer the physical
gas utility assets of Wisconsin Electric together with certain
liabilities associated with such assets, with a net book value of
approximately $365.0 million at December 31, 2000, to Wisconsin Gas in
return for stock in Wisconsin Gas in a tax free transaction.
Wisconsin Energy expects that the combined gas operation will result
in improved customer service and greater synergy savings as a result
of the Merger.  The combined gas operations would retain the name
Wisconsin Gas Company and become the 9th largest gas distribution
company in the United States as measured by delivery volumes.
Assuming the PSCW approves the transaction described above, Wisconsin
Gas and Wisconsin Electric expect to make a second filing in 2001
seeking authorization to combine tariffs and rates.  This transaction
is also subject to the approval of the Securities Exchange Commission
under the Public Utility Holding Act of 1935.


  (2)  Gas Cost Recovery

  Wisconsin Gas' rates traditionally contained clauses providing for
periodic rate adjustments, with PSCW approval, to reflect changes in
purchased gas costs, including the recovery of transition costs passed
through by pipeline suppliers.  See "Wisconsin Regulatory Matters -
Transition Cost Recovery Policy".

  The PSCW approved a performance-based gas cost recovery mechanism
("GCRM") which was in effect for three years beginning November 1,
1997 and expiring October 31, 2000.  With the post-2000 replacement
GCRM under review, the PSCW subsequently authorized an extension of
the existing GCRM commencing November 1, 2000, through such time as a
replacement GCRM (see discussion below) was ordered.  Under the
initial GCRM various portions (e.g. commodity costs) of the Company's
total cost of gas were measured against pre-determined benchmarks.  If
at the end of each GCRM year the benchmark related cost
savings/overruns exceeded 1.5% of the total cost of gas, the Company
would share 50/50 in the savings/overruns. Sharing of savings/overruns
was limited to up to 2.5% of the total cost of gas.  As such, the GCRM
provides an opportunity for Wisconsin Gas' earnings to increase or
decrease on a limited basis as the result of gas supply activities.

  In February 2001, the PSCW issued an order authorizing a
performance based recovery mechanism similar to the existing GCRM.
Other than various cost benchmark modifications, the sharing mechanism
was broadened such that sharing of savings/overruns would commence at
1.0% and conclude at 6.0% of the total cost of gas.  This replacement
GCRM is effective April 1, 2001.


  (3)  Transition Cost Recovery Policy

  Interstate pipeline companies have been allowed to pass through to
local gas distributors various costs incurred in the transition to
FERC Order No. 636. The PSCW has authorized the recovery through rates
of costs that have been passed through to Wisconsin Gas. Although
complete assurance cannot be given, it is believed that any additional
future transition costs incurred by Wisconsin Gas will also be
recoverable from its customers.


  (4)  Changing Regulatory Environment

  The PSCW has instituted generic proceedings to consider how its
regulation of gas distribution utilities should change to reflect the
changing competitive environment in the natural gas industry.  To
date, the commission has made a policy decision to deregulate the sale
of natural gas in customer segments with workably competitive market
choices and has adopted standards for transactions between a utility
and its gas marketing affiliates.  However, work on deregulation of
the gas distribution industry by the PSCW is presently on hold.
Currently, Wisconsin Gas is unable to predict the impact of potential
future deregulation on the Company's results of operations or
financial position.


(f)  Employees

  The Company had 951 full-time and 83 part-time active employees at
December 31, 2000.



Item  2.  PROPERTIES

  Wisconsin Gas owns a distribution system which, on December 31,
2000, included approximately 9,600 miles of distribution and
transmission mains, 455,000 service laterals and 535,000 active
meters.  Wisconsin Gas' distribution system consists almost entirely
of plastic and coated steel pipe.  Wisconsin Gas owns office buildings
in certain communities in which it serves, gas regulating and metering
stations, peaking facilities and its major service centers, including
garage and warehouse facilities.

  Where distribution mains and services occupy private property,
Wisconsin Gas in some, but not all, instances has obtained consents,
permits or easements for such installations from the apparent owners
or those in possession, generally without an examination of title.



Item  3.  LEGAL PROCEEDINGS

  The Company has identified two previously owned sites on which it
operated manufactured gas plants. Such plants ceased operations prior
to the mid-1950's. Environmental remediation work for one of the sites
was completed during the third quarter of 1999. The Company is
evaluating potential remedial options at the second site. The Company
has established a reserve of approximately $4.2 million at December
31, 2000, to cover the remediation and maintenance costs of the
remaining site.

  The Company periodically reviews its reserves for such remediation
costs as evidence becomes available indicating that its remediation
liability has changed. Based on the foregoing and given current
information, management believes that future costs in excess of the
amounts accrued on all presently known and quantifiable environmental
contingencies will not be material to the Company's financial position
or results of operations.  See Note 7(c) of "Notes to Financial
Statements".



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

  Omitted pursuant to General Instruction I(2)(c).



PART II

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

  WICOR owns all the issued and outstanding common stock of the
Company. On April 26, 2000, WICOR became a wholly owned subsidiary of
Wisconsin Energy.

  Dividends declared on Wisconsin Gas' common stock during the two
most recent fiscal years are set forth below.  With the exception of
the special dividends in the second and fourth quarters of 2000,
dividends were paid entirely in cash.  Dividends were paid to
Wisconsin Gas' sole common stockholder, WICOR, Inc.

<TABLE>
<CAPTION>
                   Quarter        2000         1999
                   -------       ------       ------
                    <S>        <C>           <C>
                    First      $  6,500      $ 6,500
                    Second      261,500 (a)    6,500
                    Third         4,000        6,500
                    Fourth       54,000 (a)    6,500
                                -------        -----
                    Total      $326,000      $26,000
</TABLE>

  (a)  During the second and fourth quarters of 2000, the Board of
  Directors declared two special dividends of $255.0 million and
  $50.0 million, respectively, which were financed by demand notes
  payable to WICOR, Inc.

  In 2001, Wisconsin Gas intends to suspend payment of dividends in
order to retain sufficient cash to fund interest payments due on the
demand notes payable to WICOR, Inc. and to fund ongoing construction
activity.

  Various financing arrangements and regulatory requirements impose
certain restrictions on the ability of Wisconsin Gas to transfer funds
to WICOR, Inc. in the form of cash dividends, loans or advances.
Under Wisconsin law, Wisconsin Gas is prohibited from loaning funds,
either directly or indirectly, to WICOR, Inc.



Item  6.  SELECTED FINANCIAL DATA

    Omitted pursuant to General Instruction I(2)(a).



Item  7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
          OF OPERATIONS AND FINANCIAL CONDITION

Merger with Wisconsin Energy Corporation
----------------------------------------
  On April 26, 2000, WICOR and Wisconsin Energy completed an
agreement and plan of merger ("the Merger"), providing for a strategic
business combination of WICOR and Wisconsin Energy.  In the agreement,
Wisconsin Energy acquired all of the outstanding common stock of WICOR
for $1.2 billion of cash and assumed outstanding WICOR debt of $267.0
million.  The Merger was accounted for as a purchase and resulted in
total goodwill recorded of $818.0 million. Of this total goodwill,
$458.3 million was recorded on the financial statements of Wisconsin
Gas, representing its allocated share of the goodwill within the
operations of WICOR.

  Purchase accounting adjustments, principally goodwill, have been
pushed down and are reflected in the financial statements of Wisconsin
Gas for the periods ended after April 26, 2000 (the "Merger Date").
The financial statements of Wisconsin Gas for the periods ended before
the Merger Date, were prepared using Wisconsin Gas' historical basis
of accounting and are designated as "Predecessor".  The comparability
of the operating results for the Predecessor and the periods
encompassing push-down accounting are affected by the purchase
accounting adjustments including the amortization of goodwill, and
related income tax adjustments. Other adjustments to reflect assets
and liabilities at fair value as of the Merger Date have been offset
by regulatory liabilities or assets because the associated expense and
revenue impacts of these adjustments are governed by rate setting
policies of the PSCW.  Therefore, for purposes of the discussion of
yearly operating results provided herein, the financial information of
the Predecessor for the 2000 periods prior to the Merger Date have
been combined with the post-merger financial information.  The
business operations of Wisconsin Gas were not significantly changed as
a result of the Merger.  Therefore, the post-merger and pre-merger
operating results, except as noted, are comparable.


Results of Operations - 2000 Compared with 1999
-----------------------------------------------
  Net earnings during 2000 decreased by $11.2 million, or 42.4%, to
$15.2 million compared to $26.4 million for the same period last year.
The earnings for the Company were impacted by incremental interest
expense of $11.1 million relating to the notes payable to WICOR.
Earnings were also impacted by goodwill amortization of $7.6 million
relating to the Merger in 2000.  Without the effect of these expenses
totaling $18.7 million, $14.3 million net of income taxes, the
Company's after-tax earnings would have been $29.5 million for 2000.
The Company's earnings are heavily dependent upon cold weather, which
is measured by heating degree days ("HDD").  Rates have been set based
on 20-year HDD averages.  In 2000 and 1999, the weather based on this
20 year HDD standard averaged 2.9% and 9.1% warmer than normal,
negatively effecting operating results accordingly. The improvement in
earnings, adjusted for the interest and goodwill expenses identified
above, of $3.1 million in 2000 was driven primarily by increased sales
caused by colder weather compared to 1999.

  Margin, defined as revenues less cost of gas sold, is a better
comparative performance indicator than revenues because changes in the
cost of gas sold are flowed through to revenue under a gas adjustment
clause that does not impact margin.  The Company operates under a gas
cost recovery mechanism (GCRM) which allows it to share in the risk
and rewards of purchasing gas. The GCRM favorably impacted margins by
$4.1 million and $3.3 million in 2000 and 1999, respectively.

  The following tables set forth margin and sales volumes for each of
the years ended December 31.

<TABLE>
<CAPTION>

THOUSANDS OF DOLLARS                     2000        1999        1998
-------------------                  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>
Revenues                             $ 529,537   $ 416,021   $ 406,043
Cost of gas sold                       355,044     250,226     252,181
                                     ----------  ----------  ----------
Sales margin                           174,493     165,795     153,862
Gas transportation margin               24,016      23,456      22,519
                                     ----------  ----------  ----------
Total margin                         $ 198,509   $ 189,251   $ 176,381
                                     ==========  ==========  ==========

MILLIONS OF THERMS
------------------
Sales volumes
   Firm                                  721.9       690.9       649.2
   Interruptible                          22.7        29.0        36.5
Transport volumes                        508.7       502.6       460.2
                                     ----------  ----------  ----------
Total throughput                       1,253.3     1,222.5     1,145.9
                                     ==========  ==========  ==========
Heating degree days                      6,716       6,318       5,865
                                     ==========  ==========  ==========
% (warmer) colder
  than 20-year average                    (2.9)       (9.1)      (16.4)
                                     ==========  ==========  ==========
</TABLE>

  The increase in firm sales volumes in 2000 was driven by colder
weather during the heating season in 2000 compared to 1999.  However,
the weather in 2000 was warmer than the 20-year average.  Both revenue
and cost of gas sold increased significantly from the prior year due
to the substantial increase in the commodity cost of natural gas
between 1999 and 2000, particularly in the fourth quarter of 2000.
Consistent with past practice, the Company passes these cost increases
through rate increases to customers resulting in no impact to gas
margin.

  Operating and maintenance expenses decreased $4.9 million, or 5.3%,
in 2000, compared with the prior year.  The decrease reflects reduced
labor and benefits in 2000 resulting from synergies obtained as a
result of the Merger between Wisconsin Gas and Wisconsin Energy in
2000.

  Depreciation and amortization expense in 2000 increased by $1.2
million, or 3.5%, compared with 1999 due to increases in depreciable
plant balances largely relating to new service pipeline extensions to
accommodate customer growth.

  Taxes, other than income taxes increased by $0.3 million, or 3.9%,
to $8.2 million due to higher gross receipts tax and other regulatory
taxes.  Gross receipt taxes are based on the previous year's operating
revenues.  The Company anticipates a $1.1 million increase in this
expense in 2001 due to the increased revenue in 2000 resulting from
the increased cost of gas.

  Goodwill amortization for 2000 was $7.6 million and resulted from
the $458.3 million of goodwill recorded due to the Merger which closed
on April 26, 2000.  This goodwill is being amortized over a 40 year
life and will result in amortization of $11.5 million in 2001.  No
goodwill was recorded by the Company prior to the Merger.

  Interest expense in 2000 increased $12.7 million compared to 1999.
The increase relates primarily to interest incurred on the notes
payable to WICOR.  The remaining increase relates to incremental
borrowings incurred by the Company to finance construction required to
service new customers and to finance working capital requirements
resulting from the increased cost of gas, specifically gas in storage
inventory and accounts receivable.

  Other expense (income) decreased by $5.7 million in 2000 compared
to 1999.  Other expense (income) in 2000 was negatively impacted by a
donation of $3.4 million relating to a contribution made by the
Company to the Wisconsin Energy Foundation to assist that organization
in becoming self-funding in future years.  Other expense (income) was
also impacted to a lesser extent by reduced income from non-utility
operations of $1.5 million.

  Income tax expense decreased $2.2 million in 2000 compared to 1999,
reflecting lower pre-tax income. The effective income tax rate for
2000 was 46.9% compared with the 1999 effective rate of 37.1%.  The
increase in the effective rate was due to the treatment of goodwill
amortization expense as not deductible for tax purposes.


Results of Operations - 1999 Compared with 1998
-----------------------------------------------
  Net earnings during 1999 increased by $3.8 million, or 17%, to
$26.4 million compared to $22.7 million for the same period in 1998.
In 1999 and 1998, Wisconsin Gas experienced significantly warmer than
normal weather which had a negative impact on earnings.  The
improvement in earnings in 1999 was driven by increased sales caused
by more favorable weather compared to 1998 and a $7.5 million annual
rate increase effective August 1, 1998. These items were offset in
part by higher operating expenses.

  The increase in firm sales volumes in 1999 was driven by colder
weather during the heating season in 1999 compared to 1998.  However,
the weather in 1999 was warmer than the 20-year average. During the
year, transportation volumes increased, compared to the same period in
1998, mainly because more customers purchased gas from sources other
than Wisconsin Gas and transported the volumes over the Wisconsin Gas
distribution system.  The GCRM favorably impacted margins by $3.3
million and $3.8 million in 1999 and 1998, respectively.

  Operating and maintenance expenses increased $4.7 million, or 5%,
in 1999, compared with 1998.  The increase reflects the impact of an
annualized $7.5 million charge relating to PSCW-approved additional
uncollectible accounts receivable expense, which became effective
November 1, 1998.  The increase during the year was partially offset
by lower benefit expenses due to changes in various benefit plans and
favorable plan experience.

  Depreciation expense in 1999, increased by $2.0 million, or 6%,
compared with 1998 due to increases in depreciable plant balances.

  Interest expense in 1999 increased $0.2 million compared to 1998.
The increase reflects higher borrowing levels offset in part by lower
interest rates.

  Taxes, other than income taxes decreased by $1.2 million, or 13%,
to $7.9 million due to lower gross receipts tax for Wisconsin Gas.
Gross receipt taxes are based on the previous year's operating
revenues.

  Other income decreased by $1.0 million in 1999 compared to 1998.
Other income in 1998 was positively impacted by a $1.2 million pretax
gain associated with the sales of non-utility property.

  Income tax expense increased $2.4 million in 1999 compared to 1998,
reflecting higher pre-tax income. The effective income tax rate
remained relatively unchanged between 1999 and 1998.


New Accounting Standards
------------------------
  Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("FAS 133"), is
effective for fiscal years beginning after June 15, 2000.  The Company
will adopt this statement effective January 1, 2001, which will have
an insignificant impact on net income and other comprehensive income.
For further information, see "Note 1 - Accounting Policies" in the
Notes to Financial Statements.


Effects of Changing Prices
--------------------------
  In management's opinion, changes in the rate of inflation have not
had a significant effect on Wisconsin Gas' income over the past three
years.  Inflationary increases in recent years have been recovered
through productivity improvements and/or product price increases. The
Company continues to monitor the impact of inflation in order to
minimize its effects in future years through pricing strategies,
productivity improvements and cost reductions.

  Wisconsin Gas rates are set under an alternative method of rate
making (see "Management's Discussion and Analysis of Results of
Operations and Financial Condition - Regulatory Matters"). After
reviewing the impact of the margin rate cap and other factors,
management believes that Wisconsin Gas' productivity improvements have
offset the impact of inflationary cost increases.


Liquidity and Capital Resources
-------------------------------
  Cash flows from operations during 2000 decreased by $27.0 million,
or 52%, to $24.5 million from the comparable period in 1999.  Due to
the seasonal nature of the energy business, accrued revenues, accounts
receivable and accounts payable amounts are higher in the heating
season as compared with the summer months.  The colder than normal
weather experienced late in the fourth quarter of 2000 and increased
cost of gas caused significant increases in accounts receivable,
unbilled revenue and gas storage costs over 1999.  This resulted in
the reduced operating cash flow.  The Company believes these working
capital balances will return to more normal levels by the second
quarter of 2001.  The increases in working capital were funded through
the issuance of additional short-term debt.

  The Company has access to outside capital markets and has been able
to generate funds internally to meet its long-term investment needs.
Wisconsin Gas' ability to attract the necessary financial capital at
reasonable terms is critical to the Company's overall strategic plan.

  The Company believes that cash provided from operating activities
over the next three years will satisfy normal ongoing cash
requirements. However, the Company anticipates the need for external
capital to fund major gas lateral projects including the Guardian
Pipeline lateral project.


Investment Activities
---------------------
  Capital expenditures in 2000 increased by $6.6 million to $49.5
million, a 15% increase over 1999. The majority of the increase in
capital spending over 1999 levels relates to the construction of gas
laterals. Capital expenditures are expected to increase to $76.0
million in 2001 which includes $20.0 million for gas lateral projects
including the initial phase of the Guardian pipeline lateral project.
Capital expenditures in 1999 increased $7.5 million compared to 1998.

  During 1999 and 1998, Wisconsin Gas acquired small municipal water
utilities, at book value, for $1.2 million and $0.5 million in cash,
respectively. Each of the acquisitions was accounted for as a purchase
and the results of operations of the acquired companies were included
in the Company's financial statements from their respective
acquisition dates.

  In March 1999, WICOR announced the formation of a joint venture,
Guardian Pipeline, L.L.C., to construct the Guardian interstate
natural gas pipeline from the Chicago market hub near Joliet, Illinois
to southeastern Wisconsin ("Guardian Pipeline"). CMS Energy, a
Dearborn, Michigan-based international energy company, and a
subsidiary of Xcel Energy, a Minneapolis-based diversified energy
company, are cosponsors of the project with WICOR.  The three partners
will have equal ownership interests in the project.  On March 14,
2001, the Federal Energy Regulatory Commission ("FERC") issued a
certificate of public convenience and necessity authorizing
construction and operation of the Guardian Pipeline.

  The Guardian Pipeline will consist of 141 miles of 36-inch pipe and
related compression equipment as well as an additional 8.5 mile, 16
inch lateral and will carry about 750,000 dekatherms per day of gas.

  Wisconsin Gas has committed to purchase 650,000 dekatherms per day
of capacity on the pipeline and will construct a 35-mile lateral at a
cost of approximately $62 million to connect its distribution system
to the Guardian Pipeline.  In November 1999, Wisconsin Gas filed an
application with the PSCW to construct and operate the lateral.  In
October 2000, the PSCW affirmed the need for the Wisconsin Gas lateral
in a preliminary determination.  The preliminary determination covers
all non-environmental aspects of Wisconsin Gas' application, including
need and economic justification.  Wisconsin Gas anticipates final
approval by the PSCW in the summer of 2001.  Pending receipt of all
regulatory approvals, lateral construction is expected to begin in the
spring of 2002 with commercial operation beginning in the fall of the
same year.  Wisconsin Gas expects to fund the lateral project using
long-term debt financing.


Financing Activities
--------------------
  In November 1998, Wisconsin Gas used its existing lines of credit
to issue commercial paper, the proceeds of which were used to redeem,
at par, $40 million of 7.5% Notes due in 1998. In January 1999,
Wisconsin Gas issued $50 million of 5.5% Notes due in 2009, to replace
the commercial paper.

  Wisconsin Gas' embedded cost of long-term debt was 6.4%, 6.4% and
6.9% for the years ended December 31, 2000, 1999 and 1998,
respectively.

  The Company paid cash dividends to WICOR of $21.0 million, $26.0
million and $24.0 million in 2000, 1999 and 1998, respectively.  In
addition, the Company declared special dividend payments of $255.0
million in June, 2000 and $50.0 million in December, 2000 which were
funded by the issuance of subordinated demand notes payable to WICOR.
These notes bear an interest rate approximating the short-term rates
the Company can borrow funds in the external commercial paper market.
At December 31, 2000, the interest rate on the subordinated demand
notes was 6.7%.

  In 2001, the Company intends to suspend payment of dividends in
order to retain sufficient cash to fund interest payments due on the
WICOR demand notes and to fund ongoing construction activity.

  Access to capital markets at a reasonable cost is determined in
large part by credit quality.  Moody's Investors Service, Standard and
Poor's Corporation and Fitch have rated Wisconsin Gas' unsecured long-
term debt at Aa2, AA- and AA-, respectively.  In conjunction with
Wisconsin Energy's issuance of $1 billion of unsecured senior notes in
March 2001, Standard and Poors Corporation maintained its negative
outlook for Wisconsin Energy and its subsidiaries, including Wisconsin
Gas.  Moody's Investors Service and Fitch reaffirmed their ratings of
the securities of Wisconsin Gas.  Moody's Investors Service outlook
remains stable for Wisconsin Gas.  These ratings provide a high degree
of flexibility in obtaining funds on competitive terms and reflect the
views of the rating agencies.  An explanation of the significance of
these ratings may be obtained from each rating agency. Such ratings
are not a recommendation to buy, sell or hold securities, but rather
an indication of creditworthiness.  Any rating can be revised upward
or downward or withdrawn at any time by a rating agency if it decides
the circumstances warrant that change.  Each rating should be
evaluated independently of any other rating.

  The Company's primary line of credit is a $30 million unsecured
revolving credit facility with several banks which expires August 6,
2002. Financial covenants under the facility include leverage and
interest coverage ratios.  In addition, the Company arranges domestic
seasonal lines of credit to support its commercial paper borrowing
program.  Wisconsin Gas finances working capital needs by issuing
commercial paper in the open market. Commercial paper outstanding at
December 31, 2000 and 1999 was $130.1 million and $89.8 million,
respectively.

  The Company believes that it has adequate capacity to fund its
operations for the foreseeable future through its borrowing
arrangements and internally generated cash.


Regulatory Matters
------------------
  Wisconsin Gas is subject to the jurisdiction of the PSCW as to
various phases of its operations, including rates, customer service
and issuance of securities and other various matters.

  Wisconsin Gas complies with the provisions of Statement of
Financial Accounting Standards (SFAS No. 71) "Accounting for the
Effects of Certain Types of Regulation," which provides that rate-
regulated public utilities such as Wisconsin Gas record certain costs
and credits allowed in the ratemaking process in different periods
than would be required for unregulated businesses. In the event
Wisconsin Gas determines that it no longer meets the criteria for
following SFAS 71, the accounting impact would be an extraordinary,
non-cash charge to operations of an amount that could be material.
Criteria that give rise to the discontinuance of SFAS 71 include (1)
increasing competition that restricts Wisconsin Gas' ability to
establish prices to recover specific costs and (2) a significant
change in the manner in which rates are set by regulators from cost-
based regulation to another form of regulation. SFAS 71 continues to
be applicable to Wisconsin Gas in that its rates are approved by a
third party regulator and are designed to recover its cost of service.
Wisconsin Gas believes its current cost-based rates are competitive in
the open market.

  Wisconsin Gas rates are set within the framework of the
Productivity-based Alternative Ratemaking Mechanism (PARM), which was
established in 1994 and has been extended through October 31, 2001.
Under PARM Wisconsin Gas has the ability to raise or lower margin
rates within a specified range on a quarterly basis. In 1997, 1996 and
1995, Wisconsin Gas reduced its base rates by $1.5 million, $3.0
million and $4.5 million on an annualized basis, respectively.
Effective August 1, 1998, Wisconsin Gas increased its base rates by
$7.5 million on an annualized basis. With this increase, Wisconsin
Gas's rates recover $1.5 million per year less than the maximum amount
allowed by the PSCW's rate order. The rate increase has offset
increased operating costs. The PARM has certain criteria that allow it
to be reopened at any time for significant deterioration in safety,
failures to meet conservation goals, significant changes in interest
rates and "extraordinary items." To date, none of the criteria has
been triggered.

  Wisconsin Gas' rates traditionally contained clauses providing for
periodic rate adjustments, with PSCW approval, to reflect changes in
purchased gas costs, including the recovery of transition costs passed
through by pipeline suppliers.

  Interstate pipeline companies have been allowed to pass through to
local gas distributors various costs incurred in the transition to
FERC Order No. 636. The PSCW has authorized the recovery through rates
of costs that have been passed through to Wisconsin Gas. Although
complete assurance cannot be given, it is believed that any additional
future transition costs incurred by Wisconsin Gas will also be
recoverable from its customers.

  The PSCW approved a performance-based gas cost recovery mechanism
("GCRM") which was in effect for three years beginning November 1,
1997 and expiring October 31, 2000.  With the post-2000 replacement
GCRM under review, the PSCW subsequently authorized an extension of
the existing GCRM commencing November 1, 2000, through such time as a
replacement GCRM (see discussion below) was ordered.  Under the
initial GCRM various portions (e.g. commodity costs) of the Company's
total cost of gas were measured against pre-determined benchmarks.  If
at the end of each GCRM year the benchmark related cost
savings/overruns exceeded 1.5% of the total cost of gas, the Company
would share 50/50 in the savings/overruns. Sharing of savings/overruns
was limited to up to 2.5% of the total cost of gas.  As such, the GCRM
provides an opportunity for Wisconsin Gas' earnings to increase or
decrease on a limited basis as the result of gas supply activities.

  In February 2001, the PSCW issued an order authorizing a
performance based recovery mechanism similar to the existing GCRM.
Other than various cost benchmark modifications, the sharing mechanism
was broadened such that sharing of savings/overruns would commence at
1.0% and conclude at 6.0% of the total cost of gas.  This replacement
GCRM is effective April 1, 2001.

  On March 14, 2000, the PSCW issued an order approving the Merger.
That order stipulated that the Company, and Wisconsin Electric Power
Company ("Wisconsin Electric"), a wholly owned subsidiary of Wisconsin
Energy which provides electric and gas distribution services, be
limited in their respective ability to seek rate increases for a five-
year period effective January 1, 2001 beyond adjustments to reflect
the Company's cost of gas purchased.  This limitation is subject to
certain exceptions including capital spending for major gas lateral
extensions, including the Guardian Pipeline lateral, and operating
changes resulting from government mandates.

  On November 1, 2000, Wisconsin Gas and Wisconsin Electric, filed a
joint application with the PSCW for authority to transfer the physical
gas utility assets of Wisconsin Electric together with certain
liabilities associated with such assets, with a net book value of
approximately $365.0 million at December 31, 2000, to Wisconsin Gas in
return for stock in Wisconsin Gas in a tax free transaction.
Wisconsin Energy expects that the combined gas operation will result
in improved customer service and greater synergy savings as a result
of the Merger.  The combined gas operations would retain the name
Wisconsin Gas Company and become the 9th largest gas distribution
company in the United States as measured by delivery volumes.
Assuming the PSCW approves the transaction described above, Wisconsin
Gas and Wisconsin Electric expect to make a second filing in 2001
seeking authorization to combine tariffs and rates.  This transaction
is also subject to the approval of the Securities Exchange Commission
under the Public Utility Holding Act of 1935.

  The PSCW has instituted generic proceedings to consider how its
regulation of gas distribution utilities should change to reflect the
changing competitive environment in the natural gas industry. To date,
the PSCW has made a policy decision to deregulate the sale of natural
gas in customer segments with workably competitive market choices and
has adopted standards for transactions between a utility and its gas
marketing affiliates. However, work on deregulation of the gas
distribution industry by the PSCW is presently on hold.  Currently,
Wisconsin Gas is unable to predict the impact of potential future
deregulation on the Company's results of operations or financial
position.


Environmental Matters
---------------------
  Wisconsin Gas has identified two previously owned manufactured gas
plant sites where it is responsible for environmental remediation.
Remediation at one site was completed during the third quarter of
1999. Wisconsin Gas is currently evaluating potential remedial options
at the second site and anticipates that the costs incurred in the
remediation effort will be recoverable from insurers or through rates
and will not have a material adverse effect on the Company's liquidity
or results of operations.

  For additional disclosure regarding environmental matters, see Note
7c of "Notes to Financial Statements".



Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  The Company's market risk includes the potential loss arising from
adverse changes in the price of natural gas. The Company's objective
in managing this risk is to reduce fluctuations in earnings and cash
flows associated with changes in natural gas prices. The Company's
policy prohibits the use of derivative financial instruments for
trading purposes.

  Wisconsin Gas has a commodity risk management program that has been
approved by the PSCW. This program allows Wisconsin Gas to utilize
call and put option contracts to reduce market risk associated with
fluctuations in the price of natural gas purchases and gas in storage.
Under this program, Wisconsin Gas has the ability to hedge up to 50%
of its planned gas deliveries for the heating season. The PSCW has
also allowed Wisconsin Gas to hedge gas purchased for storage during
non-heating months. The cost of the call and put option contracts, as
well as gains or losses realized under the contracts do not affect net
income as they are fully recovered under the purchased gas adjustment
clause.  In addition, under the GCRM, Wisconsin Gas uses derivative
financial instruments to reduce the cost of gas.  The cost of these
financial instruments, as well as any gains or losses on the contracts
are subject to the GCRM sharing mechanism.



Item  8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of Wisconsin Energy
Corporation:

We have audited the accompanying consolidated balance sheet and
statement of capitalization of Wisconsin Gas Company (Successor) as of
December 31, 2000 and the related consolidated statements of earnings,
common equity and cash flows for the period from April 27, 2000 to
December 31, 2000.  We have also audited the related consolidated
statements of earnings, common equity and cash flows of Wisconsin Gas
Company (Predecessor) for the period from January 1, 2000 to April 26,
2000.  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 accounting standards
generally accepted in the United States of America. 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 Successor consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Wisconsin Gas Company at December 31, 2000, and the
results of its operations and its cash flows for the period from April
27, 2000 to December 31, 2000 in conformity with accounting principles
generally accepted in the United States of America.  Furthermore, in
our opinion, the Predecessor consolidated financial statements
referred to above present fairly, in all material respects, the
results of its operations and its cash flows for the period from
January 1, 2000 to April 26, 2000 in conformity with accounting
principles generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, the
Company had a significant change in ownership as of April 27, 2000
which resulted in a new basis of accounting.

/s/PRICEWATERHOUSECOOPERS LLP
-----------------------------
PricewaterhouseCoopers LLP

Milwaukee, Wisconsin
February 6, 2001



REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Shareholders and Board of Directors of WICOR, Inc.:

We have audited the accompanying consolidated balance sheet and
statement of capitalization of Wisconsin Gas Company (Predecessor)(a
Wisconsin corporation and a wholly owned subsidiary of WICOR, Inc.)
which is a wholly owned subsidiary of Wisconsin Energy Corporation) as
of December 31, 1999 and the related consolidated statements of
earnings, common equity and cash flows for the years ended December
31, 1999 and 1998. 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 financial statements referred to above present
fairly, in all material respects, the financial position of Wisconsin
Gas Company at December 31, 1999, and the results of its operations
and its cash flows for the years ended December 31, 1999 and 1998, in
conformity with accounting principles generally accepted in the United
States.

/s/ARTHUR ANDERSEN LLP
----------------------
Arthur Andersen LLP

Milwaukee, Wisconsin,
January 24, 2000.


<TABLE>
<CAPTION>

                              WISCONSIN GAS COMPANY
                              Statements of Income

                                             |              Predecessor
                                             |  -----------------------------------
                                 Period From |  Period From
                                   April 27  |   January 1,
                                 2000 Through|  2000 Through Year Ended December 31,
                                 December 31,|    April 26   ----------------------
                                     2000    |      2000        1999        1998
                                 ------------|  ------------ ---------- -----------
                                             |(Thousands of Dollars)
<S>                                <C>       |   <C>         <C>         <C>
Operating Revenues                 $ 337,333 |   $ 216,220   $ 439,477   $ 428,562
                                   ----------|   ----------  ----------  ----------
Operating Expenses:                          |
  Cost of gas sold                   227,982 |     127,062     250,226     252,181
  Operations                          46,503 |      31,657      83,902      79,178
  Maintenance                          6,624 |       2,549       8,336       8,393
  Depreciation and amortization       24,638 |      12,202      35,596      33,568
  Goodwill amortization                7,639 |           -           -           -
  Taxes, other than income taxes       5,148 |       3,007       7,851       9,038
                                   ----------|   ----------  ----------  ----------
                                     318,534 |     176,477     385,911     382,358
                                   ----------|   ----------  ----------  ----------
                                             |
Operating Income                      18,799 |      39,743      53,566      46,204
                                   ----------|   ----------  ----------  ----------
                                             |
Interest Expense                      20,849 |       4,494      12,601      12,448
Other Expense(Income), net             3,801 |         856      (1,078)     (2,125)
                                   ----------|   ----------  ----------  ----------
(Loss)Income Before Income Taxes      (5,851)|      34,393      42,043      35,881
Income Tax Provision                     523 |      12,861      15,609      13,213
                                   ----------|   ----------  ----------  ----------
Net (Loss) Earnings                $  (6,374)|   $  21,532   $  26,434   $  22,668
                                   ==========|   ==========  ==========  ==========
</TABLE>

The accompanying notes are an integral part of these statements.


<TABLE>
<CAPTION>
                            WISCONSIN GAS COMPANY
                                Balance Sheets

                                                                     | Predecessor
                                                                     | -----------
                                                         December 31,| December 31,
                                                         ------------|------------
                                                             2000    |    1999
                                                         ----------- | -----------
                                                           (Thousands| of Dollars)
<S>                                                       <C>        | <C>
Assets                                                               |
------                                                               |
Property, Plant and Equipment, at cost                   $  905,842  |  $  865,109
Less - Accumulated depreciation                             503,726  |     477,493
                                                         ----------- |  -----------
                                                            402,116  |     387,616
                                                         ----------- |  -----------
Current Assets:                                                      |
  Cash and cash equivalents                                   6,012  |      11,368
  Accounts receivable, less allowance for doubtful                   |
    accounts of $12,416 and $10,149, respectively            95,797  |      40,448
  Accrued revenues                                           79,537  |      44,887
  Gas in storage, at weighted average cost                   54,290  |      40,415
  Materials and supplies, at weighted average cost            5,671  |       6,211
  Deferred income taxes                                      38,049  |      15,106
  Prepaid taxes                                               4,097  |       3,966
  Other                                                       8,832  |       1,826
                                                         ----------- |  -----------
                                                            292,285  |     164,227
                                                         ----------- |  -----------
Deferred Charges and Other:                                          |
  Goodwill                                                  450,698  |           -
  Prepaid pension costs                                     167,483  |      49,661
  Prepaid postretirement benefits                            26,128  |           -
  Regulatory assets                                          43,388  |      51,686
  Systems development costs                                   4,301  |       8,601
  Other                                                      10,650  |       9,357
                                                         ----------- |  -----------
                                                            702,648  |     119,305
                                                         ----------- |  -----------
                                                         $1,397,049  |  $  671,148
                                                         =========== |  ===========

</TABLE>

The accompanying notes are an integral part of these statements.


<TABLE>
<CAPTION>
                            WISCONSIN GAS COMPANY
                                Balance Sheets

                                                                       |  Predecessor
                                                                       |  -----------
                                                           December 31,|  December 31,
                                                           ------------|  -----------
                                                               2000    |      1999
                                                           ----------- |  -----------
                                                             (Thousands| of Dollars)
<S>                                                         <C>        |  <C>
Capitalization and Liabilities                                         |
------------------------------                                         |
Capitalization (See accompanying statement):                            |
  Long-term debt                                            $ 147,640  |  $ 158,244
  Preferred stock                                                   -  |          -
  Common equity                                               356,870  |    215,558
                                                            ---------- |  ----------
                                                              504,510  |    373,802
                                                            ---------- |  ----------
Current Liabilities:                                                   |
  Accounts payable                                             98,828  |     40,208
  Accounts payable - affiliated company, net                    3,809  |       (632)
  Notes payable to WICOR, Inc.                                305,000  |          -
  Short-term borrowings                                       130,100  |     89,759
  Refundable gas costs                                         40,793  |     24,043
  Accrued taxes                                                19,208  |     (1,999)
  Accrued payroll and benefits                                 10,006  |      9,195
  Other                                                        12,579  |      4,696
                                                            ---------- |  ----------
                                                              620,323  |    165,270
                                                            ---------- |  ----------
Deferred Credits and Other Liabilities:                                |
  Postretirement benefit obligation                                 -  |     38,690
  Deferred income taxes                                        52,466  |     46,409
  Regulatory liabilities                                      196,678  |     27,742
  Environmental remediation costs                               4,163  |      2,110
  Unamortized investment tax credit                             5,467  |      5,909
  Other                                                        13,442  |     11,216
                                                            ---------- |  ----------
                                                              272,216  |    132,076
                                                            ---------- |  ----------
                                                           $1,397,049  |  $ 671,148
                                                           =========== |  ==========
</TABLE>

The accompanying notes are an integral part of these statements.

<TABLE>
<CAPTION>

                               WISCONSIN GAS COMPANY
                             Statements of Cash Flows


                                               |                Predecessor
                                               |   -----------------------------------
                                   Period From |   Period From
                                     April 27, |    January 1,
                                   2000 Through|   2000 Through
                                   December 31,|     April 26,  Year Ended December 31,
                                       2000    |       2000        1999        1998
                                   ------------|   ------------ ---------- -----------
                                               |(Thousands of Dollars)
<S>                                  <C>       |    <C>         <C>         <C>
Operations:                                    |
  Net (loss) earnings               $  (6,374) |    $  21,532   $  26,434   $  22,668
  Adjustments to reconcile net (loss)          |
   earnings to net cash flows:                 |
    Depreciation & amortization        36,999  |       14,453      42,291      40,335
    Deferred income taxes                 432  |      (17,318)      3,507       7,775
    Net pension and other                      |
      post-retirement benefit income   (6,830) |       (4,710)    (11,768)     (8,001)
    Change in:                                 |
      Receivables                     (75,517) |      (14,482)     (3,231)     20,130
      Gas in storage                  (44,116) |       30,241      (3,664)      3,905
      Other current assets             (6,343) |         (123)       (442)       (743)
      Accounts payable                 58,525  |           95       3,364      (6,647)
      Accrued taxes                   (11,173) |       32,249      (4,160)     (1,180)
      Refundable gas costs             (9,966) |       26,716       5,473      (6,206)
      Other current liabilities        12,927  |          208       2,228        (632)
      Other non-current assets                 |
         and liabilities              (13,351) |          447      (8,512)     (9,240)
                                    ---------- |    ----------  ----------  ----------
                                      (64,787) |       89,308      51,520      62,164
                                    ---------- |    ----------  ----------  ----------
Investment Activities:                         |
  Capital expenditures                (37,669) |      (11,875)    (42,970)    (35,492)
  Acquisition of water utility              -  |            -      (1,187)       (509)
  Proceeds from sale of assets              -  |            -           -       1,762
  Other, net                              266  |           60         146         301
                                    ---------- |    ----------  ----------  ----------
                                      (37,403) |      (11,815)    (44,011)    (33,938)
                                    ---------- |    ----------  ----------  ----------
Financing Activities:                          |
  Change in short-term borrowings     121,200  |      (80,859)     24,759     (13,671)
  Issuance of long-term debt                -  |            -           -      50,000
  Reduction of long-term debt               -  |            -      (2,000)    (42,000)
  Cash dividends paid to WICOR, Inc.  (14,500) |       (6,500)    (26,000)    (24,000)
  Other                                     -  |            -         410         281
                                    ---------- |    ----------  ----------  ----------
                                      106,700  |      (87,359)     (2,831)    (29,390)
                                    ---------- |    ----------  ----------  ----------
Change in Cash and Cash Equivalents     4,510  |       (9,866)      4,678      (1,164)
Cash and Cash Equivalents,                     |
  Beginning of Period                   1,502  |       11,368       6,690       7,854
                                    ---------- |    ----------  ----------  ----------
Cash and Cash Equivalents,                     |
  End of Period                     $   6,012  |    $   1,502   $  11,368   $   6,690
                                    ========== |    ==========  ==========  ==========
                                               |
Supplemental Disclosure of                     |
  Cash Flow Information:                       |
Cash paid during the year for:                 |
  Income taxes, net of refunds      $   6,021  |    $   1,001   $  17,306   $   8,694
  Interest                          $  17,824  |    $   4,361   $  10,156   $  12,303
</TABLE>

The accompanying notes are an integral part of these statements.


<TABLE>
<CAPTION>
                                WISCONSIN GAS COMPANY
                             Statements of Common Equity

                                                                          Accumulated
                                                     Other     Retained     Other
                                           Common    Paid-In   Earnings  Comprehensive
                                   Total    Stock    Capital   (Deficit)     Income
                                ---------- ------- ---------- ---------- -------------
                                               (Thousands of Dollars)
<S>                             <C>        <C>     <C>        <C>        <C>
PREDECESSOR
Balance at December 31, 1997    $ 215,249  $    9  $ 120,677  $  96,005  $    (1,442)
  Net earnings                     22,668       -          -     22,668            -
  Other comprehensive income:
    Minimum pension
      liability adjustment           (782)      -          -          -         (782)
                                ---------- ------- ---------- ---------- ------------
Comprehensive income               21,886       -          -     22,668         (782)
                                ---------- ------- ---------- ---------- ------------
Cash dividends paid
    to WICOR, Inc.                (24,000)      -          -    (24,000)           -
Other                                 211       -        211          -            -
                                ---------- ------- ---------- ---------- ------------
Balance at December 31, 1998      213,346       9    120,888     94,673       (2,224)
  Net earnings                     26,434       -          -     26,434            -
  Other comprehensive income:
    Minimum pension
      liability adjustment            688       -          -          -          688
                                ---------- ------- ---------- ---------- ------------
Comprehensive income               27,122       -          -     26,434          688
                                ---------- ------- ---------- ---------- ------------
Cash dividends paid
    to WICOR, Inc.                (26,000)      -          -    (26,000)           -
Other                               1,090       -      1,090          -            -
                                ---------- ------- ---------- ---------- ------------
Balance at December 31, 1999      215,558       9    121,978     95,107       (1,536)
                                ---------- ------- ---------- ---------- ------------
  Net earnings                     21,532       -          -     21,532            -
                                ---------- ------- ---------- ---------- ------------
Comprehensive income               21,532       -          -     21,532            -
                                ---------- ------- ---------- ---------- ------------
Cash dividends paid
    to WICOR, Inc.                 (6,500)      -          -     (6,500)           -
                                ---------- ------- ---------- ---------- ------------
Balance at April 26, 2000         230,590       9    121,978    110,139       (1,536)

--------------------------------------------------------------------------------------

Merger adjustments                453,449       -    562,052   (110,139)       1,536
                                ---------- ------- ---------- ---------- ------------
Balance at April 27, 2000         684,039       9    684,030          -            -
                                ---------- ------- ---------- ---------- ------------
  Net loss                         (6,374)      -          -     (6,374)           -
  Other comprehensive loss:
    Minimum pension
      liability adjustment           (369)      -          -          -         (369)
                                ---------- ------- ---------- ---------- ------------
Comprehensive loss                 (6,743)      -          -     (6,374)        (369)
                                ---------- ------- ---------- ---------- ------------
Cash dividends paid
    to WICOR, Inc.                (14,500)      -    (14,500)         -            -
Special dividends (Note 6)       (305,000)      -   (305,000)         -            -
Other                                (926)      -       (926)         -            -
                                ---------- ------- ---------- ---------- ------------
Balance at December 31, 2000    $ 356,870  $    9  $ 363,604  $  (6,374)  $     (369)
                                ========== ======= ========== ========== ============
</TABLE>

The accompanying notes are an integral part of these statements.


<TABLE>
<CAPTION>
                            WISCONSIN GAS COMPANY
                        Statements of Capitalization


                                                                   | Predecessor
                                                                   | -----------
                                                       December 31,| December 31,
                                                       ------------| ----------
                                                           2000    |    1999
                                                        ---------- | ----------
                                                         (Thousands|of Dollars)
<S>                                                     <C>        | <C>
Long-Term Debt                                                     |
--------------                                                     |
6.375% Notes due 2005                                   $  65,000  | $  65,000
5.5% Notes due 2009                                        50,000  |    50,000
6.6% Debentures due 2013                                   45,000  |    45,000
Unamortized debt discount - Merger adjustment             (10,815) |         -
Unamortized debt discount and expense                      (1,545) |    (1,756)
                                                        ---------- | ----------
                                                          147,640  |   158,244
                                                        ---------- | ----------
                                                                   |
Preferred Stock                                                    |
---------------                                                    |
Without par value, cumulative; authorized 1,500,000                |
  shares, none outstanding                                      -  |         -
                                                        ---------- | ----------
                                                                   |
Common Equity                                                      |
-------------                                                      |
Common stock, $8 par value, authorized 5,000,000                   |
  shares, 1,125 shares outstanding                              9  |         9
Other paid-in capital                                     363,604  |   121,978
Retained earnings (deficit)                                (6,374) |    95,107
Accumulated other comprehensive loss                         (369) |    (1,536)
                                                        ---------- | ----------
                                                          356,870  |   215,558
                                                        ---------- | ----------
                                                        $ 504,510  | $ 373,802
                                                        ========== | ==========
</TABLE>

The accompanying notes are an integral part of these statements.



                         Wisconsin Gas Company
                     Notes to Financial Statements

1.  ACCOUNTING POLICIES
    -------------------
a.  Business

  Wisconsin Gas Company (the "Company" or "Wisconsin Gas"), the
oldest and largest natural gas distribution utility in Wisconsin, is a
public utility engaged in the distribution of natural gas throughout
Wisconsin. Wisconsin Gas is a wholly-owned subsidiary of WICOR, Inc.
("WICOR").  Effective April 26, 2000, WICOR became a wholly owned
subsidiary of Wisconsin Energy Corporation ("Wisconsin Energy") and
Wisconsin Gas became an indirect subsidiary of Wisconsin Energy.  Most
of Wisconsin Gas' revenues are derived from gas delivered in
southeastern Wisconsin. Wisconsin Gas is subject to regulation by the
Public Service Commission of Wisconsin (PSCW) and gives recognition to
ratemaking policies substantially in accordance with the Federal
Energy Regulatory Commission (FERC) Uniform System of Accounts.  At
December 31, 2000, Wisconsin Gas served approximately 544,400
customers.


b.  Gas Distribution Revenues and Purchased Gas Costs

  Utility billings are rendered on a cycle basis. Revenues include
estimated amounts accrued for service provided but not yet billed.

  Wisconsin Gas' rate schedules contain provisions which permit,
subject to the sharing mechanism discussed below, the recovery of
actual purchased gas costs incurred. The difference between actual gas
costs incurred (adjusted for the sharing mechanism) and costs
recovered through rates is deferred as a current asset or liability.
The deferred balance is returned to or recovered from customers at
intervals throughout the year and any residual balance at the annual
October 31 reconciliation date is subsequently refunded to or
recovered from customers.

  The PSCW approved a performance-based gas cost recovery mechanism
("GCRM") which was in effect for three years beginning November 1,
1997 and expiring October 31, 2000.  With the post-2000 replacement
GCRM under review, the PSCW subsequently authorized an extension of
the existing GCRM commencing November 1, 2000, through such time as a
replacement GCRM (see discussion below) was ordered.  Under the
initial GCRM various portions (e.g. commodity costs) of the Company's
total cost of gas were measured against pre-determined benchmarks.  If
at the end of each GCRM year the benchmark related cost
savings/overruns exceeded 1.5% of the total cost of gas, the Company
would share 50/50 in the savings/overruns. Sharing of savings/overruns
was limited to up to 2.5% of the total cost of gas.  As such, the GCRM
provides an opportunity for Wisconsin Gas' earnings to increase or
decrease on a limited basis as the result of gas supply activities.

  In February 2001, the PSCW issued an order authorizing a
performance based recovery mechanism similar to the existing GCRM.
Other than various cost benchmark modifications, the sharing mechanism
was broadened such that sharing of savings/overruns would commence at
1.0% and conclude at 6.0% of the total cost of gas.  This replacement
GCRM is effective April 1, 2001.


c.  Plant and Depreciation

  Gas distribution property, plant and equipment is stated at
original cost, including overhead allocations. Upon ordinary
retirement of plant assets, original cost plus cost of removal, net of
salvage, is charged to accumulated depreciation, and no gain or loss
is recognized.

  The depreciation of Wisconsin Gas' assets is computed using
straight-line rates over estimated useful lives and considers salvage
value. These rates have been consistently used for ratemaking
purposes. Depreciation as a percent of average depreciable utility
property was 4.4% for 2000, 1999 and 1998.

  The Company also owns equipment that it leases to customers and is
included in property, plant and equipment. This equipment is
depreciated on a straight line basis over its estimated useful life.


d.  Regulatory Accounting

  Wisconsin Gas accounts for its regulated operations in accordance
with Statement of Financial Accounting Standards (SFAS) No. 71,
"Accounting for the Effects of Certain Types of Regulation." This
statement sets forth the application of generally accepted accounting
principles to those companies whose rates are determined by an
independent third-party regulator. The economic effects of regulation
can result in regulated companies recording costs that have been or
are expected to be allowed in the ratemaking process in a period
different from the period in which the costs would be charged to
expense by an unregulated enterprise. When this occurs, costs are
deferred as assets in the balance sheet (regulatory assets) and
recorded as expenses in the period when those same amounts are
reflected in rates. Additionally, regulators can impose liabilities
upon a regulated company for amounts previously collected from
customers and for amounts that are expected to be refunded to
customers (regulatory liabilities).

  The amounts recorded as regulatory assets and regulatory
liabilities in the balance sheet at December 31, 2000 and 1999 are as
follows:
<TABLE>
<CAPTION>
                                                         |  Predecessor
(Thousands of Dollars)                           2000    |      1999
                                              ---------- |   ----------
<S>                                           <C>        |   <C>
Regulatory assets:                                       |
  Postretirement benefit costs (Note 8)       $  31,163  |   $  33,941
  Deferred uncollectible expenses                 7,768  |      15,364
  Environmental clean-up costs                    3,000  |           -
  Income tax-related amounts                             |
    due from customers                            1,276  |       1,941
  Other                                             181  |         440
                                              ---------- |   ----------
                                              $  43,388  |   $  51,686
                                              ========== |   ==========
Regulatory liabilities:                                  |
  Income tax-related amounts                             |
    due to customers                          $  14,465  |   $  16,293
  Unrecognized pension income (Note 8)            5,227  |       8,078
  Unrecognized pension income-merger related    104,759  |           -
  Unrecognized post-retirement medical                   |
    income-merger related (Note 2)               57,457  |           -
  Long-term debt adjustment-merger related       10,815  |           -
  Other                                           3,955  |       3,371
                                              ---------- |   ----------
                                              $ 196,678  |   $  27,742
                                              ========== |   ==========
</TABLE>

  Wisconsin Gas is precluded from discontinuing service to
residential customers within its service area during the heating
season. Any differences between doubtful account provisions based on
actual experience and provisions allowed for ratemaking purposes by
the PSCW are deferred and recovered in future rates. The most recent
PSCW rate order provides for a $21.4 million allowable annual
provision for doubtful accounts, including amortization of prior
deferred amounts.


e.  Income Taxes

  Wisconsin Gas is a wholly-owned subsidiary of WICOR and elected to
be included in WICOR's consolidated Federal income tax return through
the Merger Date. After the Merger Date, the income and expense of the
Company will be included in the consolidated Federal income tax return
of Wisconsin Energy.  Wisconsin Energy and WICOR allocate Federal
current tax expense or credits to Wisconsin Gas based on its
respective separate tax computation.

  Investment tax credits were recorded as a deferred credit on the
balance sheet and are being amortized to income over the applicable
service lives of the related properties in accordance with regulatory
treatment.


f.  Cash Flows

  Wisconsin Gas considers all highly liquid debt instruments
purchased with an original maturity of three months or less to be cash
equivalents. Due to the short maturity of these instruments, market
value approximates cost.


g.  Derivative Financial Instruments

  Wisconsin Gas uses derivative financial instruments to manage
commodity risks associated with the price of natural gas.  The
Company's policy prohibits the use of derivative financial instruments
for trading purposes.

  Wisconsin Gas has a commodity risk management program that has been
approved by the PSCW. This program allows Wisconsin Gas to utilize
call and put option contracts to reduce market risk associated with
fluctuations in the price of natural gas purchases and gas in storage.
Under this program, Wisconsin Gas has the ability to hedge up to 50%
of its planned gas deliveries for the heating season. The PSCW has
also allowed Wisconsin Gas to hedge gas purchased for storage during
non-heating months. The cost of the call and put option contracts, as
well as gains or losses realized under the contracts do not affect net
income as they are fully recovered under the purchased gas adjustment
clause. In addition, under the GCRM, Wisconsin Gas uses derivative
financial instruments to reduce the cost of gas.  The cost of these
financial instruments, as well as any gains or losses on the contracts
are subject to the GCRM sharing mechanism.  As of December 31, 2000,
Wisconsin Gas had put options covering approximately 74% of the
volumes of gas in storage.


h.  Use of Estimates

  The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes.  Actual results could
differ from those estimates.


i.  Non-Regulated Activities

  Revenues and expenses associated with Wisconsin Gas' nonregulated
equipment leasing and other activities are recorded in Other Expense
(Income), net.


j.  Goodwill and Long-Lived Assets

  Goodwill represents the excess of acquisition costs over the fair
value of the net assets and is amortized on a straight line basis over
its estimated life, which is generally 40 years.

  The Company reviews the carrying value of goodwill and long-lived
assets for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.  An
impairment would be determined based upon a comparison of the
undiscounted future operating cash flows anticipated to be generated
during the remaining life of the goodwill or long-lived assets to the
carrying value.  Measurement of any impairment loss would be based
upon discounted operating cash flows.


k.  New Accounting Pronouncements

  In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities ("FAS 133"), which has
been amended by FAS 137, Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FAS 133, an
amendment of FAS 133, and by FAS 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of
FAS 133.  FAS 133 requires that every derivative instrument be
recorded on the balance sheet as an asset or liability measured at its
fair value and that changes in the derivative's fair value be
recognized currently in earnings unless specific hedge accounting
criteria are met.

  FAS 133, as amended, is effective for fiscal years beginning after
June 15, 2000 and must be applied to: (1) derivative instruments; and
(2) certain derivative instruments embedded in hybrid contracts that
were issued, acquired or substantively modified after December 31,
1998.  Wisconsin Gas has identified a limited number of financial and
physical commodity contracts that meet the definition of a derivative
under FAS 133. These contracts are used to manage the Company's
exposure to natural gas commodity price volatility.

  The adoption of FAS 133, as amended, on January 1, 2001, was
insignificant to the income statement and to other comprehensive
income. Following initial adoption of FAS 133, changes in the net
value of the effective portion of derivatives qualifying as cash flow
hedges are recorded, net of tax, in other comprehensive income. The
ineffective portion of the derivative's change in fair value is
required to be recognized in earnings immediately.  In the case of
Wisconsin Gas, the ineffective portion is recorded as regulatory asset
or liability as these transactions are part of the purchased gas
adjustment clause or the gas cost recovery mechanism.

  The fair value of the derivative investments is determined by
reference to quoted market prices of listed contracts, published
quotations or quotations from independent parties.  In the absence
thereof, the Company utilizes mathematical models based on current and
historical data.


l.  Reclassifications

  Certain prior year financial statement amounts have been
reclassified to conform to their current year presentation.


2.   MERGERS AND ACQUISITIONS
     ------------------------

a.   Merger with Wisconsin Energy Corporation

  On April 26, 2000, Wisconsin Energy acquired WICOR for $1.2 billion
in cash, including related costs and expenses (the "Merger").
Wisconsin Energy accounted for its acquisition of WICOR as a purchase.
The financial statements of Wisconsin Gas for the periods ended before
April 27, 2000 were prepared using Wisconsin Gas' historical basis of
accounting and are designated as "Predecessor". As result of the
Merger, the financial statements of Wisconsin Gas were adjusted on
April 26, 2000 (the "Merger Date") to reflect certain assets and
liabilities at fair-market value.  The following summarizes
significant fair-market value adjustments recorded on Merger Date:

<TABLE>
<CAPTION>
                                             Merger
  (in thousands)                           Adjustment
                                          ------------
  <S>                                       <C>
  Prepaid pension                           $109,631
  Post-retirement medical                     60,129
  Long-term debt                              11,798
</TABLE>

  Because Wisconsin Gas is a rate-regulated natural gas utility,
expenses associated with the merger adjustments continue to be
governed by the Company's historical basis of accounting.  Therefore,
the above adjustments were offset by regulatory liabilities for an
identical amount (see Note 1d).  The excess of the consideration paid
by Wisconsin Energy over the estimated fair value of the assets and
liabilities of Wisconsin Gas at the Merger Date was approximately
$458.3 million and is reflected as goodwill in the Wisconsin Gas'
balance sheet as of December 31, 2000.

  The comparability of the operating results for the Predecessor and
the periods encompassing push down accounting are affected by the
purchase accounting adjustments, primarily the amortization of
goodwill over a period of forty years.


b.   Other Acquisitions

  During both 1999 and 1998, Wisconsin Gas acquired small municipal
water utilities, at book value, for $1.2 million and $0.5 million in
cash, respectively. Each of the acquisitions was accounted for as a
purchase and the results of operations were included in the Company's
financial statements from the date of acquisition.


c.   Proposed Transfer of Wisconsin Electric Gas Utility Assets
     to Wisconsin Gas.

  On November 1, 2000, Wisconsin Gas and Wisconsin Electric Power
Company ("Wisconsin Electric"), another wholly owned subsidiary of
Wisconsin Energy, filed a joint application with the PSCW to transfer
the physical gas utility assets of Wisconsin Electric together with
certain liabilities associated with such assets, with a net book value
of $365.0 million at December 31, 2000, to Wisconsin Gas in return for
stock in Wisconsin Gas in a tax free transaction.  Wisconsin Energy
expects that the combined gas operation will result in improved
customer service and greater synergy savings as a result of the
Merger.  The combined gas operations would retain the name Wisconsin
Gas Company and become the 9th largest gas distribution company in the
United States as measured by delivery volumes.


3.  INCOME TAXES
    ------------
  The current and deferred components of income tax expense are as
follows:

<TABLE>
<CAPTION>
                                                   Predecessor
                                      | -----------------------------------
                          Period From | Period From
                           April 27,  |  January 1,
                          2000 Through| 2000 Through
                          December 31,|  April 26,  Year Ended December31,
(Thousands of Dollars)       2000     |    2000        1999        1998
------------------------  ----------- | ----------  ----------  ----------
<S>                        <C>        |  <C>         <C>         <C>
Current                               |
  Federal                  $ (1,535)  |  $ 25,518    $ 11,515    $  7,017
  State                      (1,365)  |     6,264       2,820       1,698
                           ---------- | ----------   ---------   ----------
Total Current                (2,900)  |    31,782      14,335       8,715
                           ---------- | ----------   ---------   ----------
Deferred                              |
  Federal                     1,910   |   (15,563)        592       3,193
  State                       1,513   |    (3,358)        682       1,305
                           ---------- | ----------   ---------   ----------
Total Deferred                3,423   |   (18,921)      1,274       4,498
                           ---------- | ----------   ---------   ----------
Total Provision            $    523   | $  12,861    $ 15,609    $ 13,213
                           ========== | ==========   =========   ==========
</TABLE>

  The provision for income taxes differs from the amount of income
tax determined by applying the applicable U.S. statutory federal
income tax rate to pre-tax income as a result of the following
differences:

<TABLE>
<CAPTION>
                                       |              Predecessor
                                       | ------------------------------------
                          Period From  | Period From
                           April 27,   |  January 1,
                          2000 Through | 2000 Through
                          December 31, |  April 26,     Year Ended December 31,
(Thousands of Dollars)        2000     |     2000          1999          1998
------------------------  -----------  | ------------- ------------  ------------
<S>                       <C>     <C>  | <C>     <C>   <C>     <C>   <C>     <C>
Statutory U.S. tax rates  $(2,048)35.0%| $12,037 35.0% $14,715 35.0% $12,559 35.0%
State income taxes, net       127 (2.2)|   1,950  5.7    2,358  5.6    2,047  5.7
Amortization of goodwill    2,674(45.7)|       -    -        -    -         -    -
Investment credit restored    (71) 1.2 |    (365)(1.1)    (441)(1.0)    (445)(1.2)
Excess deferred                        |
   tax amortization          (122) 2.1 |    (623)(1.8)    (706)(1.7)    (645)(1.8)
Other, net                    (37) 0.6 |    (138)(0.4)    (317)(0.8)    (303)(0.9)
                          ------------ | ------------- ------------- ------------
Effective Tax Rates       $   523(9.0)%| $12,861 37.4% $15,609 37.1% $13,213 36.8%
                          ============ | ============= ============= ============
</TABLE>

  The components of deferred income tax assets and liabilities at
December 31, 2000 and 1999 are as follows:


<TABLE>
<CAPTION>
                                                       |  Predecessor
(Thousands of Dollars)                          2000   |     1999
--------------------------                   ----------|  ----------
<S>                                          <C>       |  <C>
Current Deferred Income Tax Assets                     |
  Recoverable gas costs                      $  16,367 |  $   5,987
  Bad debt reserve                               9,673 |      2,077
  Inventory                                      6,559 |      3,353
  Deferred compensation                          3,917 |      2,062
  Other                                          1,533 |      1,627
                                             ----------|  ----------
                                             $  38,049 |  $  15,106
                                             ==========|  ==========
                                                       |
Long-term Deferred Income Tax Liabilities              |
  Property related                           $  37,500 |  $  37,775
  Pension benefits                              23,345 |     16,465
  Systems development costs                      1,726 |      3,452
  Investment tax credit                         (3,616)|     (3,909)
  Deferred compensation                         (4,346)|     (2,865)
  Environmental                                 (1,029)|     (1,313)
  Other                                         (1,114)|     (3,196)
                                             ----------|  ----------
                                             $  52,466 |  $  46,409
                                             ==========|  ==========
</TABLE>


4.  SHORT-TERM BORROWINGS
    ---------------------
  As of December 31, 2000 and 1999, Wisconsin Gas had total unsecured
lines of credit available from banks of $55.0 million and $100.0
million, respectively.  The credit lines may be used for, among other
purposes, the support of commercial paper issued by Wisconsin Gas.
These borrowing arrangements may require the maintenance of average
compensating balances, which are generally satisfied by balances
maintained for normal business operations, and may be withdrawn at any
time.

  At December 31, 2000, $130.1 million of commercial paper was
outstanding at a weighted average interest rate of 6.6%.  At December
31, 1999, $89.8 million of commercial paper was outstanding at a
weighted average interest rate of 6.1%.

  Restrictive covenants under Wisconsin Gas' five-year $30 million
revolving credit agreement, which expires in August, 2002, include
leverage and interest coverage ratios.

  In order to fund special dividends paid to WICOR, Wisconsin Gas
issued a subordinated demand note payable to WICOR for $255.0 million
in July, 2000.  A similar subordinated note payable was issued in
December, 2000 to fund another special dividend payment of $50.0
million for an aggregate total of $305.0 million as of December 31,
2000.  The demand notes payable to WICOR incorporate a subordination
agreement which renders the demand notes subordinate to all
indebtedness, liabilities and obligations of the Company and limits
payments of principal and interest on the subordinated demand notes
should there be a default on the liabilities or indebtedness of the
Company.  In addition, the Company is prohibited from repaying any
principal of the demand notes prior to the termination of its $30
million revolving credit facility.  Based on agreement between WICOR
and the Company, the subordinated demand notes payable to WICOR bear
an interest rate approximating the short-term rates the Company can
borrow funds in the external commercial paper market.  At December 31,
2000, the interest rate on the subordinated demand notes was 6.7%.


5.  LONG-TERM DEBT
    --------------
  In January 1999, Wisconsin Gas issued $50 million of 5.5% Unsecured
Notes due 2009.  The proceeds of the offering were used in part to
reduce commercial paper issued in November 1998, in connection with
the maturity of $40.0 million 7.5% Notes.  The Company's 6.375% Notes
in the amount of $65.0 million mature in November, 2005, representing
the only long-term debt maturity in the next five years.


6.  COMMON EQUITY
    -------------
  Due to the Merger of Wisconsin Energy and WICOR, the parent of the
Company, on April 26, 2000, the Company began a new basis of
accounting which resulted in the elimination of retained earnings of
the Predecessor. In addition, the push-down of Merger related
adjustments (see Note 2) resulted in a corresponding increase in paid-
in capital of the Company.  Because the Company's earnings for the
period after the Merger Date were not sufficient to cover dividends
declared by WICOR, the reduction in common equity necessary to record
these dividends after the Merger Date was recorded as a reduction to
paid-in capital.  The dividends declared by the Company in 2000
consisted of $21 million in cash dividends (of which $6.5 million were
distributed by the Predecessor out of retained earnings), and $305.0
million of special dividends which were funded by the WICOR demand
notes (see Note 4).

The Company intends to suspend dividend payments in 2001 in order to
retain cash in the Company to fund interest payments required by the
WICOR demand note and to fund future construction activities.


7.  COMMITMENTS AND CONTINGENCIES
    -----------------------------
a.  Gas Supply

  Wisconsin Gas has agreements for firm pipeline and storage capacity
that expire at various dates through 2008.  The aggregate amount of
required payments under such agreements total approximately $297.8
million, with annual required payments of $92.3 million in 2001, $90.9
million in 2002, $73.8 million in 2003, $10.5 million in 2004 and $9.2
million.  The purchased gas adjustment provisions of Wisconsin Gas'
rate schedules permit the recovery of gas costs, including payments
for firm pipeline and storage capacity, from its customers subject to
the GCRM sharing mechanism.

  The FERC has allowed ANR Pipeline Company (ANR) to recover capacity
and "above market" supply costs associated with quantities purchased
from Dakota Gasification Company ("Dakota") under a long-term contract
expiring in the year 2009. Consistent with guidelines set forth in
Order No. 636, ANR has allocated 90% of Dakota costs to firm
transportation service.  Based on its contracted quantities with ANR,
Wisconsin Gas is currently paying approximately $100,000 per month of
Dakota costs.

  Transition costs billed to Wisconsin Gas are being recovered from
customers under the purchased gas provisions within its rate
schedules.


b.  Capital Expenditures

  Certain commitments have been made in connection with 2001 capital
expenditures. Wisconsin Gas capital expenditures for 2001 are
estimated at $76.0 million.

  In March 1999, WICOR announced the formation of a joint venture,
Guardian Pipeline, L.L.C., to construct the Guardian interstate
natural gas pipeline from the Chicago market hub near Joliet, Illinois
to southeastern Wisconsin ("Guardian Pipeline").  CMS Energy, a
Dearborn, Michigan-based international energy company, and a
subsidiary of Xcel Energy, a Minneapolis-based diversified energy
company, are cosponsors of the project with WICOR.  The three partners
will have equal ownership interests in the project.  On March 14,
2001, the Federal Energy Regulatory Commission ("FERC") issued a
certificate of public convenience and necessity authorizing
construction and operation of the Guardian Pipeline.

  The Guardian Pipeline will consist of 141 miles of 36-inch pipe and
related compression equipment as well as an additional 8.5 mile, 16
inch lateral and will carry about 750,000 dekatherms per day of gas.

  Wisconsin Gas has committed to purchase 650,000 dekatherms per day
of capacity on the pipeline and will construct a 35-mile lateral at a
cost of approximately $62 million to connect its distribution system
to the Guardian Pipeline.  In November 1999, Wisconsin Gas filed an
application with the PSCW to construct and operate the lateral.  In
October 2000, the PSCW affirmed the need for the Wisconsin Gas lateral
in a preliminary determination.  The preliminary determination covers
all non-environmental aspects of Wisconsin Gas's application,
including need and economic justification.  Wisconsin Gas anticipates
final approval by the PSCW in the summer of 2001.  Pending receipt of
all regulatory approvals, lateral construction is expected to begin in
the spring of 2002 with commercial operation beginning in the fall of
the same year.  Wisconsin Gas expects to fund the lateral project
using long-term debt financing.

  The Guardian Pipeline is expected to serve growing demand for
natural gas in Wisconsin and Northern Illinois.


c.  Environmental Matters

  Wisconsin Gas has identified two previously owned sites on which it
operated manufactured gas plants. Such plants ceased operations prior
to the mid-1950's.  Environmental remediation work for one of the
sites was completed during the third quarter of 1999.  Wisconsin Gas
is evaluating potential remedial options at the second site.
Wisconsin Gas established a reserve of approximately $2.1 million at
December 31, 1999, to cover the remediation and maintenance costs of
the remaining site.  In 2000, the Company accrued an additional $3.0
million bringing the total reserve, net of expenditures made in 2000
to $4.2 million.  The Company believes the cost of the remediation
will be recovered either through insurance proceeds or through
customer rates and has established a regulatory asset for the amount
reserved in 2000.


d.  Other

  The Company is party to various legal proceedings arising in the
ordinary course of business which are not expected to have a material
effect on Wisconsin Gas' financial position or results of operations.


8.  BENEFIT PLANS
    -------------
a.  General

  The Company provides defined benefit pension and other
postretirement benefit plans to certain employees.  Under the Merger
Agreement, the Company's existing pension and other postretirement
benefit plans or plans substantially comparable in the aggregate will
be maintained for the benefit of Company employees or former employees
for at least one year following completion of the Merger.

  As part of the Merger, the Company recorded an adjustment to
increase the net asset (excess of plan funded status over projected
benefit obligations) of the Wisconsin Gas pension and postretirement
benefit plans by $109.6 million and $60.1 million, respectively, to
equal the fair value of these assets at the Merger Date as required by
purchase accounting.  Due to the regulatory treatment of Wisconsin
Gas, an offsetting regulatory liability was also recorded representing
the difference between the fair value of the plans and the amount
reflected to date in the Company's rates. The regulatory liability is
being amortized over the estimated average remaining service life of
15 years. (See Note 1.d.)


b.  Pension Plans

  The following provides a reconciliation of benefit obligations,
plan assets and funded status of the Company's pension plans.

<TABLE>
<CAPTION>

Pension plans                                            |          Predecessor
-------------                                            |  --------------------------
                                            Period From  |  Period From
                                             April 27,   |   January 1,
                                            2000 Through |  2000 Through  Year Ended
                                            December 31, |   April 26,    December 31,
(Thousands of Dollars)                           2000    |       2000         1999
                                             ----------- |   -----------   ----------
<S>                                           <C>        |    <C>           <C>
Change in Benefit Obligation:                            |
Benefit obligation-beginning of period         $ 114,152 |   $ 117,929     $ 139,011
Service cost                                       1,600 |         911         2,995
Interest cost                                      6,929 |       3,011         8,746
Actuarial loss (gain)                             25,754 |      (1,409)      (19,527)
Special termination benefits                         551 |           -             -
Benefits paid                                    (11,849)|      (6,290)      (13,296)
                                               ----------|   ----------    ----------
Benefit obligation-end of period                 137,137 |     114,152       117,929
                                               ----------|   ----------    ----------
Change in Plan Assets:                                   |
Fair value of plan assets-                               |
   beginning of period                           268,093 |     235,601       210,456
Actual return on plan assets                      (9,305)|      38,423        38,009
Employer contributions                                 - |           -             -
Benefits paid from plan assets                   (11,576)|      (5,931)      (12,864)
                                               ----------|   ----------    ----------
Fair value of plan assets-end of period          247,212 |     268,093       235,601
                                               ----------|   ----------    ----------
                                                         |
Funded status of the plans                       110,075 |     153,941       117,672
Unrecognized net actuarial loss (gain)            49,425 |    (103,070)      (67,477)
Unrecognized prior service                               |
  cost (benefit)                                       - |       1,895         2,008
Unrecognized net transition                              |
  (asset) liability                                    - |      (5,789)       (6,725)
                                               ----------|   ----------    ----------
Net amount recognized                          $ 159,500 |   $  46,977     $  45,478
                                               ==========|   ==========    ==========

Assumptions as of December 31:
  Discount rate (weighted average)                  7.50%                     7.50%
  Expected return on plan assets                    9.00%                     9.00%
  Rate of compensation increase                     4.50%                     4.50%
</TABLE>

  Net pension (income) costs for each of the periods presented below
include the following components:

<TABLE>
<CAPTION>

                                                  |             Predecessor
                                                  | ----------------------------------
                                     Period From  | Period From
                                      April 27,   |  January 1,
                                     2000 Through | 2000 Through      Year Ended
                                     December 31, |   April 26,      December 31,
(Thousands of Dollars)                   2000     |     2000        1999       1998
                                     -----------  | -----------  ---------- ----------
<S>                                    <C>        |    <C>         <C>        <C>
Service costs                          $  1,600   |    $   911    $  2,995   $ 3,008
Interest costs on projected                       |
  benefit obligations                     6,929   |      3,011       8,746     9,088
Expected (return) on assets             (13,814)  |     (6,229)    (17,264)  (16,342)
Amortization of:                                  |
  Transition obligation (asset)               -   |       (474)     (1,445)   (1,437)
  Prior service cost (benefit)                -   |         56         179       114
  Actuarial (gain)                            -   |       (429)        (31)      (78)
                                        --------  |    --------    --------  --------
                                         (5,285)  |     (3,154)     (6,820)   (5,647)
Amortization of regulatory                        |
 (liability) asset                       (1,901)  |       (950)     (2,851)   (2,851)
                                        --------  |    --------    --------  --------
Net benefit (income) expense           $ (7,186)  |    $(4,104)    $(9,671)  $(8,498)
                                        ========  |    ========    ========  ========
</TABLE>

  Employer contributions and funding policies are consistent with
funding requirements of Federal law and regulations. Commencing
November 1, 1992, Wisconsin Gas pension costs or credits have been
calculated in accordance with SFAS 87 and are recoverable from
customers. Prior to this date, pension costs were recoverable in rates
as funded. The cumulative difference between the amounts funded and
the amounts based on SFAS 87 through November 1, 1992, is recorded as
a regulatory liability and is being amortized as a reduction of
pension expense over an eight-year period effective November 1, 1994.


c.  Postretirement health care and life insurance

  In addition to providing pension benefits, the Company provides
certain health care and life insurance benefits for retired employees
when they reach normal retirement age while working for the Company.
Wisconsin Gas funds the accrual annually based on the maximum tax
deductible amount. Commencing January 1, 1992, Wisconsin Gas'
postretirement benefit costs have been calculated in accordance with
SFAS 106 and are recoverable from customers. The cumulative difference
between the amounts funded and the amounts based on SFAS 106 through
January 1, 1992, is recorded as a regulatory asset and is being
amortized over a twenty-year period beginning January 1, 1992.


<TABLE>
<CAPTION>

Other Postretirement Benefits                            |         Predecessor
-----------------------------                            | --------------------------
                                            Period From  | Period From
                                             April 27,   |  January 1,
                                            2000 Through | 2000 Through  Year Ended
                                            December 31, |  April 26,    December 31,
(Thousands of Dollars)                           2000    |      2000         1999
                                             ----------- |  -----------   ----------
<S>                                           <C>        |   <C>           <C>
Change in Benefit Obligation:                            |
Benefit obligation-beginning of period         $  48,311 |   $  48,950     $  60,847
Service cost                                         214 |         114           398
Interest cost                                      2,508 |       1,223         3,390
Amendments and settlements                             - |           -        (5,491)
Actuarial loss (gain)                              1,787 |        (561)       (8,076)
Benefits paid                                     (1,687)|      (1,415)       (2,118)
                                               ----------|   ----------    ----------
Benefit obligation-end of period                  51,133 |      48,311        48,950
                                               ----------|   ----------    ----------
Change in Plan Assets:                                   |
Fair value of plan assets-                               |
   beginning of period                            71,926 |      67,246        58,451
Actual return on plan assets                      (2,575)|       6,095         8,994
Employer contributions                             1,336 |           -         1,919
Benefits paid from plan assets                    (1,687)|      (1,415)       (2,118)
                                               ----------|   ----------    ----------
Fair value of plan assets-end of period           69,000 |      71,926        67,246
                                               ----------|   ----------    ----------
                                                         |
Funded status of the plans                        17,867 |      23,615        18,296
Unrecognized net actuarial loss (gain)             7,244 |     (34,240)      (31,296)
Unrecognized prior service                               |
  cost (benefit)                                       - |     (26,207)      (26,866)
Unrecognized net transition                              |
  (asset) liability                                    - |           -         1,176
                                               ----------|   ----------    ----------
Net amount recognized                          $  25,111 |   $ (36,832)    $ (38,690)
                                               ==========|   ==========    ==========
                                                         |
Assumptions as of December 31:                           |
  Discount rate (weighted average)                  7.50%|                     7.50%
  Expected return on plan assets                    9.00%|                     9.00%
  Rate of compensation increase                     4.50%|                     4.50%
</TABLE>


  Net postretirement benefits expense (income) for each of the
periods presented below include the following components:

<TABLE>
<CAPTION>

                                                  |             Predecessor
                                                  | ----------------------------------
                                     Period From  | Period From
                                      April 27,   |  January 1,
                                     2000 Through | 2000 Through      Year Ended
                                     December 31, |   April 26,      December 31,
(Thousands of Dollars)                   2000     |     2000        1999       1998
                                     -----------  | -----------  ---------- ----------
<S>                                    <C>        |    <C>         <C>        <C>
Service costs                           $   214   |    $   114     $   398    $   989
Interest costs on projected                       |
  benefit obligations                     2,508   |      1,223       3,390      4,505
Expected (return) on assets              (4,218)  |     (1,970)     (5,246)    (5,168)
Amortization of:                                  |
  Prior service cost (benefit)                -   |       (660)     (1,980)    (1,384)
  Actuarial (gain)                            -   |       (564)     (1,437)    (1,223)
                                        --------  |    --------    --------   --------
                                         (1,496)  |     (1,857)     (4,875)    (2,281)
Amortization of regulatory                        |
 (liability) asset                        1,852   |        926       2,778      2,778
                                        --------  |    --------    --------   --------
Net benefit (income) expense            $   356   |       (931)    $(2,097)   $   497
                                        ========  |    ========    ========   ========
</TABLE>

  The postretirement benefit cost components for 2000 were calculated
assuming health care cost trend rates ranging from up to 9% for 2001
and decreasing to 5% in 2005. The health care cost trend rate has a
significant effect on the amounts reported. An increase of one
percentage point in the assumed health care cost trend rate in each
year would increase the accumulated postretirement benefit obligation
as of December 31, 2000, by $1.7 million and the aggregate of the
service and interest cost components of postretirement expense by $0.1
million.  A corresponding decrease would decrease the accumulated
postretirement benefit obligation by $0.5 million and the aggregate of
the service and interest cost components of postretirement expense by
$46,000.

  Plan assets are primarily invested in equities and fixed income
securities.


  d.  Retirement Savings Plans

  Wisconsin Gas maintains various employee savings plans, which
provide employees a mechanism to contribute amounts up to 16% of their
compensation for the year. Wisconsin Gas matching contributions may be
made for up to 4% of eligible compensation.  Total contributions were
valued at $0.8 million for the period from April 27, 2000 to December
31, 2000, $0.5 million for the period from January 1, 2000 to April
26, 2000, and $1.3 million in each of the years ended 1999 and 1998.


  e.  Employee Stock Ownership Plan

  In November 1991, WICOR established an ESOP covering non-union
employees of Wisconsin Gas. The ESOP funds employee benefits of up to
1% of compensation with Company common stock distributed through the
ESOP. The ESOP used the proceeds from a $10 million, adjustable rate
loan, guaranteed by WICOR, to purchase 862,532 shares of WICOR common
stock.

  As a condition to the Merger with Wisconsin Energy, the Company was
required to terminate the ESOP.  At the Merger Date, the shares of
WICOR held by the ESOP were redeemed for $39.6 million in cash.  The
proceeds from the stock redemption were used to pay the $1.7 million
outstanding loan balance under the plan in May, 2000.  The remaining
proceeds were distributed to plan participants in November, 2000,
following receipt of a determination letter authorizing the method of
distribution, and the ESOP plan was terminated.


9.  FAIR VALUE OF FINANCIAL INSTRUMENTS
    -----------------------------------
  The carrying value of cash and cash equivalents, net accounts
receivable, accounts payable and short-term borrowings approximates
fair value due to the short-term maturities of these instruments.

  The fair value of the Company's long-term debt is estimated based
upon quoted market value for the same or similar issues or upon the
quoted market prices of U.S. Treasury issues having a similar term to
maturity, adjusted for the Company's bond rating and the present value
of future cash flows.

  Because the Company operates in a regulated environment, the
Company would probably not be affected by realization of gains or
losses on extinguishment of its outstanding fixed-rate debt. Realized
gains would be refunded to and losses would be recovered from the
Company's customers through gas rates.  Likewise, any gains or losses
on gas commodity instruments used by Wisconsin Gas are refunded to or
recovered from customers under the PGAC.

  The estimated fair value of the Company's financial instruments at
December 31 is as follows:


<TABLE>
<CAPTION>
                                       2000                 1999
                                ------------------   ------------------
                                Carrying   Fair      Carrying   Fair
                                 Amount    Value      Amount    Value
                                --------  --------   --------  --------
<S>                             <C>       <C>        <C>       <C>
Long-term debt                  $147,640  $152,200   $158,244  $148,898
</TABLE>


10.  QUARTERLY FINANCIAL DATA (Unaudited)
     ------------------------------------
  Because seasonal factors significantly affect the Company's
operations, the following data is not comparable between quarters:

<TABLE>
<CAPTION>

(Thousands of dollars)        First      Second       Third      Fourth
-----------------------     ---------  ----------  ---------  ----------
<S>                         <C>        <C>         <C>        <C>
2000
----
  Operating Revenues        $176,049   $  87,758 *  $ 66,160   $ 223,586
  Operating Income (Loss)   $ 35,712   $    (487)*  $(10,980)  $  34,297
  Net Income (Loss)         $ 19,913   $  (4,841)*  $(12,585)  $  12,671

1999
----
  Operating Revenues        $170,397   $  75,322    $ 56,827   $ 136,931
  Operating Income (Loss)   $ 39,926   $  (1,560)   $ (7,047)  $  22,247
  Net Income (Loss)         $ 22,970   $  (2,440)   $ (6,018)  $  11,922
</TABLE>

 *Split between current and Predecessor performance is as follows:

<TABLE>
<CAPTION>
                         Period From |     Period From
                           April 27  |    April 1, 2000
                            2000 to  |      to April 26
                        June 30, 2000|        2000
                        -------------|   --------------
<S>                        <C>       |      <C>
Operating Revenue          $ 47,587  |      $ 40,171
Operating Income (Loss)      (4,518) |         4,031
Net Income (Loss)            (6,460) |         1,619
</TABLE>



Item  9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE

  Information about a change in accountants was previously reported
in a Current Report on Form 8-K dated as of March 8, 2001.



PART III


Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

  Omitted pursuant to General Instruction I(2)(c).



Item 11.  EXECUTIVE COMPENSATION


  Omitted pursuant to General Instruction I(2)(c).



Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

  Omitted pursuant to General Instruction I(2)(c).



Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

  Omitted pursuant to General Instruction I(2)(c).



PART IV


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

(a)  The following documents are filed as part of this Annual Report on
Form 10-K:

  1.  All Financial Statements and Reports of Independent Public
Accountants.

  Statements of Income.

  Balance Sheets.

  Statements of Cash Flows.

  Statements of Common Equity.

  Statements of Capitalization.

  Notes to Financial Statements.


  2.  Financial Statement Schedules.

  Not required.


  3.  Exhibits

  See Exhibit Index included as the last part of this report, which
  is incorporated by reference.  Each management contract and
  compensatory plan or arrangement required to be filed as an exhibit
  to this report is identified in the Exhibit index by a pound symbol
  (#) following the description of the exhibit.


(b)  Reports on Form 8-K.

  No Current Reports on Form 8-K were filed by Wisconsin Gas during
  the quarter ended December 31, 2000.

  A Current Report on Form 8-K dated as of March 8, 2001 was filed by
  Wisconsin Gas Company on March 15, 2001 to report a change in
  accountant.




                              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.



                                    WISCONSIN GAS COMPANY

Date:  March 29, 2001          By:  /s/RICHARD A. ABDOO
                                    ---------------------------------------
                                    Richard A. Abdoo, Chairman of the Board
                                    and Director


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 in the dates indicated.

/s/RICHARD A. ABDOO                                            March 29, 2001
---------------------------------------------------------------
Richard A. Abdoo, Chairman of the Board and Director
- Principal Executive Officer

/s/PAUL DONOVAN                                                March 29, 2001
---------------------------------------------------------------
Paul Donovan, Senior Vice President and Chief Financial Officer
- Principal Financial Officer

/s/STEPHEN P. DICKSON                                           March 29, 2001
----------------------------------------------------------------
Stephen P. Dickson, Controller - Principal Accounting Officer

/s/JOHN F. AHEARNE                                              March 29, 2001
----------------------------------------------------------------
John F. Ahearne, Director

/s/JOHN. F. BERGSTROM                                           March 29, 2001
----------------------------------------------------------------
John F. Bergstrom, Director

/s/BARBARA L. BOWLES                                            March 29, 2001
----------------------------------------------------------------
Barbara L. Bowles, Director

/s/ROBERT A. CORNOG                                             March 29, 2001
----------------------------------------------------------------
Robert A. Cornog, Director

/s/WILLIE D. DAVIS                                              March 29, 2001
----------------------------------------------------------------
Willie D. Davis, Director

/s/RICHARD R. GRIGG                                             March 29, 2001
-----------------------------------------------------------------
Richard R. Grigg, Director

/s/FREDERICK P. STRATTON                                        March 29, 2001
-----------------------------------------------------------------
Frederick P. Stratton, Director

/s/GEORGE E. WARDEBERG                                          March 29, 2001
-----------------------------------------------------------------
George E. Wardeberg, Director



                        TABLE OF CONTENTS
                           TO EXHIBITS


    2.1  Agreement and Plan of Merger, dated as of June 27, 1999, as
amended as of September 9, 1999, by and among Wisconsin Energy
Corporation, WICOR, Inc. and CEW Acquisition, Inc. (Incorporated by
reference to Appendix A to the joint proxy statement/prospectus dated
September 10, 1999, included in Wisconsin Energy Corporation's
Registration on Form S-4 filed on September 9, 1999 File No. 333-
86827)

    2.2  Amendment to Agreement and Plan of Merger dated as of
September 9, 1999.  (Incorporated by reference to Exhibit 2.2 to
Wisconsin Energy Corporation's Registration Statement on Form S-4
filed on September 9, 1999 File No. 333-86827)

    2.3  Second Amendment to Agreement and Plan of Merger dated as of
April 26, 2000 (incorporated by reference to Exhibit 2.3 to Wisconsin
Energy Corporation's Current Report of Form 8-K dated April 26, 2000).

    3.1  Wisconsin Gas Company Restated Articles of Incorporation, as
amended (incorporated by reference to Exhibit 3.1 to the Company's
Annual Report on Form 10-K for 1988).

    3.2* Wisconsin Gas Company By-laws, as amended April 27, 2000.

    4.1  Indenture, dated as of September 1, 1990, between Wisconsin Gas
Company and Firstar Bank Milwaukee, N.A., Trustee (incorporated by
reference to Exhibit 4.11 to Wisconsin Gas Company's Form S-3
Registration Statement No. 33-36639).

    4.2  Officers' Certificate, dated as of September 15, 1993, setting
forth the terms of the Company's 6.60% debentures due 2013
(incorporated by reference to Exhibit 4.1 to the Company's Form 8-K
Current Report for September, 1993).

    4.3  Officers' Certificate, dated as of November 7, 1995, setting
forth the terms of the Company's 6-3/8% Notes due 2005 (incorporated
by reference to the Company's Form 8-K Current Report dated November
7, 1995).

    4.4  Officers' Certificate, dated as of January 21, 1999, setting
forth the terms of Wisconsin Gas Company's 5.5% notes due 2009
(incorporated by reference to Exhibit 4 to Wisconsin Gas Company's
Form 8-K Current Report dated January 15, 1999).

    10.1 Service Agreement, dated as of April 25, 2000 between Wisconsin
Electric Power Company and Wisconsin Gas Company.  (incorporated by
reference to Exhibit 10.32 to Wisconsin Energy's Annual Report on Form
10-K for the year ended December 31, 2000.)

    10.2 Service Agreement, dated as of June 1, 1994, among WICOR, Inc.,
Wisconsin Gas Company, Sta-Rite Industries, Inc., WEXCO of Delaware,
Inc. and SHURflo Pump Manufacturing Co. (incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K for 1995).

    10.3# Non-Qualified Trust Agreement by and between Wisconsin Energy
Corporation and The Northern Trust Company dated December 1, 2000,
regarding trust established to provide a source of funds to assist in
meeting of the liabilities under various nonqualified deferred
compensation plans made between Wisconsin Energy Corporation or its
subsidiaries and various plan participants.  (incorporated by
reference to Exhibit 10.2 to Wisconsin Energy's Annual Report on Form
10-K for the year ended December 31, 2000.)

   10.4# Supplemental Benefits Agreement between Wisconsin Energy
Corporation and Richard A. Abdoo dated November 21, 1994, as amended
by an April 26, 1995 letter agreement.  (incorporated by reference to
Exhibit 10-1 to Wisconsin Energy's Quarterly Report on Form 10-Q dated
as of June 30, 1995.)

   10.5# Amended and Restated Wisconsin Energy Corporation Special
Executive Severance Policy, effective April 26, 2000.  (incorporated
by reference to Exhibit 10.3 to Wisconsin Energy's Quarterly Report on
Form 10-Q dated as of March 31, 2000.)

   10.6# Employment arrangement with Larry Salustro, effective December
12, 1997.  (incorporated by reference to Exhibit 10.7 to Wisconsin
Energy's Annual Report on Form 10-K for the year ended December 31,
2000.)

   10.7# Form of Deferred Compensation Agreements between Wisconsin Gas
Company and certain of its executive officers.  (incorporated by
reference to Exhibit 10.25 to the Company's Annual Report on Form 10-K
for the year ended December 31, 1990.)

   10.8# Senior Officer Change in Control, Severance, Special Pension,
and Non-Compete Agreement between Wisconsin Energy Corporation and
Paul Donovan effective November 8, 2000.  (incorporated by reference
to Exhibit 10.1 to Wisconsin Energy's Quarterly Report on Form 10-Q
dated as of September 30, 2000.)

   10.9# Employment agreement with George E. Wardeberg as Vice Chairman
of the Board of Directors of Wisconsin Energy Corporation, effective
April 26, 2000.  (incorporated by reference to Exhibit 10.2(a) to
Wisconsin Energy's Quarterly Report on Form 10-Q dated as of March 31,
2000.)

   10.10# Non-Qualified Stock Option Agreement with George E. Wardeberg,
dated April 26, 2000, granted pursuant to the Employment Agreement.
(incorporated by reference to Exhibit 10.2(b) to Wisconsin Energy's
Quarterly Report on Form 10-Q dated as of March 31, 2000.)

   10.11# Senior Officer Change in Control, Severance, and Non-Compete
Agreement Wisconsin Energy Corporation and Richard R. Grigg effective
January 29, 2001.  (incorporated by reference to Exhibit 10.20 to
Wisconsin Energy's Annual Report on Form 10-K for the year ended
December 31, 2000.)

   10.12# Form of amendment to the Deferred Compensation Agreement
between Wisconsin Gas Company and Thomas F. Schrader.  (incorporated
by reference to Exhibit 10.1 to the Company's Quarterly Report on Form
10-Q dated as of September 30, 1999.)


#  Indicates a plan under which compensation is paid or payable to
directors or executive officers of the Company.  Certain compensatory
plans in which directors or executive officers of Wisconsin Gas are
eligible to participate are not filed as Wisconsin Gas exhibits in
reliance on the exclusion in Item 601(b)(10)(iii)(B)(6) of Regulation
S-K.

*  Indicates a document filed herewith.